Shareholder advocates of workers’ rights at US firms have received a boost at the start of this year’s proxy season, after a freedom of association audit proposal gained majority support at Starbucks.
Results from the coffee giant’s annual general meeting last week were released on Wednesday, revealing an impressive 52 percent support for the resolution. It is believed to be the first time a shareholder proposal on workers’ rights has achieved the backing of more than half of investors.
The proposal asked Starbucks to undertake an independent assessment of its labour practices, including whether it is adhering to its “stated commitment to workers’ freedom of association and collective bargaining rights”.
It was filed by the Office of the New York City Comptroller, Brad Lander, UK proxy adviser PIRC and Canadian responsible investment association SHARE, representing investors including US-based Trillium Asset Management.
Support was likely buoyed by the recommendations of influential proxy advisers Glass Lewis and ISS.
ISS stated in its advice that there “seem to be credible reasons that may lend support to various accusations raised by the NLRB [National Labor Relations Board], Starbucks, and Workers United”.
“The proposed third-party assessment would benefit shareholders by cutting through some of the noise and helping them evaluate the company’s management of any related risks,” it added.
Starbucks’ former CEO, Howard Schultz, who stepped down earlier this month, was challenged about the company’s union practices this week at a Senate hearing by senator Bernie Sanders.
The Financial Times reported that Sanders, who chairs the Senate committee that oversees US labour laws, said that since workers at a Starbucks store in Buffalo, New York, first voted to unionise in December 2021, the company had waged “the most aggressive and illegal union-busting campaign in the modern history of our country”.
Jonas Kron, chief advocacy officer at co-filer Trillium, said: “With shareholders sending a clear message with the solid majority vote, CEO [Laxman] Narasimhan and chair [Mellody] Hobson have a perfect opportunity to pivot.”
At least 10 more proposals on workers’ rights are due to go to the vote in the US this proxy season, including at Amazon, Netflix and Tesla.
SEC allows Chubb to exclude fossil fuel underwriting phase out proposal
The US Securities and Exchange Commission (SEC) has allowed Chubb to exclude a proposal requesting that the insurer adopt a policy for a timebound phase-out from underwriting new fossil fuel exploration and development, agreeing with the company that it fell foul of the financial watchdog’s micromanagement rule.
“Chubb, using sophisticated data, analysis and dedicated insurance, technical and legal professionals, has considered the prescriptive objective advocated by the proponent, but has affirmatively determined that it believes it is currently an inadvisable risk for the company,” the company wrote in its latest “no action” letter.
Last proxy season, a similar proposal, also filed by US-based Green Century Capital Management, survived Chubb’s “no action” request, with the SEC rejecting the company’s “micromanagement” challenge.
This year’s resolution upped the ante on the one filed in 2022, which asked the company to “adopt and disclose new policies to help ensure that its underwriting practices do not support new fossil fuel supplies, in alignment with the IEA’s net-zero emissions by 2050 scenario”. That proposal achieved 19 percent support in May last year.
But Sanford Lewis, an attorney at US-based legal adviser Strategic Counsel, who supported the filing of this year’s proposal, told Responsible Investor that it provided “more flexibility” in some respects, making clear that the intent was to phase out risks rather than clients.
While noting that it is too early in the proxy season to understand why the SEC supported the company in its bid to exclude, Lewis suggested that the language used in the request could have been deemed too technical from an insurance perspective by the regulator.
The same proposal will go to the vote this year at Chubb’s peers The Hartford and Travelers. Neither firm registered a challenge the SEC.
Lewis told RI that the SEC’s decision on Chubb does create “an element of uncertainty”, especially since the proposal was considered by the filers to be “well within the bounds of micromanagement”.
Another SEC decision that has raised eyebrows was on a proposal calling for an audited report on costs associated with decommissioning fossil fuel assets. The watchdog agreed with Valero and Phillips 66 that the proposal micromanaged. The filer, the New Jersey Common Pension Fund, did not challenge “no action” requests by the companies.
Historically, disclosure proposals are more likely to get past the SEC than those calling for action, particularly when it comes to the micromanagement rule, so the rulings on Valero and Phillips are noteworthy.
They are even more surprising given the shift at the SEC since President Joe Biden took office, during which time the regulator has been far more supportive of climate and ESG-orientated shareholder proposals.
“We’re going to have some dots to connect at the end of the season” to work out the SEC’s position on different proposals, Lewis said.
Sarasin to vote against Rio Tinto’s auditor over climate… again
Sarasin & Partners has revealed it will again vote against Rio Tinto’s auditor at the miner’s AGM on 6 April. The decision is a response to KPMG’s failure to opine on the reliability of the company’s 1.5C stress test or its assumptions around carbon prices, which the UK-based investment manager views as too low.
Sarasin said it will also abstain from voting on the miner’s financial statements and the audit committee chair, Simon Henry.
The manager voted against Rio Tinto’s financial statement last year, but has stepped back from that this year in recognition of the company’s improved disclosure around climate change, including carbon price assumptions.
In a website post published on Thursday, Sarasin highlighted that Rio Tinto has disbursed only 20 percent of the £1.5 billion ($1.86 billion; €1.7 billion) it has committed to spend between 2022 and 2024 to deliver its carbon ambitions. Over the same period, the firm’s Scope 3 emissions have gone up due to increased production of iron ore.
Reproductive rights win at CVS
The resolution asked CVS to address threats to the privacy of customers’ reproductive health data collected and maintained by the company. It was co-filed with Rhia Ventures, a US impact fund focused on women’s reproductive and maternal health.
Thirty shareholder proposals have been filed on reproductive rights this year, more than twice as many as in 2022. This follows the US Supreme Court’s decision last May to overturn the landmark 1973 Roe vs Wade ruling, ending women’s federal right to abortion.
“CVS is taking the steps necessary to protect its customers’ privacy and data in a post-Dobbs world,” said Natasha Lamb, managing partner at Arjuna Capital. “It’s clear that threats to women’s privacy are also a threat to CVS’s business, brand and investors.”