Hugh Wheelan: Unions are stepping up the naming and shaming of fund managers on workers’ rights

CWC affiliates are working on asset manager report cards.

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The Committee on Workers Capital. (CWC) celebrates its 20th anniversary this year.
As it hits two decades, CWC is getting bolder in its efforts to name and shame asset managers it believes are not upholding workers’s rights.
For those who may not have tuned into its work, the CWC is an international trades union network of 700 participants from 25 countries pushing for responsible investment of workers’ retirement savings. That, after all, is what much institutional investment capital is. Many of those workers are trades union members with a clear, vested interest in knowing that their pension savings are aligned with the work of their unions, as well as seeking sound, long-term returns. The CWC has heft as a joint initiative of the International Trade Union Confederation (ITUC), the Global Unions Federation and the Trade Union Advisory Committee to the OECD (TUAC). I’ve seen its work develop over the years from a small gathering of committed, financially-savvy union officials to a much broader gathering of the labour movement. Its 2019 Paris conference last month may have been ajunior event to the PRI in Person (with half of it taking place on a Sunday…that’s dedication!), but the debates – as might be expected – ran closer to the knuckle on the social issues that can run contrary to workers’ interests. A major aim of CWC is more dialogue between union-affiliated pension trustees and their asset managers to push labour concerns at the company and investment level. Hugues Letourneau, who manages CWC, said it wants to stop S being the ‘poor country cousin’ in ESG. A recent example has been union engagement with investors led by Unite Here on the wages and conditions of hotel workers in the Marriott chain in the US. Unite Here represents workers in the hotel, gaming and food service industries and notes that its 270,000 members are beneficiaries of pension funds with over $60bn in assets. Unions are getting increasingly bullish about naming and shaming investment managers they believe are not protecting workers’ rights. Unite Here runs a website where it lists what it calls ‘irresponsible’ fund managers.
And members of CWC are working on asset manager report cards to show where they believe fund managers are not pushing investee companies on best practices for protecting workers’ rights. This might, for example,
include a lack of responsible contractor or procurement policies, or poor oversight on issues like modern slavery. Anyone who doesn’t believe such labour issues can become financially material need look no further than this year’s succession of airline employee/management bust ups at the likes of Ryanair and British Airways, which knocked share prices. Smart investors, notably hedge funds, were paying attention and tuning into unions at the heart of these negotiations. It’s not all investor knocking at CWC. The group is keen to push examples of good practice in the market. IFM, the Australian, pension fund-owned infrastructure manager, told the conference it has a memorandum of understanding with ITUC on labour rights and related due diligence on deals. It aims to build confidence in the investments it makes around climate, fair pricing, tax, diversity and social licence and sees itself as a trusted partner of unions rather than an adversary.Some union trustees are putting workers’ rights clearly into the money equation via their hiring of fund managers. Mike Musuraca, Consultant to the North America’s Building Trades Unions (NABTU) said its affiliated pension funds “put the ’S’ front at the forefront of investment consultant and manager selection.” That makes sense.
As it enters its twenties, CWC should have a clear and loud policy dictum that its affiliated trustees will seek to veto the hire of any fund manager that does not clearly support simple principles at investee companies such as freedom of association for employees, some kind of direction on working hours, and collective bargaining on wages. Many do, but not all. These are staples of the Principles of the International Labour Organisation signed by 187 countries.They should underpin the responsible investment policies of trades-union linked pension funds allied to CWC.