Schroders has been asked to leave ShareAction’s Good Work Coalition after the UK fund manager publicly revealed it would oppose the living wage proposal filed at Sainsbury’s by the non-profit, which goes to the vote on Thursday.
A spokesperson for ShareAction confirmed that Schroders – which disappeared from the list of investor members since it disclosed its vote last week – had been asked to “step away from the coalition with immediate effect”.
“We find Schroders’ vocal opposition to the resolution impossible to reconcile with the firm’s membership of the Good Work Coalition, which exists to advance decent work across the UK economy,” Responsible Investor was told.
Asked about the decision, a spokesperson for Schroders told RI: “We have been a member of ShareAction’s Good Work Coalition since its inception in 2020 and were recently praised as a valued member. We are therefore disappointed this has now changed after having stated our views on the Sainsbury’s resolution.”
They added: “We believe that the nuance is critical and think that, as an ESG community, we should be prepared to disagree when ultimately we share the same long-term ambitions.”
The £732 billion ($878 billion; €853 billion) asset manager, which is a top five shareholder in Sainsbury’s, announced on 27 June that it would not support the resolution, which calls on the UK’s second largest grocer to gain accreditation from the Living Wage Foundation, a charity that calculates an annual “real living wage”, by 2023.
In a blog, Schroders’ head of active ownership, Kimberley Lewis, wrote that “after a detailed analysis of likely outcomes”, the fund believes the proposal “fails to fully consider both the business implications and potential wider stakeholder impacts”.
Its decision, however, puts it at odds with peers, including Legal & General Investment Management, HSBC Asset Management and Aviva Investors, which are backing the proposal.
Schroders, which is itself Living Wage accredited, highlighted its membership of the Good Work Coalition in its blog.
ShareAction, speaking to RI, suggested that Schroders had contradicted its own engagement framework with its position on Sainsbury’s: “Schroders believes investee companies should ‘commit to pay all direct employees a living wage (or equally valued equivalent) and in the mid-term, commit that all workers (including contractors in direct operations) are paid a living wage (or equally valued equivalent)’. This was precisely the ask made by the shareholder resolution at Sainsbury’s.”
The non-profit said it has reached out to Schroders to discuss its “future plans to engage with companies on living wages, given its Engagement Blueprint commitments” but that in the meantime the fund had been asked to leave its coalition.
In response, Schroders told RI that it expects all companies to pay their employees a living wage, “whilst understanding that, as an active owner, we may need to give management the flexibility to determine how to achieve that goal in a sustainable way which also meets the best interests of our clients”.
The Schroders spokesperson also pointed to an announcement by Sainsbury’s in April, in which the supermarket chain committed to bringing the wages for the remainder of its direct employers in line with the Living Wage Foundation – a move which met the expectations set out in the Schroders Engagement Blueprint.
“As an active owner, we have been constructively engaging with Sainsbury’s to extend this to all contractors in the medium term. In our view, this approach addresses our expectations, while considering the long-term sustainability of the company,” they added.
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