UK labour unions form governance group for voting £1bn of pension assets at AGMs

Trade Union Share Owners initiative is launched

UK umbrella trade union group the Trades Union Congress (TUC) and its affiliates Unite and Unison have formed a group to promote a new approach to the way they vote their more than £1bn (€1.2bn) of assets at companies’ annual meetings.
The TUC has 54 affiliated unions representing 6.2m workers. Unite has 1.5m members across various sectors while Unison is the public service trade union, with 1.3m members.
They will work with shareholder advisory firm PIRC to make sure they take a “common voting position” at the AGMs of companies in the FTSE350 index – in accordance with a new 32-page set of TUC policy guidelines.
Topics for the new ‘Trade Union Share Owners’ group, launched ahead of the company voting season and a year after the ‘shareholder spring’, will include senior directors’ pay and bonuses and it’s hoped that more unions will get involved as the project goes ahead.
The TUC has long been concerned that the way unions’ pension fund managers vote on pay doesn’t reflect the views of membership – as highlighted by TUC’s own annual Fund Manager Voting Survey.

The unions state it’s their fiduciary duty to take account of environmental, social and governance (ESG) issues in how they manage their funds’ investments: “We believe that this not only desirable from a trade union and ethicalperspective but also contributes to the long-term success of the companies whose shares we hold.”

ESG issues covered by the guidance include company reporting, audit, employees and supply chain.

TUC General Secretary Frances O’Grady said: “It’s time to inject a long overdue dose of reality into British boardrooms and we are going to use the power of our pension funds to make a difference and to encourage a new and more responsible corporate Britain.”

UNISON General Secretary Dave Prentis added: “We will be active shareowners of FTSE companies, in the interests of our scheme members and other stakeholders in the companies our funds own. We will be modern, responsible investors.”

Union engagement guidelines:

  • Limit the pay gap between top executives and workforce, aim for a 20:1 pay ratio.
  • Persuade all companies to become living wage employers
  • Encourage firms to include worker representatives
  • At least a quarter of the board positions to be held by women.
  • Limit to multiple directorships