What’s the issue?

Although asset owners sit at the top of the investment chain, establishing accountability from their asset managers on labour-related issues – the “S” in "ESG" – is among the major challenges faced by trustees striving to responsibly steward workers’ capital.

Despite improvements in accountability on environmental and governance issues, substantial shortcomings are evident in how global asset managers incorporate social issues pertaining to workers in their investment practices, stewardship activities and interventions in the public policy arena. The result is that global asset managers often utilize the capital of their clients – including workers’ retirement savings – in a way that undermines workers’ fundamental rights.

Large global asset managers have, to varying degrees and within a range of frameworks, articulated commitments to integrate social considerations into their investment practices and processes. Yet discrepancies between discourse and action on social issues are visible in the substance and outcomes of asset managers’ engagements with portfolio companies, their proxy voting records and their input into public policy and regulatory consultations.

What are we doing?

The CWC, in consultation with an advisory committee, has designed a methodology that evaluates 10 global asset managers whose client base includes CWC participants based on:

1. The strength of the stewardship framework: The degree to which the asset managers’ internal policies, processes and practices establish a stewardship framework to ensure that companies in public equity and alternative investment portfolios uphold workers’ human rights and labour standards. These are drawn from the ILO core conventions, the UN Guiding Principles on Business and Human Rights, the UN SDGs, the ITUC Global Rights Index and other relevant standards.

2. The impact of asset manager stewardship practices on trade union priorities: This component examines specific cases where fundamental rights of workers have been or are being violated and analyses how the asset manager is using its leverage, as per the OECD Guidelines, to influence the entity causing the adverse human rights impact. Furthermore, it reviews how asset managers use their clout to weigh into public consultations on topics such as corporate governance and disclosure. Our analysis includes:

• The scope, substance and outcomes of engagements with public equity portfolio companies on CWC-supported campaigns;
• The proxy voting records of asset managers on resolutions relevant to workers’ rights and workplace issues that were supported by the CWC;
• The public policy positions of asset managers on issues related to trade union priorities;
• The existence and implementation of Responsible Contractor Policies (RCPs) or other guidelines on workplace issues and standards in their alternative investment portfolios.

The CWC organizes meetings between asset managers and CWC pension trustees to transform and deepen accountability in the investment chain. Our completed asset manager report cards, meeting reports and methodology are available upon request to CWC participants.

CWC Asset Manager report cards are available to CWC participants. Contact the secretariat for more information.

To read our informational flyer, click here.

For more information on this initiative, please contact the CWC Secretariat

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