Committee on Workers' Capital

CWC Baseline Expectations - Asset Manager Analysis

Hugues Letourneau — 2022-07-12T14:00:00Z

2022-06-29_cwc_baseline_expectations-am_analysis.xlsx

Baseline Expectations for Asset Managers on Fundamental Labour Rights

Shalini Ramgoolam — 2022-07-12T13:00:00Z

The Baseline Expectations for Asset Managers on Fundamental Labour Rights are geared at helping CWC network participants hold the asset managers they contract accountable on fundamental labour rights.

The CWC Baseline Expectations are divided into four categories from which to assess an asset manager's level of commitment to respecting and upholding fundamental labour rights:

(1) Stewardship framework
(2) Stewardship in public equities (including proxy voting and engagement)
(3) stewardship in private markets
(4) Policy advocacy

Pension fund trustees, staff and other asset owners can share this document with contracted asset manager and ask their managers to report back to them on the implementation of the Expectations.

Asset managers can use this document as a road map for continual improvement of their firm's approach to fundamental labour rights in investments.

The CWC Secretariat will analyze and compare manager practices against the CWC Baseline Expectations and inform the CWC network of its findings.

The Baseline Expectations draw from global human rights frameworks such as the UN Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises, and the ILO Declaration on Fundamental Principles and Rights at Work.

The Baseline Expectations were developed collaboratively by trade union officials and pension fund trustees affiliated to unions, including: the Australian Council of Trade Unions (Australia), AFL-CIO (USA), Comisiones Obreras (Spain), FNV (Netherlands), the International Trade Union Confederation (ITUC), UNI Global Union (UNI), the International Transport Workers' Federation (ITF) and the Trade Union Advisory Committee to the OECD (TUAC).

Click here to see the Asset Manager Analysis Table (updated on an ongoing basis).

Click here to see the CWC Baseline Expectations' Theory of Change

Click here to read the press release.

cwc__baseline_expectations_for_asset_managers_on_fundamental_labour_rights_-_eng.pdf

Spotlight on Capital Group: Opportunities to Embed Fundamental Labour Rights in Investment Stewardship

Hugues Letourneau — 2022-06-29T19:44:56Z

Capital Group is the world's 7th largest asset manager. The US-headquartered firm is an active investor which often ranks as a top 10 shareholder in the companies where it invests, including priority cases among CWC participating trade unions, such as Amazon and Wizz Air. The manager has a client base in the Americas (Canada, the USA), Asia Pacific (including Australia) and Europe. Institutional investors (including pension funds) make up 37%, or USD 0.9tn of its client base.

The CWC Secretariat analysed Capital Group against three of the four categories that figure in the CWC Baseline Expectations for Asset Managers on Fundamental Labour Rights. The report comprises an analysis of the manager's: 1) Stewardship framework, 2) Stewardship practices in public equities (including shareholder engagement and proxy voting) and 3) policy advocacy.

Report Highlights

Capital Group references international norms and frameworks like the ILO Declaration on Fundamental Principles and Rights at Work.
Capital Group's ESG policy lacks details on the criteria for engagement with companies and escalation tactics used when severe adverse labour rights impacts occur.
The manager could improve ESG stewardship practices by disclosing its proxy voting record and listing the companies it engages with on a quarterly basis, in line with practices of other global asset managers.
Capital Group could enhance its transparency by publishing its responses to public policy consultations in a centralized location on its website on a quarterly basis.

This report on Capital Group is current up to June 9th, 2022.

cwc_ama_capital_group_report_final_.pdf

Spotlight on UBS: Opportunities to Reinforce Fundamental Labour Rights in Investment Stewardship Practices

Shalini Ramgoolam — 2021-09-27T22:59:33Z

UBS Asset Management (“UBS”) is the world's 13th largest asset manager with USD 1.1 trillion in assets under management (AUM). Of this amount, institutional investors – including pension funds - account for 59% of their global client base.

The CWC's analysis finds that UBS's stewardship framework makes an effort to implement a double-materiality perspective that is conducive to holding companies accountable on labour rights. We were encouraged by elements of UBS's stewardship framework, such as the importance it places on breaches of the UN Global Compact, its policy on collaborating with other investors, its consideration of portfolio companies' human rights due diligence processes and its reference to collective bargaining.

However, the analysis demonstrates that there are gaps between UBS's public policies and its stewardship practice in terms of upholding fundamental labour rights in its portfolios. The report outlines key steps and case studies where the asset manager can improve its approach to engagement and proxy voting based on global trade union priorities.

Report Highlights

UBS's recent engagement practices and proxy voting show increasing alignment with human rights-based frameworks relative to the prior analysis carried out in 2019.
UBS could make significant improvements in its proxy voting practice by supporting employee representation on corporate boards
UBS could clarify how it applies its escalation strategies when labour rights violations go unaddressed by management within a reasonable timeframe or when the company has refused to participate in remediation.
There is no explicit mention of the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises (MNEs) in UBS stewardship documents

The report is current up to September 2021.

Click below to download the report on UBS in English or in French.

Other CWC asset manager reports available:
BlackRock
SSGA
Macquarie

ubs_invest_stewardship_report_09-21-eng-v5.pdf

Spotlight on Macquarie: Opportunities to Embed Labour Rights in Investment Stewardship Practices

Hugues Letourneau — 2021-07-06T22:08:42Z

With a USD 146 billion portfolio invested in infrastructure and real estate around the world, Macquarie is the world's largest infrastructure asset manager. It has an employment footprint of more 130,000 across its portfolio.

This report, which focuses on Macquarie's real asset portfolio, analyzes how the manager's Net Zero 2040 commitment for its investment portfolio will affect workers in power and petrochemical assets around the world. It calls for Macquarie to adopt a set of just transition principles. The report also reviews the asset managers' overall stewardship framework and identifies a lack of cohesion in the firm's global engagement and proxy voting activities.

The report was developed with the input of unions from around the world. This report was developed with the input of unions from around the world. Please note that the significant role that Macquarie plays in the privatization of public infrastructure is of concern to unions and communities around the world was beyond the scope of this report, which focuses on investment stewardship.

Report highlights:

Despite its relatively larger portfolio of securities (equities, fixed income), Macquarie generates the majority of its investor client fees through its infrastructure and real assets.
Macquarie has not accompanied its net zero 2040 pledge with a commitment to ensure a transition that is just and fair for workers impacted by the climate transition in its assets.
Macquarie's growing exposure to Australian commercial real estate represents an opportunity for the firm to join the Cleaning Accountability Framework, a union-backed, worker driven social responsibility initiative.
Three Macquarie assets are under watch by trade unions in the UK, Spain and the USA for the implementation of a policy in which the firm commits to respect freedom of association and collective bargaining.
Unlike BlackRock and SSGA, Macquarie outsources part of its proxy voting and does not disclose voting guidelines for all Macquarie branded and managed funds; this is problematic to hold companies accountable when adverse labour rights impacts occur.

The report is current up to June 2021.

Click below to download the report on Macquarie.

Other CWC asset manager reports available:
BlackRock
SSGA

cwc-macquarie_stewardship_report_07-21-eng.pdf

Comparison Table: SSGA and BlackRock

Hugues Letourneau — 2021-04-29T17:14:40Z

Click below to download a PDF of the comparison table on State Street Global Advisors (SSGA) and BlackRock's incorporation of fundamental labour rights in their stewardship frameworks.

blackrock_ssga_comparison-v3.pdf

Full report on BlackRock available here.

Full report on SSGA available here.

Spotlight on State Street Global Advisors: The Role of Fundamental Labour Rights in Investment Stewardship

Shalini Ramgoolam — 2021-04-22T21:20:02Z

This report, part of the CWC Asset Manager Report Series, evaluates the strength of SSGAs stewardship framework, the impact of its stewardship practices on workers' rights and its degree of alignment with the ILO Fundamental Principles and Rights at Work and rights-based frameworks such as the UN Guiding Principles for Business and Human Rights (UNGP) and the OECD Guidelines for MNEs.

Furthermore, the report compares and contrasts the policy commitments of SSGA and BlackRock with regards to investment stewardship policies on fundamental labour rights (appendix 1).

Report highlights:

SSGA's public statements and stewardship documents commit to raising the bar on social issues related to COVID-19 and racial justice, but its ESG stewardship framework is based on a narrow analysis of the financial materiality of sustainability issues;
The lack of reference to fundamental labour rights in SSGA's engagement and proxy guidelines limits the effectiveness of its stewardship framework in holding companies accountable on workers' rights issues;
SSGA has scaled up its engagements with companies on "human capital management" issues but it is unclear whether these press companies to uphold workers' rights and labour standards as defined in international frameworks;
SSGA voted against every CWC-supported proxy voting recommendation with one exception;
In its public policy submissions, SSGA advocates for the development of sustainability reporting standards aligned with financial materiality, thereby discounting a "double materiality" approach that calls on companies to disclose their environmental and social impacts on key stakeholders, including workers.

This report is current up to April 2021.

Click here to access the comparison table between BlackRock and SSGA

Click below to download the report on SSGA.

Also available: CWC Report on BlackRock

ssga-cwc_asset_manager_report-2021-04-22.pdf

Spotlight on BlackRock: The Role of Fundamental Labour Rights in Investment Stewardship

Hugues Letourneau — 2020-10-01T15:34:31Z

This report, part of the CWC Asset Manager Report Series, evaluates the strength of BlackRock's stewardship framework, the impact of its stewardship practices on workers' rights and its degree of alignment with the ILO Fundamental Principles and Rights at Work and rights-based frameworks such as the UN Guiding Principles for Business and Human Rights (UNGP) and the OECD Guidelines for MNEs. This report is current up to 23 September 2020.

Report highlights:

BlackRock is the largest holder of ownership stakes of 5 percent or above in US listed firms and the top investor in Germany's DAX
It voted against every CWC-supported voting recommendation highlighted in the report in the first half of 2020
It scored very poorly on the 2020 NABTU Responsible Contractor Policy Scorecard on real estate and infrastructure
While it publicly supports the shift away from shareholder primacy, its response to recent policy consultations in the UK and Germany ran counter to trade union recommendations
It should support remediation as an element of effective due diligence under the OECD Guidelines and create an investment portfolio focused grievance mechanism

Click here to access the comparison table between BlackRock and SSGA

blackrock_cwc_report-09-2020-final.pdf

Amazon In-Depth: Work, Rights and Risks at Amazon.com, Inc.

Tamara Herman — 2020-07-07T19:18:31Z

Amid Amazon.com Inc.'s (“Amazon”) rapid growth, worrying patterns with respect to employee health and safety, infringement of international labour standards, and aversion to collective bargaining have emerged. This investor report provides an overview of Amazon and describes workforce risks in its operations.

Workforce risks documented in Amazon In-Depth include:

Health and safety: Facing demanding productivity quotas in warehouses, studies in various jurisdictions document that workers suffer from higher-than-average injury rates.

Workers' rights to freedom of association and collective bargaining: With strikes and work stoppages at logistics centres across Europe and North America, Amazon has faced pressure to recognize workers' rights to freedom of association and collective bargaining. In some cases, workers allege that they were fired for attempting to improve their working conditions.

COVID-19: Amazon's response to COVID-19 has further illuminated precarious working conditions, as well as health and safety issues, in the company's warehouse and delivery chain.

Workers' collective voice is essential to improving Amazon's workforce management and mitigating the human rights risks that may negatively impact the company's reputation.

This report provides a path for investors to address these risks by encouraging improvements in Amazon's workforce management practices. Specifically, we suggest that investors should request from Amazon a commitment to strengthen its performance and reduce its human rights risks by:

GOVERNANCE: Elevating workforce management oversight to the board of directors, appointing directors with specific human resource management and human rights due diligence skills and experience, and publicly disclosing the board's workforce oversight policies and activities.

RISK MANAGEMENT: Improving its existing labour and human rights policies (the “Amazon Global Human Rights Principles”) to manage risk more effectively by:

Specifying the business relationships – such as customers, suppliers, employees – to whom the company's commitments apply, as well as how the company will embed its policy commitments and strengthen accountability;

Committing to implement among its direct employees and those in its value chain the full range of labour rights specified in the Core Conventions of the International Labour Organization (ILO), including the right to collective bargaining;

Working with investors and independent human rights experts to detail the processes it will use to identify, assess, prevent, mitigate, and, where appropriate, address adverse human and labour rights impacts, in accordance with the OECD Guidelines for Multinational Enterprises and other relevant standards.

Fulfilling its pledge to lead in workforce management by committing to upholding international human and labour rights standards, even where national law – including in the United States, where its largest workforce is located – does not meet those standards.

Read Amazon In-Depth by clicking here

cwc_amazon_in_depth_investor_brief-06-20-eng_final.pdf

Photo: Shutterstock | Frederic Legrand - COMEO

Pension Fund Cost Transparency: A How-to Guide for Unions

Hugues Letourneau — 2018-10-01T19:22:00Z

This report seeks to empower trade unions and pension trustees around the world to seek better transparency on the fees paid when the retirement savings of workers are invested.

Click here to read the report