Committee on Workers' Capital

Shared Prosperity: The Investor Case for Freedom of Association and Collective Bargaining

Tamara Herman — 2022-11-29T15:59:00Z

This brief explains why respect for the fundamental labour rights of collective bargaining and freedom of association is important to investors.

For information on the PRI in Person Side event, click here.

When workers come together in a trade union, they can effect meaningful changes in their compensation and working conditions, bringing valuable benefits to themselves and their companies and contributing to broader societal goals of economic growth, income and wealth equality, equity and inclusion. As these benefits and contributions are of interest to investors, this brief outlines how they can meet their responsibilities to protect workers' fundamental labour rights.

Read the full report here

cwc_foa_cb_report.pdf

Read the Executive Summary here

cwc_foa_cb_report_executive_summary.pdf

CWC 2022 Amazon proxy brief

Tamara Herman — 2022-04-26T20:13:44Z

The CWC invites investors to vote for workers at Amazon.com Inc's 2022 Annual General Meeting.

This investor brief lists shareholder resolutions and proxy vote recommendations that the CWC encourages investors to support at the 2022 Amazon.com Inc AGM.

cwc_amazon_2022_agm_brief.pdf

CWC Statement for Investors on the Union Election at Amazon's Facility in Bessemer, Alabama

Hugues Letourneau — 2021-04-15T10:00:00Z

On April 15th, 2021, the Global Unions' Committee on Workers' Capital issued a statement that describes how Amazon's anti-union campaign at its Bessemer, Alabama facility interfered with its workers' internationally recognized rights to freedom of association.

The statement lays out the steps that investors can take to engage with Amazon on the gap between its policies and recent practices in Bessemer, Alabama.

Read the CWC Statement by clicking below.

Other CWC resources on Amazon (including the CWC investor brief on Amazon) are available here.

cwc_amazon_statement-2021-04-16.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

Investor Brief: Grupo México

Tamara Herman — 2020-06-29T23:25:20Z

This investor brief summarizes environmental, social, and governance risks at Grupo México, the third largest copper mining company in the world. Grupo México's wholly-owned subsidiary ASARCO operates copper mines, a smelter, a refinery and processing plants in the United States.

Approximately 1,700 workers in Arizona and Texas walked off the job in October 2019 to protest the company's unfair labor practices after management demanded significant increases to healthcare costs and refused to raise wages, which would remain stagnant for 14 years under the company's contract proposal. The strike has gained investor attention and crippled the company's Hayden smelter and Amarillo refinery operations.

Read our investor brief on ESG risks at Grupo México here.

Investor Brief: Amazon.com, Inc. and the COVID-19 Pandemic

Tamara Herman — 2020-04-27T03:46:25Z

Amazon's explosive growth has accelerated as a result of COVID-19 public health restrictions, creating new stress on the company's operations. The company faces challenges in keeping its workforce, its customers, and the communities it serves safe - challenges that are amplified under increased public and investor scrutiny. How Amazon responds to the public health crisis will have a lasting impact on Amazon's corporate reputation and its relationship with its workforce.

This investor brief summarizes workforce risks at Amazon in Europe and the United States. It includes a set of policies and practices, developed in consultation with occupational and public health experts, that assist companies in protecting their workers, customers and the communities they serve. These policies and practices are widely applicable and available as a separate document here.

To read the Amazon investor brief, click here.

To read Workforce Best Practices for COVID-19, click here

Please note that the documents were revised on May 4, 2020.

Image: “Amazon – official opening,” Scottish Government (Photographer Chris Watt), Photo taken on November 14, 2011. Licensed under a Creative Commons Attribution-NonCommercial 2.0 Generic (CC BY-NC 2.0). Retrieved from https://www.flickr.com/photos/scottishgovernment/6352123585/.

Workforce Best Practices for COVID-19

Tamara Herman — 2020-04-26T04:32:00Z

The COVID-19 pandemic has created an urgent need for companies to adopt best practices to protect their workers, their customers and the communities they serve.
We encourage companies to adopt a set of recommended policies and practices that were developed in consultation with occupational and public health experts.
Click here to read the document.
(Note: This is a revised version of the previous document. Published Monday, May 4, 2020)
Photo: (...)

- Investor Briefs / Shareholder Activism Working Group, Company Engagement, Worker Rights and Labour Standards, News , Briefs, Implementation Guides

Investor Brief on the Digitalisation of the Economy: Why it matters for long-term investors and what to look for

Tamara Herman — 2019-06-21T17:50:59Z

Digital transformation is changing the world of work, raising profound challenges in areas such as labour protection, employment transitions, training, and tax policies. The transformation has implications for investors, from the portfolio to systemic levels.

Produced by the Trade Union Advisory Committee to the OECD (TUAC) in conjunction with the CWC, this brief describes how digitalisation is transforming the world of work overall and the challenges that workers are now facing. It looks specifically at highly digitalised companies, such as online platforms, the challenges they raise in terms of fair competition, corporate governance and tax. It outlines issues that long-term investors look for and how they may respond to the digital transformation.

Read the full brief here:

2019-tuac-cwc_brief-06-21.pdf

Caspar Camille Rubin

Trustee Brief: Uber Technologies Inc. (NYSE:UBER)

Tamara Herman — 2019-05-07T20:50:48Z

This brief summarizes some key considerations and risks associated with a potential investment in Uber. It includes steps trustees can take and questions you can bring forward to your boards, consultants, managers and staff.

Please note that this brief was published on May 7, 2019.

PDF version of the CWC Trustee Brief on Uber is available here.

Your fund may be considering an investment in Uber Technologies, Inc. (“Uber”), which has filed its Initial Public Offering prospectus and is expected to list its shares on the New York Stock Exchange in May 2019. With its IPO roadshow in full swing, Uber is approaching institutional investors, possibly including your pension fund and/or its managers. As a fiduciary, you may have some questions about whether investing in Uber is in the best interests of the members of your fund.

Uber's business model has profound implications for workers – both in and beyond the sectors it impacts directly. Uber's IPO is set to be the third largest in US tech IPO history after Facebook and Alibaba. Its flotation and subsequent stock performance will determine whether Uber's modus operandi of relying on a vast workforce of independent contractors towards whom it has no responsibilities with regards to wage and hour laws, employee benefits and social security contributions is a successful business model.

This brief summarizes some key considerations and risks associated with a potential investment in Uber. At the end of the brief you will find steps you can take and questions you can bring forward to your boards, consultants, managers and staff. Please note that this brief is for informational purposes only, and is not intended to provide and should not be relied on for investment, legal, tax or accounting advice. Trustees should consult their own advisors and investment professionals to evaluate the merits and risks of any investment.

Can Uber be profitable while upholding fundamental principles and rights of workers?

Official filings show that Uber has and will continue to struggle to be a profitable firm. It recorded a gain of USD 997 million in 2018, the first net gain since the company began reporting figures in 2014. The net gain figure is due, in large part, to the sale of Uber's businesses in Russia and Southeast Asia, as well as a gain on the value of its 2018 investment in its former Chinese competitor DiDi, to which Uber sold its business in exchange for a minority stake. These are non-recurring gains.

The company uses “Adjusted EBITDA” as a key measure to evaluate its operating performance. According to this measure, the company has not made a quarterly gain since this figure was first reported in Q1 2015. Its adjusted EBIDTA was a USD 1.85 billion loss in 2018, USD 2.64 billion loss in 2017 and USD 2.51 billion loss in 2016.

It is unclear whether Uber can make profits with its core rideshare business, through which it generates 81% of its revenue. Uber's main revenue driver is the fee that it generates on passenger fares. The fee model means that Uber requires increasing scale to generate revenue growth, which it can achieve by attracting more drivers. Drivers are considered contractors by the company and can switch between rideshare platforms. A number of lawsuits and regulatory pressure that the company faces around the world present challenges for this business model.

These headwinds will continue to fundamentally challenge Uber's ability to generate enough revenue on rideshare services to a) provide adequate compensation to drivers, b) maintain customers satisfied with low fares and c) deliver value to shareholders.

What risks should investors consider?

1. Legal risks

Uber has faced a large number of lawsuits related to various aspects of its operations. The onset of new court cases means that Uber may need to set aside significant and variable reserves every year into the medium term. The company increased legal, tax and regulatory reserves and settlements by USD 598 million 2017 before decreasing it by USD 325 million in 2018.

The company cites costs associated with lawsuits as a risk in its prospectus. Recent examples include:

Misrepresentation: In 2017, Uber paid a USD 20 million settlement to the US Federal Trade Commission for driver redress to settle an investigation into whether the company exaggerated possible earnable income and misrepresented the terms of its vehicle financing options.

Misclassification: At least 12 lawsuits alleging Uber misclassified drivers as independent contractors have been filed in jurisdictions across the world. In some of these cases, Uber has prevailed in having the lawsuits dismissed.

2. Regulatory risks

Misclassification and driver status
Misclassification suits and other legal challenges related to Uber's use of independent contractors as drivers have resulted in case law and rulingswith broader consequences for employment standards. Present and future regulatory risks posing fundamental challenges to the company's business model include:

California: Legislation to both codify and expand a state Supreme Court ruling establishing a stricter test on worker classification as employees is now moving through the California legislature, with significant potential implications for Uber drivers in California.

UK: In Uber's biggest market in Europe, a UK employment tribunal ruled that Uber drivers are considered workers and entitled to benefits such as holiday pay and minimum wage. Uber has appealed the decision to the UK Supreme Court.

EU: The Court of Justice of the European Union (ECJ) classified Uber's UberPOP product as a transport service rather than a digital platform in 2017, removing protections against national regulation that its classification as a digital service would have offered.

Regulations banning certain ridesharing products or imposing extensive operational restrictions have been adopted in key markets, including Argentina, Germany, Italy, Japan, South Korea, and Spain. New York City imposed a rate structure for for-hire drivers and limited the expansion of new vehicle licenses for car services in 2018.

Tax avoidance

Beyond misclassification, Uber faces risks related to tax avoidance. The OECD is developing a framework to address tax issues raised by the digital economy and is seeking consensus by the end of 2020 on new international tax rules for digital multinationals. Furthermore, Uber faces investigations into its compliance with tax rules and may become subject to sales tax rates in certain jurisdictions.

3. Reputational risks

Uber faces reputational risks generated by media coverage of the following issues:

Driver dissatisfaction: Uber drivers have protested in Australia, India, Kenya, the UK and the US. Uber's prospectus asserts that it expects driver dissatisfaction to increase as it aims to move towards profitability by reducing financial incentives to drivers. Its ability to increase fares while still retaining customers and moving towards profitability in a competitive market is questionable.

Community impacts: Taxi drivers in various jurisdictions have organized against Uber, generating reputational risks that have, in some cases, triggered regulatory restrictions. Argentina, Germany, Italy, Japan, South Korea, and Spain are among the jurisdictions where laws and regulations on ridesharing have been adopted. A series of driver suicides were attributed to the spread of Uber in New York City, contributing to pressure on the city to limit the expansion of ridesharing.

Alleged sexual harassment: A former Uber employee wrote a blog post detailing allegations of sexual harassment and gender discrimination in 2017. This and other negative publicity led to platform users deleting Uber's app. Its prospectus acknowledged that this contributed to the hiring of a new Chief Executive Officer, Dara Khosrowshahi, to replace Travis Kalanick in 2017.

Trustee Guidance: What can trustees do about Uber??

Trustees should ask their fund staff how an investment in Uber is in the interests of pension plan members – in the short and long term. If you are concerned about Uber, consider taking the following steps:

Ask for due diligence before investing in Uber: Ask your consultants, managers and/or fund staff to carry out some due diligence on the issues in this letter and report back to the board if an investment in Uber is being considered.

Initiate a board discussion on digitalized companies and business models: Ask your consultants, board colleagues and/or staff to work with you to set up an agenda item at a future board meeting where the implications of emerging digital business models on workers' rights and pension fund members would be discussed, with a variety of presenters sharing information. If your fund has an investment belief statement or an ESG policy, you might propose discussing investments in digital businesses in this context.

Request an engagement with Uber: If your fund has invested in Uber, ask your manager or staff to engage Uber on the issues outlined in this brief and report back.

Please note that this brief is for informational purposes only, and is not intended to provide, and should not be relied on for investment, legal, tax or accounting advice. Trustees should consult their own advisors and investment professionals to evaluate the merits and risks of any investment.

For more information, please contact the CWC Secretariat.

Victor Xok

Investor Brief & Engagement Request: BHP

Tamara Herman — 2019-02-15T22:51:46Z

In January 2019 BHP announced the withdrawal of its two remaining locally-crewed ships that supply iron ore for BlueScope Steel's production site in Port Kembla, Australia. The carriers will be replaced by Flag of Convenience (FOC) ships. The crews on FOC ships receive wages as low as $2 per hour, as documented in a 2016 Parliament of Australia report.

BHP has failed to respect the human rights of both Australian and international seafarers in its bulk commodity supply chains by:

i. Failing to consulting the current workforce and their labour unions on the employment impacts of its decision;

ii. Inadequately engaging with the International Transport Workers Federation (ITF) and national seafarer unions on appropriate labour standards relating to crewing, training and safety for seafarers on FOC ships it charters.

This recent decision to withdraw two ships could generate reputational and financial risk, compromising the company's long-term value.

To learn more please read the CWC BHP Investor Brief and the MUA BHP Investor Alert (February 2019).

Dylan McLeod