Committee on Workers' Capital

"Being an activist trustee can make a difference": Trustees push UBS to hold Marriott accountable on workers' rights in Baltimore

Tamara Herman — 2021-03-18T20:23:10Z

As part of the Asset Manager Accountability Initiative on Workers' Rights in Investment Stewardship, the CWC works with its global network to drive positive impacts to workers' rights on the ground. The Baltimore Marriott story demonstrates how engagement by asset owners with their asset managers is an important tool to improve fundamental labour rights in a context where the lines between ownership and responsibility for worker rights are often blurry.

By Dana Wise, Director of Corporate Engagement at UNITE HERE

During the worst surge of COVID-19, workers at Baltimore's Marriott Waterfront Hotel ratified a first union contract with the largest hotel operator in the world. What drove the victory was a two-year effort by an alliance of workers, the hotel workers' union, and investors persuading the hotel owner, UBS, to engage on what Marriott, the hotel operator, was doing inside the hotel.

This is the story of how the Baltimore hotel workers and their allies changed the behavior of the Swiss banking giant UBS, overcame Marriott's anti-union bias, and won basic job protections, a voice at work, and a chance to share in the success of the hotel when business returns to normal.

The Baltimore Waterfront Marriott is operated day-to-day by Marriott, but the hotel is owned by a group with the largest stake held by UBS through its Trumbull Property Fund.

UBS has a management agreement with Marriott to operate the hotel. We haven't seen that management agreement, but a typical hotel agreement involves the owner paying an operator such as Marriott to run the hotel and employ the workforce, with management and the owners splitting the profits. Management agreements often require the operator to consult with the owner on policy concerning management, general overall operating procedures, economics and other matters affecting the operation of the hotel.

In the summer of 2018, the Baltimore hotel employees asked Marriott and UBS to agree to a fair process to let them organize and bargain collectively. Marriott refused the request. UBS washed its hands, saying Marriott was wholly responsible. The labour dispute escalated.

UBS's response was surprising given the institution's marketing as a responsible investor, its glowing ESG reports, and its extensive business ties to pension plans. UBS had adopted a Responsible Contractor Policy (RCP), at the urging of building trades unions, but bizarrely argued that the responsible contractor policy did not apply to the Baltimore hotel since the employees were hired by a contractor. UBS officials wrote, “Since none of the employees impacted are employees of UBS Realty, but, instead are employees of property managers or other third parties, UBS Realty is not in a position to impose neutrality on those parties.”

Meanwhile, the labour dispute escalated. Marriott fired a union leader who was a ten-year hotel employee. UBS responded to investors' inquiries stating, “Marriott confirmed that this case was handled consistently with similar cases that have occurred over the years.” In a January 1, 2019 response to a union survey of labour policies and practices governing its real estate investments, UBS reported that neither it nor its operators had any labour disputes. It was as if UBS was pretending the Baltimore labour dispute didn't exist.

In 2019, in the face of an anti-union campaign, a majority of the hotel's food and beverage employees voted in favor of forming a union in a federally mandated election. Yet they still faced an uphill battle to get a first contract.

Investors stepped up their engagement, challenging UBS to live up to its policies by pointing out the gap between UBS's policy and what was happening in the hotel. The Global Unions Committee on Workers' Capital, the international network of worker-nominated pension trustees, set up a meeting between UBS pension fund clients from around the globe and the asset manager's ESG team at the 2019 PRI conference and asked why the Baltimore labor dispute wasn't in the UBS reports. As part of the Asset Manager Accountability Initiative on Workers' Rights in Investment Stewardship, the CWC works with its global network to drive positive impacts to workers' rights on the ground, in line with the ILO Fundamental Rights and Principles at Work.

The North American Building Trades gave UBS a failing grade on their RCP scorecard. A month later, Connecticut Treasurer Shawn Wooden, Maryland Treasurer Nancy Kopp, Maryland trustee, high school English teacher and union leader Doug Prouty, and NEBF's Monte Tarbox and other investors met with UBS's new President of Asset Management, Suni Harford, and Trumbull Fund officers in Hartford. During these face-to-face meetings, UBS's new leadership and new Trumbull Fund leaders promised to be more responsive to investors. But Marriott was dug in.

After several more months of painfully slow progress, as UBS was revising its assessment, Marriott added a final straw. With the hotel largely shut down during the pandemic and most of the workforce furloughed, Marriott proposed extending employer-paid health insurance benefits for hotel employees who were not bargaining collectively while ending it for employees who were. Marriott's anti-union overreach coupled with the investor scrutiny appeared to be a final straw for UBS.

UBS assured investors that Marriott's latest ploy was unacceptable. It is not known what else was said between UBS and Marriott, but within a matter of days, Marriott had backed down from its proposal and the hotel workers had a contract.

Credit goes to UBS officials for finally engaging and helping to bring the dispute to an end. Teamsters, Operating Engineers, county and state labour leaders and officials, Australian dock workers and health care workers, Dutch public sector labour leaders, and Finnish hotel labour leaders, largely convened by the Committee on Workers Capital, contributed to this effort.

Maryland teacher trustee Doug Prouty said, “This outcome shows that being an activist trustee can make a difference. I am very pleased about the resolution for the hotel and its employees, for the members and beneficiaries of our state retirement system, and for the people of Maryland.”

If you want to hear the inside scoop, ask one of these investors.

Photos courtesy of Unite Here Local 7/Dana Wise

Workers' Capital in Action: The Las Vegas Hard Rock Casino

Tamara Herman — 2019-03-21T22:28:47Z

For over 8 years, valet workers at the Hard Rock Casino and Hotel in Las Vegas had been fighting for union protection with the Teamsters. The struggle was marked by countless federal court hearings, National Labor Relations Board charges, letters, meetings and demonstrations. The Teamsters' Louis Malizia tells the story of how capital stewardship and labour movement solidarity were instrumental in the hard-won Teamsters contract that the workers achieved in 2018.

It was not until the hotel's owners, the Canadian investment firm Brookfield Asset Management, was set to secure $500 million in new investments with the New York City Retirement System that the hotel's bad management practices came back to haunt them.

With a Teamster representative on the public employees' retirement system board and other union trustees across the five funds of that system (including the NYC Teachers, Firefighters and Police), concerns about the management of the Hard Rock held up the vote for the $500 million allocation. You see, NYCRS had recently adopted a new responsible contractor policy for its real estate investments and the trustees were concerned about allocating $500 million of members' retirement assets to an investment firm whose management team violates workers' rights and the federal laws designed to protect them.

With $500 million on the line for Brookfield, Hard Rock's management quickly changed its tune, agreeing to a Teamster contract that provides $2/hour wage increases, participation in the Western Conference of Teamsters Pension Trust, and employer paid health care. Where workers had been paying between $400-$500/month for health insurance, they now pay zero for the life of the contract. And that's not all. Because of this engagement, the union also secured card-check neutrality for the whole property which now has new owners. Teamsters and other unions now represent hundreds of additional members at the Hard Rock Hotel who have the security of a strong union contract.

By Louis Malizia, Teamsters

For more information on this story, click here

Photo: Teamsters 986

Workers' rights take center stage in San Francisco: Reflections on the CWC Conference, PRI in Person and the Marriott Workers' Strike

Tamara Herman — 2018-10-18T18:03:45Z

Labour issues do not usually take centre-stage among ESG priorities at the annual PRI in Person conferences. That changed this year, when Marriott hotel worker Consuelo Escorcia addressed the attendees from the stage during the opening plenary, providing the often-abstract debates on whether workplace issues are an investment concern with a real-life case-in-point.

Consuelo is a worker at the Marriott Marquis – the hotel where the PRI in Person was held. While the PRI delegates discussed pressing issues related to responsible investment, Consuelo and 99% of her UniteHere Local 2 colleagues voted to strike.

Blocks away from the Marriott Marquis and the strike vote centre, the CWC and UniteHere convened a meeting with a local union representative and one of Host Hotels and Resorts' (“Host”) key investors in UniteHere Local 2's office. We had been working closely with UniteHere to engage Host investors since the spring, when urged our network to support a shareholder resolution for an annual sustainability report.

A publicly-listed REIT, Host owns a significant number of the properties that serve as Marriott-operated hotels. Indeed, according to its 2018 10-k report, Host generates approximately 70 percent of its revenue from Marriott-branded hotels. Host is the largest lodging REIT in the US. Fifty-seven percent of its expenses are in wages and benefits (see 10-k report, p.41).

It is common for REITs, such as Host, to claim they hold no responsibility for the terms of employment at the hotels that operate in the properties they own. Yet under the OECD Guidelines for MNEs, Host has a business relationship with Marriott International. Accordingly, it has a responsibility to use its leverage to influence Marriott to avoid causing or contributing to adverse human rights impacts. Similarly, under the OECD Guidelines, Host investors – including minority shareholders – also have responsibilities regarding human rights due diligence processes.

Initiated in collaboration with CWC Trustee Leadership Network Chair José Meijer (ABP) and PRI Board Member Xander den Uyl (ABP), the investor meeting in San Francisco served as an opportunity for the trustees and their fund's asset manager, APG, to discuss the issues at stake with those most impacted: workers themselves.

While engaging some investors on labour issues continues to be an uphill battle, others are willing to sit in a room lined with banners and picket signs to consider integrating worker and labour-related issues into their engagements with investee companies. At a time when workers in the hotel hosting the PRI in Person are organizing under the campaign slogan “one job should be enough”, the importance of this work cannot be understated.

For many CWC participants who attended the PRI in Person, one of the more memorable moments would be walking together to the site of the UniteHere Local 2 strike vote. On October 4, Marriott workers at seven hotels in San Francisco – including the Marquis - joined their colleagues in eight cities across the US. In total, it is estimated that 8,000 Marriott workers are now on strike. To learn more, please click here.

Organizing the workers of the Westin Long Beach Hotel in California: Support from the Network of Trustees for Responsible Investment (RAIR) and IRCANTEC in France

Tamara Herman — 2018-04-10T23:02:30Z

This hotel's story of social dialogue began in February 2015, when workers informed their managers that they wanted to launch an organizing campaign in their hotel to join UNITE HERE, a California union committed to defending the good practices in the hotel industry.

The 500-room luxury hotel in Los Angeles has about 200 employees. It is managed by AEW Capital Management, an American subsidiary of the French management company Natixis.

Over the course of 2015, facing strong opposition from hotel management and degrading working conditions, UNITE HERE and the hotel workers organized demonstrations twice a week in front of the hotel.

In March 2015, the National Labor Relations Board (NLRB) ruled that the employees' complaint was receivable and began an investigation. In August 2015, the workers filed a class action suit against the hotel on the grounds of wage-and-hour violations. Then, in September 2016, UNITE HERE filed a complaint against Natixis with the French National Contact Point, the government body responsible for implementing the OECD Guidelines for Multinational Enterprises.

Despite these actions, the employees and the union were confronted with the reality of modern capitalism. The Westin Hotel was not directly owned by Natixis. It was owned by the Utah Public Service Pensioners' Pension Fund, which had appointed AEW Capital Management to manage its investments. And AEW had delegated the day-to-day management of the hotel to Interstate Hotels & Resorts, which manages 400 hotels.

UNITE HERE faced silence and a lack of accountability on the part of each link in this investment chain. In Utah, pension fund managers made it clear that they could not intervene in the dispute, as they had delegated all decisions to AEW. And AEW did not want to engage with the union, arguing that it did not have a direct relationship with UNITE HERE. UNITE HERE then turned to Natixis, which argued that it was not involved in the conflict and did not understand then the controversy.

The RAIR –the French Network of Trustees for Responsible Investment – was alerted to the situation and contacted Ircantec, a French pension fund that uses Natixis as one of its investment managers.

With the support of the President of Ircantec, Jean-Pierre Costes, the RAIR convened Natixis's directors in the summer of 2017. Confidential exchanges led to a solution within 3 months: the management of the hotel was entrusted to a buyer that was willing to extend union recognition to workers.

Workers were able to organize and unionize and are currently negotiating, with their new management, a labour agreement.

By: Luc Prayssac, President, RAIR

Workers' Capital in Action

Hugues Letourneau — 2018-04-05T23:40:34Z

This section features examples where the responsible investment of workers' retirement savings helped improve or remedy violations of workers' fundamental rights.

These cases link board level decision making and leadership with impacts on the ground for workers who are affected by the decisions of companies held in pensions portfolios.

Pension fund trustees often take initiative to oversee the application or the improvement of responsible investment policies. The cases highlight asset owned-led engagements with companies and asset managers which ultimately led to the improvement of workers' fundamental rights.

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Alex Gomes — 2017-06-27T15:45:19Z

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