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 Baseline Expectations - Asset Manager Analysis

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

2022-06-29_cwc_baseline_expectations-am_analysis.xlsx

Global Trade Unions Release Baseline Expectations for Asset Managers on Fundamental Labour Rights

Shalini Ramgoolam — 2022-07-12T13:30:00Z

The Global Unions' Committee on Workers' Capital (CWC) has released its Baseline Expectations for Asset Managers on Fundamental Labour Rights (“CWC Baseline Expectations”). Developed by trade unions and pension fund board members as part of the Asset Manager Accountability Initiative, the CWC Baseline Expectations will help asset owners hold the asset managers they contract accountable on fundamental labour rights.

Global asset managers invest capital on behalf of workers' retirement savings funds. Pension fund trustees who sit on the boards of these funds and participate in the CWC network expect that their managers will uphold their responsibilities to mitigate adverse labour rights impacts in their investments. Likewise, other types of asset owner vehicles, including foundations and religious investors, also have growing expectations of their managers.

“Global asset managers can hold sizeable stakes in public and private market investments where fundamental labour rights, such as the right to freedom of association and collective bargaining, are violated” said Paddy Crumlin, President of the International Transport Workers' Federation (ITF) and vice-president of the CWC. “Asset owners can now use the Baseline Expectations to drive actions by asset managers to use their influence and ultimately drive impact on the ground for workers whose rights are violated”.

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

Stewardship framework;
Stewardship practices in public equities (proxy voting and shareholder engagement);
Stewardship practices in private markets; and
Policy advocacy

The framework is anchored in the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises which lay out investor responsibilities to carry out due diligence and prevent or mitigate adverse environmental and social impacts.

“Marketing around ESG investment has put the onus on asset owners to differentiate the asset managers that walk the talk from those that don't on human and labour rights stewardship” said Christoffer Jönsson, CEO of Folksam LO Pension and chair of the CWC. “Amid the crosshairs, I will use this tool to ask questions of our external asset managers with the aim of encouraging a race to the top.”

The CWC 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, UNI Global Union, the International Transport Workers' Federation and the Trade Union Advisory Committee to the OECD (TUAC).

Click here to access the document

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

CWC Blog: Bringing workers' rights to the epicenter of change at SSGA

Tamara Herman — 2022-03-27T23:04:35Z

Equipped with a high-level commitment to the “S” in “ESG” and new set of stronger policies on social issues, State Street Global Advisors is now better positioned to hold companies to account on fundamental labour rights.

“The “S” is probably the epicenter of where the greatest change has happened over the last several years.” This is what State Street Global Advisors' (SSGA) CEO Cyrus Taraporevala told Just Capital in an interview in March 2022.

The “S” in “ESG” - or fundamental labour rights specifically- has been the focus of a multi-year engagement convened by the Global Unions' Committee on Workers' Capital (CWC) between SSGA and board members at pension funds that are clients of the world's third largest manager. Although the road ahead is long, trustees participating in a follow-up engagement with SSGA in late March will see signs that the asset manager is moving in the right direction.

When the CWC first looked at SSGA's ESG stewardship policy framework in 2019, there was no mention of workers' human rights or labour standards. SSGA disclosed very little about its approach labour-related issues, providing no examples of company engagements in the area and voting in line with only two out of eleven CWC proxy vote recommendations.

A group of Australian trustees joined the CWC in meeting with SSGA to highlight these concerns, raising workers' rights issues in portfolio companies such as Woolworth's and XPO Logistics in the meeting.

Fast forward to June 2021. The COVID-19 pandemic and racial justice uprisings had resulted in more scrutiny of how large asset managers account for social factors in their stewardship practices. The CWC released an analysis of SSGA's revised ESG stewardship policies and practices. It then convened a meeting with over 20 trustees from around the world.

At the meeting, trustees reiterated their request that SSGA reference and incorporate fundamental labour rights in its ESG stewardship framework. They also pressed the manager to engage with specific companies - including Amazon, Chartwell Retirement Residences, Marathon Petroleum Corporation, McDonalds and XPO Logistics - on fundamental labour rights.

SSGA's Q2 2021 stewardship report indicates that the asset manager indeed followed up on requests to engage with many of the companies raised by trustees in the CWC meeting, including Amazon, Marathon Petroleum Corporation, McDonalds, and XPO Logistics.

In early 2022, SSGA published its first Guidance on Human Rights Disclosures & Practices. In this guidance, the manager articulates an expectation for its portfolio companies to identify and manage human rights risks in their operations, as defined in the Universal Declaration of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work and in alignment with the UN Guiding Principles on Business and Human Rights. The SSGA Guidance also asks companies to describe which “mechanisms exist for workers to raise grievances without fear of retaliation.” This is in alignment with the recommendations brought forward by the CWC.

This policy establishes a clearer commitment from which client asset owners can hold SSGA to account. It sets a path for the next step in the upcoming CWC engagement with SSGA: fostering a stronger understanding of the importance of fundamental labour rights in its approach to human rights and human capital management.

Workers' “voice” and trade union rights

SSGA's new suite of documents on social issues includes several related pieces: Guidance on Human Capital Management Disclosures & Practices, which sets human capital management expectations for companies; Human Capital Management Insights, which contains narrative reports of engagements on workforce issues according to key themes; and Human Rights Insights: Addressing Modern Slavery in Supply Chains, which reports on its engagement campaign. A theme shared between these three documents is the role that employee voice plays in due diligence and decent workplace practices.

Human Rights Insights: Addressing Modern Slavery in Supply Chains, for instance, defines employees as “the first line of defense in identifying signs of modern slavery” and emphasizes that “companies should establish mechanisms to enable employees to share concerns about modern slavery with management without fear of retaliation.” The manager's Guidance on Human Capital Management Disclosures & Practices tells companies that it expects disclosures on “Voice: How concerns and ideas from employees are solicited (and if appropriate, acted upon), and how the workforce is engaged in the organization.” The Guidance on Human Rights Disclosures & Practices suggests that a best practice is company disclosures on “which mechanisms exist for workers to raise grievances without fear of retaliation.”

In its upcoming engagement, the CWC will ask SSGA to acknowledge the relationship between trade unions and “employee voice.” The CWC Secretariat sees an important distinction between a worker's voice and workers' collective voice. Added pressure on companies to provide human capital management disclosures has contributed to a proliferation of reporting on company-built mechanisms for workers to express concerns and priorities (e.g., Amazon report). Tools such as employee surveys or company-established structures do not replace collective bargaining processes where workers can exercise control in determining their wages and working conditions. Furthermore, in jurisdictions where laws are inadequate, trade unions provide workers with more protections from retaliation when they raise grievances.

The upcoming SSGA engagement is coming at a time when workers' rights to form a union and bargain collectively are under attack across the world. SSGA is charged with the stewardship of the retirement savings of countless workers and has reiterated its commitment to upholding human rights, including fundamental labour rights. This year, we are looking for more information on how SSGA engages (and escalates engagements) when a company violates workers' rights to freedom of association and collective bargaining. We look forward to convening asset owner board members across the world with SSGA to continue this important and fruitful work.

Photo: Flickr/Anthony Quintano

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