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Workers’ Capital News - May 20

In this issue:

  • Governance and Disclosure

    UK government council discusses gender diversity on boards / EFAMA outlines new corporate governance and RI guidelines / CalPERS and CalSTRS commit to ESG; join sustainable economy roundtable

  • Shareholder Activism

    FairPensions petitions for living wage from FTSE companies / Investors engage with companies on forced labour and modern-day slavery

  • Pensions and Investments

    UK: Public sector workers vote on strike over pension reforms

Governance and Disclosure

UK government council discusses gender diversity on boards

Spurred by a key recommendation of a government commissioned report regarding women’s presence in boardrooms, the UK Financial Reporting Council (FRC) has launched a consultation on diversity in the boardroom. The February 2011 report, titled “Women on Boards”, pans the lack of progress in the area of boardroom diversity. The consultation will seek opinions on whether it should be made mandatory that listed companies create gender diversity policies and submit annual reports regarding the implementation of said policies.

The commissioned report recommended that FTSE companies should aim for at least 25% in female representation on the board by 2015, as compared to the current 12.5% in female representation on FTSE boards in 2010. The concept of introducing quotas for women on boards is also currently being debated in the European Union as another option to promote boardroom diversity.

Both boardrooms and shareholders benefit from a female presence and perspective, as such representation brings diverse perspectives to the decision-making process of a company. The presence of women ont he board of directors offers several competitive advantages, such as a better return on equity, better performance during financial crises, and more.

 

EFAMA outlines new corporate governance and RI guidelines

According to Global Pensions, the European Fund and Asset Management Association (EFAMA) released their new guidelines on responsible investment (RI) and corporate governance. As the first European-wide code on corporate governance for asset managers, the document provides recommendations on company engagement and risk management approaches. It also encourages regulatory initiatives on RI and transparency from institutional investors on their RI practices.

Although EFAMA does not possess the ability to actually enforce the code, they suggest that EFAMA member nations use and promote the framework document as a “minimum European standard for asset managers”.

 

CalPERS and CalSTRS commit to ESG; join sustainable economy roundtable

According to the organization’s website, CalPERS has announced its intention to implement key environmental, social, and governance (ESG) commitments in its operations. The four recommendations, developed by CalPERS in collaboration with Ceres during an ESG commitment development workshop, include:

  • Uniformly integrating ESG issues into investment decision-making across all five CalPERS asset classes,
  • Producing the first annual RI report to the CalPERS board on a total fund approach to ESG integration,
  • Integrating the “Ceres Roadmap for Sustainability” into CalPERS corporate governance engagement with publicly traded companies, and
  •  Working with CalSTRS and more than 20 other Investor Network on Climate Change (INCR) signatories to engage with the CEOs and boards of Russell 1000 companies (the largest 1000 US securities) on addressing sustainability challenges and environmental issues, such as supply chains.

Furthermore, it was also announced that an Investor-Business Roundtable for a Sustainable Economy will be formed. The roundtable will be made up of CalPERS, CalSTRS, AFL-CIO, Al Gore’s Generation Investment Management, the Skoll Foundation, alongside real estate, clothing, and software industry giants. The roundtable currently consists of the 9 founding signatories, but will engage more organizations in the future. The original roundtable participants have pledged to use their position as “industry leaders and key market influencers” to promote responsible and sustainable investment in their sectors of work.

 

Shareholder Activism

UK ‘s FairPensions petitions for living wage from FTSE companies

FairPensions, in conjunction with major unions, institutional investors, and other invested organizations, is spearheading a major investor sign-on letter campaign calling on the chief executives of the FTSE companies (the top 100 listed UK corporations) to pay a living wage to their employees.

In addition to writing letters to the CEO’s of the FTSE companies, FairPensions and supporters of the issue have also been working to engage board members directly on the issues of living wage and low pay at the AGMs of several corporations, including Shell, the Royal Bank of Scotland, Barclays, and more.

The JustPay! campaign holds particular importance in light of Britain’s current massive public service cuts, which further complicates the already existing struggle low-paid workers face in order to meet basic needs such as housing and food. Those on the lowest wages are forced to work multiple jobs just to meet the costs of living, negatively affecting their health and well-being. The campaign also serves to voice the concern that workers and investors have regarding the significant wage disparity between the executives and the lowest paid employees of many listed UK companies.

The instatement of a living wage, which is based on real living costs for essential goods and services, would allow for workers to support their families without having to endanger their own health just to meet basic needs.

For more information on living wage and the JustPay! campaign, please visit FairPension’s JustPay! campaign webpage, or contact FairPensions’ Campaign Office, Juliette Daigre. If any international union pension funds are interested in becoming involved with the JustPay! campaign, please contact FairPensions’ Louise Rouse for information on investor engagement opportunities.

 

Investors engage with companies on forced labour and modern-day slavery

According to the organization’s website, a coalition of institutional investors affiliated with the Interfaith Centre on Corporate Responsibility (ICCR) sent a statement to 25 companies calling on the corporations to prioritize the elimination of forced labour in the form of human trafficking in their supply chains.

Pointing to recent legislation enacted in California (the Transparency in Supply Chain Act) as well as the Conflict Minerals Special Disclosure Provision of the Dodd-Frank Act, the coalition’s statement pushes for increased supply chain disclosure.

The statement was sent to industry giants in apparel, agriculture, food/beverage, travel/tourism, technology, and retail sectors. It recommends both individual company action to monitor and ensure consistency with international human rights standards, as well as cooperation within the industry and with NGOs that already have ongoing initiatives to combat forced labour.

The signatories to the statement cited social justice, risk assessment and management, and long-term returns as the primary reasons for pursuing the corporations on human trafficking.

 

Pensions and Investments

Public sector workers vote on strike over pension reforms

According to The Guardian, civil service unions have voted to ballot for strikes in protest of potential pension reforms. The unions voting on strike action, which include the Public and Commercial Services Union (PCS), the University and Colleges Union, and two other teaching unions, total approximately 500,000 public servants.

The strikes are being called in light of government talks on the implementation of a new pension scheme, which would delay retirement for some public employees and make obsolete the most general final salary schemes. PCS, which represents 250,000 civil servants, called the implementation of these reforms an attack on the public sector, civil services providers, and their pensions.

The strikes will be carried out unless an agreement can be struck between the UK government and the Trades Union Congress (TUC), currently in the negotiation process. The first day of a potential mass walk-out is being tentatively scheduled for June 30.

UK ministers are expected to come to a decision on a formal offer on pensions this summer.

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