Workers’ Capital Unites in San Francisco: Summary of the Week of September 10th

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Workers' Capital Unites in San Francisco: Summary of the Week of September 10th

On September 10-11th, more than 115 worker-nominated pension fund trustees and trade union capital strategists from more than 12 countries came together at LiUNA local 261 union hall in San Francisco to improve accountability in the investment chain and to take stock of advances around the world.

The CWC also utilized the global convening to drive tangible action on asset manager accountability on workers’ rights and to elevate the profile of social issues - particularly workers’ rights - within the work of the UNPRI.

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The CWC Secretariat was on the ground in San Francisco the week of September 10th for a full week of events. In addition to organising the Workers’ Capital Conference – big thanks to LiUNA and the amicable team at the Local 261 Union Hall – we participated in the UC Berkeley conference on labour in the climate transition along with the PRI in Person. We stand in solidarity with the workers of the Marriott Marquis, where the PRi in Person conference was held, and all workers affiliated to Unite Here local 2 who voted overwhelmingly in favour of a strike on Thursday September 13th when the PRI in Person was underway.

This year’s gathering of the worker capital community was decidedly action-driven. The CWC worked with its partners to organise a meeting in San Francisco between Australian trustees and one of their fund managers which owns a sizeable stake in a company with questionable human capital management practices. The CWC will press ahead with its network of trustees to identify cases that warrant accountability from asset managers whose claims to integrate social issues in their investments do not always translate into practice.

The CWC leadership team also met with PRI CEO Fiona Reynolds and PRI board members to evaluate progress and next steps on collaborative work items – including raising the profile of just transition as an investor issue, empowering trustees on responsible investment and holding asset managers to account on social issues.

Workers’ Capital Conference: a summary of activities
The morning of Monday September 10th, we held an inaugural edition of the CWC trustee leadership workshop which was co-organised by SHARE and the Trustee Leadership Forum in the US. More than 30 trustees from countries such as Australia, South Africa, France, the Netherlands, Canada and the USA met in an intimate setting to discuss their experiences and the challenges they face in embedding workers’ rights in the investment policies and practices of their funds.

The CWC Conference opened on Monday afternoon. We heard moving testimonies from former Toys R US workers on the impact of the practices implemented by the private equity-backed toy store and linked this story all the way to the pension fund clients of the PE firm. A specialist on private equity fee structure also challenged the idea that, on a risk-adjusted basis, private equity returns are greater than those of public equities. This was followed by a spotlight on workers’ rights violations in an economic sector which is expanding across the globe to cater to e-commerce: shipping and logistics. The day wrapped up with a discussion on sustainability reporting frameworks, such as the Workforce Disclosure Initiative and SASB. An important argument was that effective disclosure on workers’ rights could have a similar impact to CEO pay disclosure, which has exposed excessive remuneration.

On Tuesday, the day kick started with a panel on infrastructure investments where speakers from a Canadian union and a union-owned infrastructure asset manager in the USA outlined practical tools and steps that trustees can take to fend off the privatization of public-sector jobs and uphold worker rights in infrastructure investments. The next panel touched on fees in the investment chain. A US trustee spoke about his experience in formulating an investment belief on the alignment on financial interests between the pension fund and its asset managers. Takeaways from this session included the following: a) what pension funds pay in fees to investment managers affects the pool of capital that is available to pension beneficiaries and hence, warrants stewardship by trustees and b) if pension funds and trustees find a way to work together and stand up to the fee structure that is presented to them – eg: by private equity managers – the industry would need to adapt to client expectations.

Our keynote, Lenore Palladino, Senior Economist and Policy Counsel at the Roosevelt Institute, spoke about stock buybacks and why they harm long-term investors and companies, including workers. She also spoke about the importance of having CWC participants call into question the role of the corporation in society and spoke about the growing challenge to shareholder primacy in the US, as evidenced by the recent introduction of a proposed federal bill called the Accountable Capitalism Act in the USA.

The final afternoon of the CWC Conference touched on asset manager accountability on social issues and the just transition to a low-carbon economy. The asset manager accountability panel featured three stories which highlighted how effective connections between union organisers, capital stewards, pension trustees and asset managers resulted in a) asset manager responsiveness to asset owners (workers’ capital) and b) positive changes for workers on the ground. The CWC Conference rounded up with examples from unions, trustees and responsible investment practitioners on how the “S” and the “E” need to be bridged accelerate the transition to a low-carbon economy across – but also within – companies.

In her final remarks, Sharan Burrow, the General Secretary of the ITUC spoke about how her top priority, building workers’ power, aligns with the work of the CWC. The ITUC has worked with the UNPRI on a Just transition framework, which was launched in San Francisco. The objective is to gather the commitments of 300 funds with $30 trillion of assets under management ahead of the next COP meeting in Poland in December 2018. Sharan Burrow also raised concern with the monopoly power of the world’s largest asset managers – the world’s top 5 asset managers, Blackrock, Vanguard, State Street, Fidelity and BNY Mellon manage more than $17 trillion - which own stakes in virtually all publicly-listed companies across the globe.