One of the hottest investment strategies right now is what’s known as environmental, social, and governance (ESG) investing. Although most of the focus has been on the “e” in ESG (pushing companies on their climate change initiatives) or the “g” (seeking more diversity in the boardroom), the potential for investors to play a role in improving social factors, such as employee rights and working conditions, is growing. Alice Martin, who advises shareholders on labor rights issues at PIRC, Europe’s largest independent corporate governance advisory firm, is a leading thinker on how workers can enlist shareholders to their cause and amplify traditional worker organizing efforts. “Traditional models of strike action are having less impact [in some companies]. They’re much more difficult to enact when membership is low or when workplaces are not particularly well organized,” Martin says. “Shareholder activism becomes another tool that can be used to get a seat around the table and negotiate with an employer about terms and conditions. The times that it works best is when there is also good action on the ground as well.” In that context, workers are making shareholders aware of such issues as low wages, poor working conditions, or safety risks, a point that became particularly acute during the global COVID-19 crisis.
Martin has been a researcher in the world of labor markets and worker rights policy for much of her professional career. During her work with unions in her London home base, she recognized that there was an opportunity to explore a new set of tools for workers to win rights from their employers. This work also influenced the 2020 book she coauthored, Unions Renewed: Building Power in an Age of Finance, that argues for unions as a tool to fight financialized capitalism. “Trade union membership has been in decline across the world for a number of years now, particularly in the U.S. and in the U.K.,” Martin says. “In response to this, unions have been looking for new ways that they can assert their rights in the workplace and to actually hold employers to account.” Shareholder activism is another way.
“There are no quick wins,” Martin warns. “This is all about building campaigns, building your leverage over the long term, and chipping away at corporate practices in a way that, hopefully, eventually, you’ll see some huge changes.” She cites several different ways in which workers can start to engage in adding shareholder activism to their toolkit. For one, a union often manages its members’ pension funds and that money is invested in both public and private markets. The Committee on Workers’ Capital, an international labor union network, has a shareholder activism workers group focused on helping workers use their shareholder power to hold those companies they’re invested in to account. Given that shareholders are still the primary constituency that company management seeks to serve (despite the growing attention and conversation around stakeholder capitalism, which puts additional emphasis on employees and the communities in which companies operate), being an owner is a starting place for developing additional leverage.
Although shareholder proposals may not always be successful, they can amplify problems within a company and raise awareness both among investors and consumers to workplace issues that could have an impact on a company and its stock price. “Trade unions can play a role in actually influencing what resolutions are filed in those meetings,” Martin says, “so the shareholders have to vote on something, which might relate specifically to labor rights, for example. The way that you would get that resolution filed would be through forming relationships with sympathetic shareholders.”
While the pandemic and remote work have created some challenges for workplace organizing, the fact that virtual meetings became commonplace actually made it easier to connect workers and shareholders. “We’ve helped facilitate this in some cases,” she says, “because there has been so much oversight on health and safety issues in some companies and we’ve seen lots of COVID risks and fatalities, for example, in food processing and meat processing.” Shareholders who may be overseas can now join a virtual meeting with workers on the ground to hear directly about what’s going on. Martin also cites a shareholder letter signed by investors of more than 100 institutions and representing more than $2 trillion in assets, sent to global meat processors, including Tyson and JBS [two of the largest], making several workplace-safety-related demands. “That was a labor-movement-led initiative,” Martin notes, “because it was the trade unions who were telling shareholders about the risks in the company.”
As Martin cautions, though, this approach is not guaranteed to work and should be thought of as part of a long effort to swing things in the direction of workers. Consider that investors holding about $20 billion in Amazon shares sent the company’s management a letter early on during the voting period for the effort to unionize Amazon’s workforce at its Bessemer, Alabama, facility, encouraging it not to interfere with the process. By all accounts, Amazon did not heed that unsolicited advice, and its anti-union tactics succeeded in defeating the union drive at present.
That said, Martin believes Amazon could well prove to be a focal point in the future of worker-fueled shareholder activism. “We might be moving to a phase now where we start to see divestment from certain groups of shareholders in companies like Amazon, in the same way that you saw that in the environmental movement,” she says. “Over the next months and years, I think we’ll probably see an increased amount of divestment from companies like Amazon. It’s become obvious that they’re not going to move on issues through the normal routes.”
Ultimately, “this kind of activism has to be part of a wider agenda to improve democracy within companies,” Martin says. That needs to be a key aim in targeting shareholders: “It’s not just to win one-off concessions. It’s actually to establish a greater say for the workforce.”