Social Factor round-up
Mercedes, Amazon, social care and defence stocks
Keep an eye on those auto manufacturers. Webinar coming up this week on the situation at Mercedes, details below:
Expert Briefing: Potential Impacts of the German Supply Chain Act Complaint Against Mercedes-Benz
Thursday, May 2nd, 11:00am ET / 17:00 CEST
Please join us to hear about the recent charge against Mercedes-Benz filed by the United Auto Workers Union (UAW) under the German Supply Chain Due Diligence Act over labor rights violations in the U.S. This event will feature workers who have experienced Mercedes’ anti-union practices, and Dr. Miriam Saage-Maaß, an expert on the new law who will explain how the UAW’s complaint may affect Mercedes-Benz’s operations and its shareholders. Participants will also hear from an investor about their expectations of Mercedes as their workers continue their effort to exercise their labor rights.
Earlier this year the German Supply Chain Due Diligence Act (also known as LkSG), which requires German headquartered companies to identify and prevent human rights violations in their supply chains, went into effect. This law could have a major impact on the operations of the over 4,500 German companies that employ over 700,000 workers in the United States. Companies found to be in breach of the Act could be exposed to lawsuits, fines of up to 2% of their global annual turnover, and other penalties.
In April, thousands of Volkswagen workers at a plant in Chattanooga, Tennessee voted to join the UAW. Mercedes-Benz workers in Vance, Alabama will have an opportunity to do the same in mid-May. Since petitioning for a union election, workers at the Vance, Alabama factory have faced anti-union interference from management and other alleged violations of their right to freedom of association. In early April, the UAW filed a complaint under the Supply Chain Due Diligence Act in response to this anti-union activity by Mercedes-Benz.
Speakers will include:
· Dr. Miriam Saage-Maaß, Legal Director of the European Center for Constitutional and Human Rights (ECCHR)
· Worker from the Mercedes-Benz assembly plant in Vance, Alabama
· Investor
A potentially big development at Amazon, where the GMB has initiated legal action against the company over the nature of its opposition to unionisation. A few points in the GMB statement are particularly noteworthy:
Company bosses have erected QR codes in Amazon fulfilment centres which generate an email to the union’s membership department requesting that membership is cancelled.
Forced workers to attend hour long anti-union seminars. Led by senior company managers, these briefings forced workers to listen to anti-union messages on work time.
Displayed anti-union messages throughout Amazon workplaces, including on billboards and screens.
I have not heard of something like the QR code being done by an employer in the UK before. Anti-union seminars (better know as captive audience meetings) and anti-union billboards and screens are things you see in the US, but not the UK.
Here is Amazon’s statement to the Retail Gazette:
Amazon has denied the claims and said the information meetings are “entirely voluntary” to help employees make an informed decision. It added that it had provided QR codes for the workers who said they wish to cancel their union membership.
A spokesperson told Retail Gazette: “We agree that everyone has the right to choose to join a union, and that everyone also has the right to leave a union if they choose.
“Our employees told us how difficult it was to cancel their union membership so we provided information to help, through signs that always state that it’s an employee’s personal choice.
“Additionally, it is made clear to employees that attendance at meetings is entirely their choice too. We have received no notification of legal action and do not believe there is any merit in such a case.”
So the company does not deny that some of the controversial activities have taken place, though it portrays them differently. This does suggest that US-style ‘union avoidance’ tactics are being imported into the UK. It will be interesting to see what investors think about this.
There’s a good article by Dame Sara Thornton, Consultant on Modern Slavery at CCLA IM and former Independent Anti-Slavery Commissioner, on ESG Investor about exploitation in the care sector and what to do about. Here’s a snippet:
Investors need to think laterally about their influence. Some care providers are funded through private equity – have investors in turn funded that private equity? Some care homes are owned by real estate investment trusts – these may well make up part of an alternatives portfolio. And do investors hold equity in labour agencies which provide staff?
Interesting to see this joint statement between HM Treasury and the Investment Association. This is the entire text:
Investing in defence companies contributes to our national security, defends the civil liberties we all enjoy, while delivering long-term returns for pensions funds and retail investors.
That is why the UK’s world leading investment management industry supports our defence sector, with the Investment Association’s members having invested £35 billion in UK defence companies.
Investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed.
Leaving aside for now the rights and wrongs of the argument itself, rather, I’m interested in who the statement is aimed at. There has been chatter for a couple of years at least about defence companies believing they are being undervalued due to the influence of ‘ESG’.
It feels to me that the statement is primarily designed to enable asset managers to point to it to justify the inclusion of defence stocks in ESG/sustainability products. If so that suggests that ultimately it is aimed at asset managers’ clients and their advisers. Perhaps a secondary consideration is pointing in the other direction - a message to companies involved in defence that ESG isn’t a threat. I’m interested to hear if anyone thinks something else is going on here.
To state the obvious, the text itself is a nothing burger. It is extremely short and there is no attempt to evidence the claims made. I do not think that anyone working in Responsible Investment would think material of this type would be anywhere close to acceptable for supporting a decision/recommendation they wanted make. So it does not feel like it is written to convince. The HMT logo is doing the heavy lifting here.