Starbucks shots

A few bits of news this week

There’s a lot happening at Starbucks in the run-up to the AGM, so just pulling together useful links for those interested in the topic.

The AGM

There have been lots of articles about the campaign to put some labour expertise on the board, which will play out at the AGM in March. The FT Long Read is worth checking out as it goes into quite a lot of detail.

The SOC has issued its preliminary proxy which anyone who has a vote on this one needs to read. You can also find out more at https://www.brewabetterstarbucks.com

The Starbucks review

Starbucks released the review of its adherence to its own policy commitments on freedom of association and collective bargaining in December. That review was carried out in response to the shareholder resolution that went to last year’s AGM and passed, which sought such a review.

Now the group of investors that filed the resolution has issued its own analysis of the review that was undertaken. Full disclosure: I was part of the filing group and have been involved in the drafting of the analysis of the review. Therefore I won’t add any further comment. However, you can read the ‘review of the review’ here. And there is a good write-up on Bloomberg here.

Union avoidance

The use of union avoidance consultants is one of my favourite topics. Notably the assessor undertaking the Starbucks review did not consult with Littler Mendelson - the firm used by Starbucks, and probably the most well known in the US. The review nonetheless concluded that - despite employing a notorious union avoidance consultant that the assessor did not interview - the company did not have an anti-union playbook.

Under the US system there are some requirements to disclose information relating to the use of union avoidance consultants. The SEIU has made a complaint to the Department of Labor that Starbucks has failed to do so. There is a good Bloomberg piece on it here and the full complaint is here.

What employers must report on is both pretty clear and defined in a way that I think investors who are interested in social topics should be alert to. Here’s a key excerpt:

(3) any agreement or arrangement with a labor relations consultant or other independent contractor or organization pursuant to which such person undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing, or undertakes to supply such employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding; or

(4) any payment (including reimbursed expenses) pursuant to an agreement or arrangement described in subdivision (3).

This is the point I have raised a number of times in investor meetings. If the objective of employing a consultant is to persuade employees “not to exercise… the right to organize and bargain collectively” how is this at all consistent with a stated commitment to fundamental rights at work? I don’t think it’s defensible and my sense is people haven’t looked at it very closely yet and/or it is tolerated as just part of how the US system works.

European investors could play a really valuable role here. Employing a consultant to dissuade employees from exercising rights at work would not be tolerated in the countries where many investors are based. I also wonder how investors would view a company employing a consultant to dissuade shareholders from exercising, say, their right to vote or submit resolutions.