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100 investors ratchet up pressure on companies to come clean on workforce risks

by LLB Reporter
5th Jul 18 8:07 am

Here’s what you need to know

A coalition of more than 100 institutional investors managing over $12 trillion of assets is putting its muscle behind a demand that companies disclose more information on how they manage their global workforce. 

The investor group features institutions in 11 countries including Schroders, UBS, Amundi, HSBC Asset Management, Axa Investment Managers, Legal and General IM, Nordea, Rockefeller & Co, and AustralianSuper. Coordinated by ShareAction’s Workforce Disclosure Initiative (WDI), the investor signatories are backing a survey sent to 500 global companies from 11 sectors, asking for improved data on issues such as diversity, workers’ rights, and health and safety in supply chains.

The request for information covers both developed and developing economies where companies have operations and supply chains. After a successful pilot year, the WDI is scaling up and approaching 500 companies headquartered in 30 countries, including Canada, India, Japan and the US. Companies include Apple, Alibaba, BAE, Tesla, and Louis Vuitton and are selected based on their market capitalisation, significance within their sector, and size of their workforce. They have received an invitation letter from the WDI coalition and a deadline for response of 22 October 2018. 

Companies that participated in the first year of the Workforce Disclosure Initiative included Anglo American, Compass Group, GSK, International Consolidated Airlines Group (owner of British Airways), Microsoft, Sainsbury’s, and Saint Gobain. Disclosing companies employ nearly 3.5 million people, with millions more working in their supply chains. Investors will pay close attention to working with companies which encounter barriers to disclosure.

The WDI was launched in response to investor concerns that the quality of data from companies about workforce management is both weak and inconsistent between comparable firms. The data generated will allow investors to understand and engage with companies in support of smart management of ‘human capital’, as well as about their exposure to the risks of poor workforce practices.  

The WDI’s ultimate goal is to improve the quality of jobs in the operations and supply chains of multinational companies, which would contribute towards poverty alleviation and the delivery of Sustainable Development Goal 8 – ‘decent work for all’. 

Matt Christensen, Global Head of Responsible Investment, AXA IM, says: “As a long-term investor looking to provide our clients with a tailored offering while creating positive impact on society, we very much welcome the WDI initiative to better integrate the S in our investment case. As companies have been reinforcing their disclosures on environmental topics over recent years, we wish to see a similar effort with social factors. Companies should disclose data that is material, consistent and comparable enough to truly understand their approach to workforce management in their annual reports.” 

Liza McDonald, Head of Responsible Investment, First State Super, says: “We believe integrating ESG issues into our investment process will lead to favourable long-term outcomes for our members. By collaborating with other investors through the WDI we want to encourage companies, both in Australia and further afield, to improve their reporting on workforce and supply chain related topics”. 

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