Investors, regulators, Congress are focusing on companies ’attitudes toward employees

Activist shareholders are pushing for companies to improve working conditions in retail and other industries as investors and lawmakers seek a deeper understanding of the attitude of corporations to what many consider their most valuable asset: employees.

Investors this year worked to force companies to address occupational safety and health issues, improve benefits for employees and reveal their dependence on independent contractors and other part-time employees.

This push comes at a time when the Securities and Exchange Commission is considering the adoption of rules on the disclosure of information on human capital management. The agency in 2020 began asking companies to list such resources in their 10-K disclosure form, although companies could choose metrics and exclude others such as workplace safety measures and financial benefits.

SEC Chair Gary Hensler and Commissioners Alison Heren Lee and Caroline A. Crenshaw support improved disclosure of human capital management. The agency has a potential rule on the agenda, but it is one of more than 50 items on deck.

Activist and Democrat shareholders say the disclosure rule will give investors much-needed material information about companies and make corporations more responsible for managing employees. In recent months, some companies have raised wages and additional benefits to attract employees amid a strengthening economy and low unemployment. Others, including Amazon.com Inc. and Starbucks Corp., are aggressively fighting attempts by employees to unite.

“We definitely support the expansion of information on relevant human capital management indicators to help us understand the composition of the workforce, the costs associated with labor turnover, and such information to help investors really understand,” said Mary Beth Gallagher, director of human resources. Interaction Domini Impact Investments. LLC, a female-led investment consultant.

“Increased expectations about disclosure so that companies consistently and diligently report information about the workforce would be really valuable,” she said in an interview.

Amazon Audit

Domini is advocating with three co-workers at Amazon for an independent audit of how performance quotas and surveillance practices affect high levels of injury and turnover among its warehouse workers. The resolution highlights growing concerns about what is happening in online store warehouses, especially after a December tornado struck an Amazon warehouse in Edwardsville, Illinois, killing six people.

“Across the country and around the world, there is a lot of analysis of what Amazon’s workplace is and how it can create a better, safer and healthier environment for its employees,” Gallagher said. “As shareholders, we believe that an independent third-party audit, in consultation with all stakeholders, is necessary to understand how these practices, in particular performance quotas and monitoring, contribute to increased injury rates.”

Amazon has asked the SEC’s finance department to block the offer. In a letter dated January 24, the firm stated that the shareholder’s proposal relates to the company’s usual business practices and does not focus on a significant public policy issue.

As the SEC’s precedent has set, “reference to aspects of the topic that may include significant social policy issues but that do not define the scope of action in the proposal and do not limit the main focus of the proposal does not transform a normal business proposal into one that goes beyond ordinary business, ”the company’s request reads.

Amazon did not respond to a request for comment.

“The net amount of investigations and controls the company faces, in our view, raises this issue from what is related to the company’s day-to-day operations to a key topic in public discourse and public policy landscape,” Gallagher said.

Kroger, Meta

In addition to Amazon, ESG investors are pushing dozens of retail companies and restaurant chains to create permanent paid sick leave for all employees.

The Interfaith Center for Corporate Responsibility last month announced that it is managing a coordinated effort with 150 institutional investors to submit shareholder offerings to CVS Health Corp., Kroger Co., Target Corp. and The TJX Companies Inc. to adopt a paid sick leave policy for both part-time and full-time employees. The organization also sent to four networks and 37 other companies, such as The Cheesecake Factory Inc. and Petco Health and Wellness Company Inc., a letter urging companies to actively create a paid sick leave policy for their employees.

“More than 26 million people working in the private sector do not have access to earned time of incapacity for work or” paid sick leave “(PSL) for short-term medical and preventive needs,” the resolution said. “Working people in the United States are faced with the impossible choice when they are sick: staying home and risking their economic stability or going to work and risking their health and the health of the population.”

Although companies have gained additional benefits, including testing for COVID-19 and other health measures during the pandemic, ICCR and other investors, representing assets of $ 3.6 trillion, are concerned that these the initiatives are only temporary.

“As the COVID-19 pandemic has shown, PSL is an important factor in health care, allowing workers who have been exposed to any disease to be quarantined,” the resolution said.

Both CVS and Target have since submitted requests to the SEC to allow them to prevent the proposals from being among the items to be voted on at their future annual meetings.

Lawmakers are joining investors in their efforts to better report on human capital before the potential SEC regulatory process. Last week, Democratic Senators Mark Warner of Virginia and Sherrod Brown of Ohio called on the SEC to require U.S. state-owned companies to report to the agency on the number of full-time employees, including independent contractors, as part of human capital disclosures.

“Material labor”

Brown, who chairs the Senate Banking Committee, and Warner, who introduced legislation in May requiring companies to report on certain labor force performance indicators, said in a letter to Gensler that corporations should note if they use subcontractors such as security. , cleaner. and guardians, catering workers and housekeepers as part of their “material labor force”.

These data, as well as indicators on health and safety, training, turnover and pay, will help inform asset managers and shareholders about how the companies they invest in relate to their entire workforce, the senators ’letter said. Investor decision-making would be “completely incomplete” without this essential information about contractors and other employees.

“In recent decades, companies have replaced domestic operations with contracts, on-demand work or other forms of independent and contract work that reduce short-term costs for business but come at the expense of employees who receive fewer benefits, lower wages and less upward mobility.” said Warner and Brown.

“This is one of the defining tensions that arose when companies preferred short-term profits through investment in their workforce and long-term productivity. As you know, these decisions significantly affect the financial performance of the business, “- they added.

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