£6.1tn investor coalition targets global working conditions

A coalition of 79 institutional investors with over £6 trillion of assets under management is supporting a drive to improve employment practices across global workforces.

The group, brought together by pension investment pressure group ShareAction, is made up of institutions from 10 countries, and includes Schroders, Amundi, HSBC Asset Management, Axa Investment Managers, Legal & General IM, Nordea, APG, Natixis, AustralianSuper, RPMI Railpen, Nest, and South Yorkshire Pensions Authority.

The group are founding signatories of the Workforce Disclosure Initiative (WDI), a project devised and coordinated by ShareAction and funded by the UK’s Department for International Development (DfID).

They are backing a survey sent today to 75 mega cap companies listed on 8 international stock exchanges.

The investors involved want deeper insight into companies’ workforce policies and practices, and to see how firms compare with peers in the same sector in managing workforce risks and opportunities. WDI process is designed to tackle survey fatigue and multiplication of effort by companies and investors through a single survey for public companies.

Companies being surveyed in the pilot year include 50 of the largest FTSE listed firms plus an additional 25 traded on 7 other exchanges. The request is for information covering both developed and developing economies where companies have operations and supply chains. The number of firms will grow rapidly in future years following evaluation of the process in the pilot year. Firms are being asked about their governance of workforce issues, global workforce composition and stability, training and development of people, and worker engagement.

Oxfam is preparing on-the-ground case studies highlighting practice in several developing countries where the surveyed companies have operations and suppliers.

ShareAction says the quality of disclosures from companies about workforce management is weak and inconsistent between comparable firms. The data generated aims to enable investors to 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 lack of comparable data disclosed by companies is cited as a major barrier to such investor engagement at present, says ShareAction.

The pressure group says the initiative adds to progress made through pieces of legislation such as the 2015 UK Modern Slavery Act and the 2014 EU Non-Financial Reporting Directive, both of which have also mandated companies to disclose more. The WDI is believed to be the first investor-led process for companies to report on workforce issues across their direct operations and supply chains.

ShareAction chief executive Catherine Howarth says: “We’re delighted that major investors want to work together to secure the data they need to properly understand this critical aspect of company performance and corporate impact. The Workforce Disclosure Initiative will enable investors and companies to make measurable progress on Sustainable Development Goal 8 which targets decent work for all.”

LGIM corporate governance manager Jeannette Andrews says: “As a large and long-term investor, information on a company’s culture and employee engagement is important to understand the sustainability of business practices and long-term prospects. The WDI provides this disclosure on a consistent and comparable basis, and is therefore an extremely useful format for LGIM to integrate into its assessment of company performance.”

AustralianSuper governance manager, investments Kelly Christodoulou says: “We believe integrating workforce issues into our investment process will improve long-term value and returns for members. In order to fulfil our role as an active owner in relation to these issues, we need to be able to measure how companies manage their workforces. With its strong, collaborative call for better reporting from companies, the WDI is an important step in the right direction.”

Amundi head of SRI expertise Thierry Bogaty says: “To perform well over the long-term, companies must take advantage of opportunities to enhance their human capital. The WDI is designed to equip investors with all important data with which to compare companies and encourage a race to the top on workforce issues.”