18-09-2024 12:55

How we use our shareholder impact to promote labour rights

Nordea has extensively engaged for several years with many known consumer brands to improve labour rights at the companies. Recent examples are Tesla, Starbucks and Amazon.
Worker pulling hand truck

At Nordea, we believe that active ownership is a powerful way to protect shareholder value and enhance long-term returns. We want to drive positive change in the companies that our customers can invest in via our more than 200 investment funds.

In practice, this means that when relevant we try to influence a company by, for example, having direct dialogues with the companies, collaborating with other investors on strategic topics, filing shareholder proposals and making our voice heard through voting at annual general meetings.

One focus area of our responsible investment strategy is human rights. We have lately been very active on labour rights as a number of well-known international consumer brands are having issues with fundamental workers’ rights. 

Conflict with union

One of the companies we engage with on the issue of labour rights is Tesla. Tesla has for many years failed to respect union rights in the US. In the autumn of 2023 Tesla workers in Sweden went on strike because the company would not sign a collective agreement for its workers. In December 2023 Nordea and 15 other Nordic institutional investors wrote to Tesla’s board saying that we are “deeply concerned” about Tesla’s attitude to workers’ rights in Sweden and demanded that the car maker accept collective bargaining agreements for its staff”. This action received a lot of attention from international media, but not from Tesla.

As a next step, we decided to support a shareholder proposal on freedom of association at Tesla’s annual general meeting in June. To demonstrate Nordea’s support of the proposal ahead of the annual meeting, we pre-declared our voting intentions for the proposal on a public investor voting platform. Even though the proposal did not receive enough votes to pass, it is still an important step in our engagement with Tesla. Filing shareholder proposals can help bring attention to important ESG issues, explains Katarina Hammar, Head of Investment Stewardship: 

Katarina Hammar, Head of Investment Stewardship.

“Electric vehicles are important for the transition to a low-carbon economy – a transition that Nordea supports and wants to promote. But Tesla is a challenging company from a sustainability perspective, which is why we will continue the dialogue with the company.”

Katarina Hammar highlights that the Tesla case is a good example of how active ownership often works in practice. Engagement with companies often spans several years and covers several topics. 

Engagement with more than thousand companies

Another company we engage with on labour rights is Amazon, which has been publicly criticised for neglecting fundamental labour rights especially in the US. At Amazon’s latest annual general meeting Nordea and 20 other global investors filed a shareholder proposal requesting Amazon to commission a third-party assessment of the company's commitment to freedom of association and collective bargaining. The proposal got 31% of the votes and while Katarina Hammar had hoped for a different outcome, Nordea will keep on engaging with the company to drive the needed change: 

"Poor handling of issues concerning human rights and labour rights can mean operational risks, legal risks and reputational risks for the company. Last year we engaged with 1,179 companies on environmental, social and governance issues and we will continue to be active as we believe this is how we create most impact,” she says. 

Last year we engaged with 1,179 companies on environmental, social and governance issues and we will continue to be active as we believe this is how we create most impact.

Katarina Hammar points out that we also have had positive cases, such as Starbucks. As a result of a long-term engagement, and ahead of the company’s 2024 annual meeting, the board confirmed to us that it is committed to addressing the findings of an independent assessment report on how the company respects labour rights requested by investors and to reaching a long-term agreement with the union Workers United. In early 2024 Starbucks also released a public joint statement along with the unions to work towards collective labour agreements. 

Follow how we vote

On a yearly basis, we vote at around 4,000 AGMs. In Nordea’s Voting Portal you can see how we’re voting across regions, sectors and companies. Our votes are published within 24 hours so everyone can follow how we vote and act.

Read more about how we engage with Tesla in our blog on active management and in Nordea Funds Magazine

Visit Nordea Funds Magazine to learn more about how we work with responsible investing.

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