Investors Use Leverage to “Uphold” Labour Rights at Apple

Agreement reached by Apple and its shareholders on workers’ right to organise “sets a standard” for remedy of workforce-related disputes.  

A recent agreement with tech giant Apple demonstrates how investors are using their leverage to ensure firms “maintain and uphold” their human rights and workforce policies, said Bettina Reinboth, Director of Human Rights and Social Issues at the Principles for Responsible Investment (PRI).  

“Investors are now looking beyond broad-brush statements to actual policy implementation and are doing so by collaborating to send a stronger signal to company boards,” she said.  

Nadira Narine, Senior Programme Director at the Interfaith Centre on Corporate Responsibility (ICCR), who hopes that the agreement will “set a standard” for companies to follow and a precedent for similar engagements with other company boards.  

Her sentiment is shared by Jonas Kron, Chief Advocacy Officer at Trillium Asset Management, with the tech giant viewed as a “trendsetter” in the tech industry and seen as the “gold standard” by many businesses leaders. 

“I think [the agreement] will be an important template for how other companies can respond.”  

The agreement reached following engagement – including the filing of a resolution – by New York City pension funds and a coalition of investors including SOC Investment Group, Parnassus Investments, Trillium Asset Management and the Greater Manchester Pension Fund (advised by PIRC an independent corporate governance and shareholder advisory firm) will see Apple independently assess its compliance with its existing commitments to freedom of association and collective bargaining rights, according to a filing with the US Securities and Exchange Commission (SEC).  

“Companies tell investors: ‘We have a policy on freedom of association, we have a policy on collective bargaining, and we follow the International Labour Organisation (ILO) conventions’ – yet controversies still pop up,” said ICCR’s Narine.  

“Here’s a clear opportunity for [Apple] to investigate why those controversies keep coming up to an independent third-party audit.”   

The audit is being carried out amid a myriad of complaints by regulators and employees that Apple has repeatedly violated workers’ labour rights to stop them from unionising.  

Apple has denied the accusations.  

“Salient” labour issues emerge 

The agreement is a part of a wider trend, according to Tom Powdrill, Head of Stewardship at PIRC, who expects similar shareholder resolutions on freedom of association on the ballot at other US tech companies in 2023, demonstrating the level of investor interest in this and other workforce-related issues.  

“The investor group we are part of that reached this agreement with Apple has already communicated to the company our expectations of the review,” he said.  

“We have particularly emphasised the need to address the issue of ‘non-interference’ when employees unionise, the need to appoint a credible third-party to undertake the assessment (which would preclude any firms which provide ‘union avoidance’ services) and for the review to consult with workers and worker organisers.” 

Collective bargaining and freedom of association have emerged as “salient labour issues” across a variety of sectors in the US – namely food, retail and tech, said PRI’s Reinboth, noting the engagement with Apple paves the way for further investor action across these industries.  

Union rights are a key focus of PRI’s new ‘Advance’ engagement initiative targeting social issues and human rights, with more than 220 investors collectively, representing US$30 trillion in assets under management, involved. 

Transparency and disclosure 

From a regulatory perspective, the case highlights the need for greater policy efforts around transparency and disclosure, said Reinboth.  

“Already, we see that the SEC is preparing to release its Human Capital Management Rulemaking, which will seek to mandate greater levels of disclosure from companies on social factors,” she said. 

“Ultimately, this provides investors with greater information to be able to prioritise human rights-linked engagements.” 

While Powdrill admits that that US labour laws are “very weak” compared to Europe, the country does have the necessary ILO conventions and, as such, “there is no need for companies to reinvent the wheel”.  

“The crunch question is how policies that claim to uphold these rights are applied,” he said.  

In practice, when operating in a market like the US where labour protections are weak, and there is a “mini industry” advising companies on how to undermine union organising, the best orientation is for a company to adopt is neutrality, added PIRC’s Powdrill. 

“If investors want to support decent work they must challenge portfolio companies that are actively seeking to dissuade employees from exercising fundamental workplace rights.” 

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