This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/2016/sep/24/sports-direct-surrender-just-the-start-says-tuc
The article has changed 4 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Sports Direct’s surrender is just the start, says TUC | |
| (35 minutes later) | |
| When Sports Direct caved in to pressure last week and accepted an external review of how it treats its workers, it was a sweet victory for Janet Williamson. | When Sports Direct caved in to pressure last week and accepted an external review of how it treats its workers, it was a sweet victory for Janet Williamson. |
| Williamson is head of corporate governance at the TUC and oversees Trade Union Share Owners (Tuso), a handful of union pension funds that got together three years ago to vote for change at companies’ annual general meetings. | Williamson is head of corporate governance at the TUC and oversees Trade Union Share Owners (Tuso), a handful of union pension funds that got together three years ago to vote for change at companies’ annual general meetings. |
| It was Tuso’s resolution, at Sports Direct’s AGM on 7 September, that called for an independent review of its treatment of workers and corporate governance, and it was backed by a majority of independent shareholders – so excluding owner Mike Ashley. | It was Tuso’s resolution, at Sports Direct’s AGM on 7 September, that called for an independent review of its treatment of workers and corporate governance, and it was backed by a majority of independent shareholders – so excluding owner Mike Ashley. |
| Ashley had tried to head off unrest by commissioning his own review and a further report by a law firm close to him but to no avail. Though the vote was not binding, shareholders made an independent review a condition for letting chairman Keith Hellawell remain and on Tuesday Ashley caved in. | Ashley had tried to head off unrest by commissioning his own review and a further report by a law firm close to him but to no avail. Though the vote was not binding, shareholders made an independent review a condition for letting chairman Keith Hellawell remain and on Tuesday Ashley caved in. |
| To get the resolution through, Williamson forged an unlikely alliance – with City fund managers. Now she wants to build on this success to give unions a lasting influence on how big shareholders treat companies that exploit workers. | To get the resolution through, Williamson forged an unlikely alliance – with City fund managers. Now she wants to build on this success to give unions a lasting influence on how big shareholders treat companies that exploit workers. |
| The Guardian’s revelations about conditions at Sports Direct’s warehouse last year had drawn attention to poor treatment of workers at the company, and shareholders, already unhappy about how Sports Direct was run, were incensed. | The Guardian’s revelations about conditions at Sports Direct’s warehouse last year had drawn attention to poor treatment of workers at the company, and shareholders, already unhappy about how Sports Direct was run, were incensed. |
| The Unite union had long campaigned against Sports Direct and Tuso held a seminar for investors a year ago on insecure work that used Sports Direct as a case study. After Tuso wrote to leading shareholders asking them to vote against Hellawell at the September 2015 AGM, opposition to the chairman increased. | The Unite union had long campaigned against Sports Direct and Tuso held a seminar for investors a year ago on insecure work that used Sports Direct as a case study. After Tuso wrote to leading shareholders asking them to vote against Hellawell at the September 2015 AGM, opposition to the chairman increased. |
| Williamson says: “Sports Direct was clearly a company that was on the horizons of investors so we felt there was an opportunity to join forces with them in raising the issues we wanted to raise.” | Williamson says: “Sports Direct was clearly a company that was on the horizons of investors so we felt there was an opportunity to join forces with them in raising the issues we wanted to raise.” |
| The resolution calling for an independent review of working practices and governance was filed in March, after Williamson scraped together enough shares to get over the minimum threshold. But to have an impact it needed support from City fund managers – not the most likely of allies for the unions. | The resolution calling for an independent review of working practices and governance was filed in March, after Williamson scraped together enough shares to get over the minimum threshold. But to have an impact it needed support from City fund managers – not the most likely of allies for the unions. |
| The alliance was cemented in July, when Tuso met about 30 investors at the TUC’s office in London. Unite presented evidence about Sports Direct and fund managers asked questions. Everyone invited turned up, Williamson says. | The alliance was cemented in July, when Tuso met about 30 investors at the TUC’s office in London. Unite presented evidence about Sports Direct and fund managers asked questions. Everyone invited turned up, Williamson says. |
| Paul Lee, head of corporate governance at Aberdeen Asset Management, one of Britain’s biggest fund managers, says: “The information they shared and put in front of shareholders had a noticeable effect on people’s views on the company and I think it hardened investors’ line on what was needed.” | Paul Lee, head of corporate governance at Aberdeen Asset Management, one of Britain’s biggest fund managers, says: “The information they shared and put in front of shareholders had a noticeable effect on people’s views on the company and I think it hardened investors’ line on what was needed.” |
| At the AGM on 7 September the resolution passed – the biggest-ever vote in favour of a resolution on employment matters at a UK AGM: 57% failed to support the board’s call for shareholders to vote against the resolution. | At the AGM on 7 September the resolution passed – the biggest-ever vote in favour of a resolution on employment matters at a UK AGM: 57% failed to support the board’s call for shareholders to vote against the resolution. |
| In her speech at the TUC conference a few days after the AGM, Frances O’Grady, TUC general secretary, said Sports Direct was a warning to others with a “big brand but a dirty little secret … we are coming for you”. She promised to win over shareholders, use the courts and persuade customers to get fair treatment for all workers. | In her speech at the TUC conference a few days after the AGM, Frances O’Grady, TUC general secretary, said Sports Direct was a warning to others with a “big brand but a dirty little secret … we are coming for you”. She promised to win over shareholders, use the courts and persuade customers to get fair treatment for all workers. |
| Williamson says low pay, zero-hours contracts and other employment issues have now shot up the agenda for politicians, shareholders and consumers. | Williamson says low pay, zero-hours contracts and other employment issues have now shot up the agenda for politicians, shareholders and consumers. |
| “We hope this resolution will show to companies that if they don’t act responsibly on employment practices they may be the target of a similar campaign; and we hope we have shown to investors the benefits of engaging with us over employment issues.” | “We hope this resolution will show to companies that if they don’t act responsibly on employment practices they may be the target of a similar campaign; and we hope we have shown to investors the benefits of engaging with us over employment issues.” |
| Now she is picking new targets, which could include retailers, where low pay and poor working conditions are common, and airlines with pilots on zero-hours contracts. Companies that are not publicly quoted, such as “gig economy” businesses and care home operators backed by private equity firms, could also be targeted through their investors, she says. | Now she is picking new targets, which could include retailers, where low pay and poor working conditions are common, and airlines with pilots on zero-hours contracts. Companies that are not publicly quoted, such as “gig economy” businesses and care home operators backed by private equity firms, could also be targeted through their investors, she says. |
| It remains to be seen whether Sports Direct marks a turning point as a precedent or is just a cause celebre that has fleetingly concentrated the minds of investors, who will accept tough but not terrible working conditions. | It remains to be seen whether Sports Direct marks a turning point as a precedent or is just a cause celebre that has fleetingly concentrated the minds of investors, who will accept tough but not terrible working conditions. |
| Aberdeen’s Lee says: “There may be cases where investors will say: ‘Yes, we understand that life could be nicer for the workforce but this is the nature of the business and while it’s legal and the company has effective management structures, so that it’s not causing problems with consumers and so on, why would investors intervene to increase the costs of the business?’” | Aberdeen’s Lee says: “There may be cases where investors will say: ‘Yes, we understand that life could be nicer for the workforce but this is the nature of the business and while it’s legal and the company has effective management structures, so that it’s not causing problems with consumers and so on, why would investors intervene to increase the costs of the business?’” |
| But Williamson reckons things are changing. In the wake of the Sports Direct controversy, several big employers, including JD Wetherspoon, Greene King and Everyman cinemas have all announced plans to scrap zero-hours contracts this month. | But Williamson reckons things are changing. In the wake of the Sports Direct controversy, several big employers, including JD Wetherspoon, Greene King and Everyman cinemas have all announced plans to scrap zero-hours contracts this month. |
| Only one City investor, she says, has told her profit is its priority, rather than treatment of workers. “I hope investors who supported our resolution are pleased to have been part of something that is sending a signal that customers, ordinary people, investors and workers will not accept these poor employment practices,” she says. “Perhaps the tide is turning.” | Only one City investor, she says, has told her profit is its priority, rather than treatment of workers. “I hope investors who supported our resolution are pleased to have been part of something that is sending a signal that customers, ordinary people, investors and workers will not accept these poor employment practices,” she says. “Perhaps the tide is turning.” |