Labour practices (Corporate Accord and Investor Coalition)
From Aldi to Zara, Western stores beef up safety for Bangladesh workers
Major brands from Aldi to Zara have agreed to improve conditions for up to 2 million Bangladeshi garment workers, four years after a factory collapse in Dhaka killed more than 1,000 people. Cut-price fashion giants Primark, H&M, Lidl and umbrella brand Inditex, are among the 13 retailers that extended a raft of existing standards and agreed on new terms. The accord covers more than 1,000 factories in Bangladesh and will run for three years from May 2018. More companies are expected to sign over coming weeks in a deal covering up to 2 million garment workers. The agreement adds protections for workers who lobby for safer working conditions and extends factory inspections to cover spinning mills as well as washing and dying facilities. The previous Bangladesh Accord has only had limited success in implementing health and safety changes in factories, while unions and retailers concede that more must be done, they heralded the new agreement as a step forward. (Thomson Reuters)
Investors demand more information on labour practices
A coalition of 79 influential asset managers with almost $8tn under management has written to the world’s largest companies calling for more information on labour practices in order to identify badly managed workforces that are vulnerable to financial shocks. Investors including Schroders, Nordea and Legal and General Investment Management are signatories of the Workforce Disclosure Initiative, which has asked companies to provide annual data on their workforces. WDI was set up by ShareAction, the responsible investment organisation, and funded by the UK’s Department for International Development. The 22-page questionnaire quizzes companies on areas such as the gender pay gap, the number of staff on permanent and fixed contracts and the number of staff on minimum wage. Only 12 per cent of the world’s 4,609 largest listed companies provided the rate of employee turnover and only 11 per cent reported injury rates among employees, according to a 2014 study. “We believe integrating workforce issues into our investment process will improve long-term value and returns for members,” said Kelly Christodoulou, an investments governance manager at AustralianSuper, Australia’s largest pension fund. (Financial Times*)
Transparency
Drug-makers payments to UK health groups climb 25%
Drug-makers in the U.K. led by AstraZeneca Plc increased payments to local health-care organizations, doctors and other workers by 25 percent last year, with most of that money going toward research and development, voluntary disclosures by the recipients showed. The spending climbed to £455million last year, according to a report from the Association of the British Pharmaceutical Industry. AstraZeneca had the highest expenditure, at £56million. Almost two-thirds of health-care workers consented to sharing details of payments and benefits, though the voluntary nature of the program allows some of the highest-paid people and groups to remain anonymous. The rising number of disclosures may not be enough to ease calls for mandating more transparency in an industry that has been under pressure globally for high drug prices and questionable sales practices. In the U.S., the Physician Payments Sunshine Act was signed into law in 2010 as part of the Affordable Care Act, to force a comprehensive disclosure of companies’ financial ties to the medical professionals that prescribe and use their products. About three quarters of the money in the UK last year went towards R&D, including clinical trials, with the rest of the spend going towards consulting fees, donations, travel, sponsorship agreements and other items. (Bloomberg)
Environment
Europe’s contribution to deforestation set to rise despite pledge to halt it
Europe’s contribution to global deforestation may rise by more than a quarter by 2030, despite a pledge to halt such practices by the end of this decade, according to a leaked draft EU analysis. An estimated 13million hectares of the world’s forestland is lost each year, a figure projected to spiral in the next 30 years with the Amazon, Greater Mekong and Borneo bearing the brunt of tree clearances. But despite signing several international pledges to end deforestation by the end of the decade, more than 5million hectares of extra forest land will be needed annually by 2030 to meet EU demand for agricultural products, the study predicts. Land clearances for crop, livestock and biofuel production are the biggest causes of deforestation, and Europe is the end destination for nearly a quarter of such products. (Guardian)
Responsible Investment
Hedge fund rescue risks compromising Co-op’s ethical stance
The Co-operative Bank received a lifeline this week through a £700m rescue from its investors. The latest support, the second in four years, means the lender will not be wound down. But with the Co-operative Group’s stake falling to just 1 per cent, and hedge funds seizing almost full control of the bank, the deal raises questions over whether ethical banking can be sustainable and profitable. Dennis Holt, chairman of the bank, says he is “confident” the lender can preserve its ethical stance- and its name- despite the mutual group’s tiny holding, as it will continue to abide by the same policies. The Co-op Bank was forced to strike the latest deal after it revealed that it would miss the regulator’s capital requirements over the next few years. Some analysts argue that its focus on ethical products, services and workplace values has hampered the Co-op Bank’s performance, putting more pressure on it compared with lenders that pursue pure profit growth. (Financial Times*)
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