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Starbucks urged by NYC pension funds to order workers’ rights audit

Coffee chain has dismissed allegations of anti-union activity as “categorically false”

Unionised workers strike outside a Starbucks in Boston in July. New York pension funds escalated scrutiny on the coffee chain's labour practices. Photograph: M Scott Brauer/Bloomberg

Mon Sep 19 2022 - 15:16

A group of investors led by New York City’s pension funds filed a shareholder proposal calling for an audit of workers’ rights at Starbucks, escalating scrutiny over the coffee chain’s response to a widening US union campaign.

The resolution urges Starbucks directors to commission and publicly release a third-party assessment of the company’s compliance with its stated commitments to honour workers’ collective bargaining rights. It cites allegations of lawbreaking by Starbucks management, including store closures and retaliatory anti-union firings, some of which are now being pursued by the US National Labor Relations Board (NLRB).

City comptroller Brad Lander and several groups representing shareholders submitted on September 16th: “We believe the apparent misalignment between Starbucks’ public commitments and its reported conduct represents material reputational, legal and operational risks and may impact its long-term value, according to the resolution.” Failure to respect workers’ rights could hurt the company’s reputation and its ability to attract workers, the group said.

The coffee chain’s shares rose in early trading in New York. The stock has fallen 22 per cent this year.

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Starbucks declined to comment. The company has repeatedly said it obeys US labour laws and any claims of anti-union activity are “categorically false”. It has said the workers in question were fired because they failed to follow company policies and not because they sought to join a union.

Workers at more than 230 of the estimated Starbucks’ 9,000 corporate-run US coffee shops have voted to unionise with Workers United since the group’s landmark victory last December in Buffalo, New York. US labour board officials around the country have issued 30 complaints accusing the company of violating federal labour law, including by threatening and retaliating against workers trying to organise.

Those complaints are now pending with agency judges, whose rulings can be appealed to labour board members in Washington, and from there into federal court.

Mr Lander said Starbucks’ conduct shows the chain isn’t living up to its commitments on freedom of association. He called on Starbucks to agree not to oppose workers’ unionisation efforts, saying a new US corporate standard is emerging in which companies “genuinely remain neutral when workers organise”.

He cited employers such as Microsoft and Major League Baseball, which recently agreed to make it easier for employees to unionise. The group’s Starbucks proposal echoes a similar one Lander and others recently submitted at Apple, which has yet to receive a vote from shareholders.

While Starbucks is legally required to bargain collectively with workers at the hundreds of stores that have voted to unionise, organisers have said it will take significant public pressure – including from investors – to secure a good contract with the company.

That’s because federal law doesn’t require that companies make major concessions on issues that newly unionised workers care about, and the NLRB has limited remedies to respond to stonewalling at the bargaining table. Reaching an agreement after unionising usually takes more than a year, and the process can drag on much longer.

The funds are proposing the resolution in conjunction with several other organisations including sustainability focused firm Trillium Asset Management, which said the filing reflected investors’ increasing interest in labour rights. “That’s partially a result of Covid,” said Trillium’s chief advocacy officer, Jonas Kron, and “partially a result of changing expectations among workers as new generations move into the workforce”.

Mr Kron said the appointment of a new Starbucks chief executive, Laxman Narasimhan, who is scheduled to take the top job in April, was a chance for the company to change course. “There really is an opportunity for a pivot, he said. – Bloomberg

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