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Setting the benchmark in corporate integrity

New union group pledges to ‘tackle corporate responsibility’

The Trade Union Share Owners group will put union values at the heart of corporate governance through the Trade Union Voting and Engagement Guidelines

The group, formed by the Trade Unions Congress, Unison and Unite, have drawn up the new guidelines to ensure that ordinary employees and shareholders are represented in the boardroom in order to tackle issues such as excessive executive pay.

The Trade Union Voting and Engagement Guidelines stipulate that at any AGM of a FTSE 350 company where either the TUC staff pension fund or those of its two biggest unions hold shares, the group will take a common voting position. This will be supported by advisory group Pensions and Investment Research Consultants. The groups hold more than £1bn assets between them, so have a significant force going forward.

UNISON General Secretary Dave Prentis said: “Unions are all about collective principles and action to enable progress and tackle inequity. Now we can demonstrate this with our collective investment power. We will be active shareowners of FTSE companies, in the interests of our scheme members and other stakeholders in the companies our funds own. We will be modern, responsible investors.”

The move stems from fears that pension fund managers do not always vote in line with trade union policies, a concern that was highlighted over Shareholder Spring last year as investors voiced their anger over disproportionate pay for executives. An ICM poll last year showed that only seven percent of people thought that company directors should be paid more than £1m a year. By ensuring that TUC representatives are present at AGMs, they will have more gravitas to vote against remuneration reports.

The guidelines cover a wide range of policies, including:
•    Moves to limit the growing gap in the pay of those at the very top and bottom of companies, with the aim of achieving a 20:1 pay ratio, and for pay increases to directors to mirror those being offered to ordinary employees.
•    Persuading all companies to become living wage employers on the basis that decent wages lower staff turnover and absence rates, and lead to a more motivated, productive workforce.
•    Encouraging companies which are keen to include worker representatives in their corporate governance structures.
•    At least a quarter of the board positions to be held by women.
•    All board vacancies to be advertised, rather than people simply being invited to join.
•    A limit to the number of board positions that directors can hold. Where individuals are unable to devote enough time to their role their re-election should be opposed.

Where companies are found not to be acting within the new guidelines, TUC representatives have been encouraged to take specific action, such as voting against policies, resolutions or re-elections proposed by the company.

General secretary of Unite, Ian McClusky, said: “Trade union values of decency and fairness ought to be present in the boardroom, but if we cannot trust that they will be, then we need to use our share ownership to influence corporations.”

 

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