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F&C: we challenged Amazon over working conditions

24 March 2020

Fund manager of F&C investment trust vows to ‘keep badgering’ Amazon over promised changes to its labour policies after taking the online shopping giant to task over its treatment of staff.

The fund manager of F&C (FCIT) investment trust has vowed to ‘keep badgering’ Amazon (AMZN.O) over promised changes to its labour policies after taking the online shopping behemoth to task over its way it treats its staff. 

Tales of the poor working conditions are notorious, with lack of breaks, unrealistic work targets, paltry wages, and poor working conditions par for the course across at Amazon’s giant sorting factors across the globe. 

This had become an uncomfortable truth for BMO Global Asset Management’s Paul Niven, manager of the £3.3bn global portfolio, which has Amazon as its second largest holding making up 2.3% of assets.

Vicki Bakhshi, BMO’s director of governance and sustainable investment at trust manager was tasked with doing something about it. 

In her role, Bakhshi is responsible for ‘opening up dialogue’ with companies ‘over the challenges they face’ and to push for better governance in terms of societal and environmental issues. 

‘Amazon employs a lot of people and we were not happy with the way people were being treated,’ she said. ‘We talked to them and we were not getting very far.’

Individually, FCIT was having little impact and so it teamed up with other investors that were also concerned about the conditions Amazon staff were working in. 

‘We could see there were a lot of people trying to have this conversation, so we group together,’ she said, adding that the group of investors collective had control of $2tn of assets.

‘We wrote to [Amazon chief executive] Jeff Bezos saying we wanted to talk about labour standards and we got a foot in the door and had a call with the global head of HR.’

‘I’m not pretending it has been easy but we are starting to make headway. [Amazon] has now come out with a new human rights policy and promises on health and safety, and the way they treat people. We will keep badgering them to make sure those promises are put into practice.’ 

Bakhshi said FCIT is an ‘owner not a trader’ of shares and therefore has a responsibility under its stewardship code to ensure companies are operating sustainably, forcing them to make decisions that are beneficial to society and the environment. 

She said climate change was one of the ‘biggest challenges’ facing companies currently but it was an uncomfortable topic as the changes needed may ‘require them to rip up the business plan and start again’.

‘It’s a tough decision for them to make and the easy option is to stick with the status quo,’ said Bakhshi. ‘We are trying to break that open and say it’s not good enough. Companies need to take these responsibilities seriously. 

Climate change and palm oil

This year represents a ‘critical’ year for climate change as countries draw up new and revised climate action plans to try and meet the 2015 Paris Climate Change agreement of maintaining global temperature rises at just 1.5 degrees celsius a year. The earth is currently heating up at double the target. 

One area contributing to the climate disaster is the production of palm oil, which Bakhshi said is used in a large amount of packaged products, from toothpaste to pizza and ‘demand is what has driven deforestation and driven up greenhouse gases’.

‘Damage is being done,’ she said, adding just 30% of palm oil produced is independently certified as sustainable. 

In order to try and enforce change in the industry, FCIT ‘targeted the people financing those growing palm oil’, including Bank Mandiri (BMRI.JK) in Indonesia, the largest lender to the palm oil industry in the world. 

‘We got in front of the CEO and asked them to put in place better lending criteria for palm oil,’ said Bakhshi.

The trust argued that by lending to those who are not producing sustainable palm oil, they were lending to businesses that will in the long run lose their customer and therefore ‘are a credit risk’.

‘The bank did put in place a statement on sustainable finance,’ said Bakhshi. ‘We are still on their back 0 this is not just a piece of paper, it has to have teeth.’

While Bakhshi said it would be easier to find bad companies and sell them or not invest in them, it was better ‘use our voice’ for positive change. It also does so as a founder member of Climate Action 100+, a group of investors controlling $40trn - just a bit less than double US GDP - that is ‘speaking with one voice and saying we need to be more ambitious with climate chance’. 

They are tackling the 161 largest greenhouse emitters in the world, including Shell (RDSb), Glencore (GLEN), and Nestle (NESN.S).

‘When you are faced with big global issues it is easy to feel hopeless and that we cannot make a difference but we each have influence,’ said Bakhshi.

‘We can make a choice to put our savings with investment managers who want to make positive choices in the world and all those choices add up and...we can make some progress and we can make some change. The future is our responsibility and choices we make can help to make it a better one.’

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