UNISON International Conference on Capital Stewardship

“Yes we can” attitude demonstrated by SEIU: At the UNISON/PSI conference on Capital Stewardship, held in London on Dec 3rd & 4th, conference heard of the efforts made by the SEIU to use workers capital within pension funds to successfully lobby large corporations, to ensure that they were persuaded to take a positive view of the Health Care legislation being proposed by the Obama administration. From a resolution at their 2000 convention, the SEIU now has grown to a position where it actively intervenes as a shareholder through the pension schemes, calling major companies to account.

The efforts made by the SEIU are far from unusual, as public sector trade unions throughout the world have started to realise the value of the assets that are controlled through public sector pensions' funds. The conference brought together a wide variety of public sector unions from Europe, Asia and North America together with delegates from PSI and the AFL/CIO to share experiences of how to campaign.

Such work starts from the realisation that pension funds are not simply a source of funds to provide for retirement, but their assets are the largest source of investment in capital markets. Within the USA for example the top fifty public pension funds control $1.6 TRILLION .

Where pension funds invest has implications for capital investment, job creation, and economic stimulus. So where pension funds invest has a direct impact on the interests of our members, the strength of their communities and their economy. Capital Stewardship is intended to give a voice to the collective owners of the funds – to ensure that workers are heard in the capital markets where our funds are invested, and in the corporate relationships that have decision making powers. Through active intervention it is possible to hold companies to account, to press for socially responsible standards, and push forward the interests of workers, all the while working within the fiduciary responsibilities that are expected of pensions' trustees.

Obviously using the funds in this way is predicated on having a say in how the funds are invested, something that few (if any) of the local government schemes in this country allows for. It was clear from the examples given within the seminar that having trustees elected by members of the scheme (even where there was not a majority) provided a very significant level of influence.

Within UNISON there has been policy for a number of years about a bottom up approach, working with our members who are trustees on our local superannuation funds, and seeking to increase their numbers. The total £143 billion assets in LG pension schemes represent 13% of national GDP. This makes them major investors in the largest private companies on the London stock exchange – household names such as Cadbury Schweppes, Scottish and Newcastle or Marks and Spencer. More controversially, local government pensions funds are significant investors in companies that employ many workers in privatised or contracted out services, making the case for a more interventionist approach in the investment policies of the funds.

In a sense, this conference was an eye-opener to UNISON members. It is one thing to believe that we could have the influence to potentially see our pension funds invested within an ethical set of standards. It is quite another to be presented with the evidence that such influence can be used in politically radical ways by open intervention in the corporate governance of major international companies to ensure that they act in a more labour friendly way, or to conform to higher standards of governance or to meet some goals in terms of sustainability. Yet evidence of all of these types of intervention were given at the conference, making our efforts in terms of using our local government funds like a toddlers first faltering steps. But further establishing a union voice in pensions fund governance is obviously needed. At the conference the phrase converting from being “passive owners to active owners” was used.

From looking at what can be achieved by such an active approach to pension fund management, the conference went on to look to how we should use such funds. What are the UN Principles for Active Investment? How can we use them in pension’s governance? Can and should pension funds be uses for infrastructure investments?

This may have been the first international trade union event on Capital Stewardship but it became obvious as the conference progressed that this is an area in which;-

a) We have much to learn from one another

b) It may be possible to develop common goals and targets, due to the international nature of the companies in which influence can be brought to bear and the international ways in which funds are spread.

It was therefore agreed to set up a group under the auspices of the PSI to provide these networking opportunities. From a UNISON point of view there is much for us to learn, but the foundations of building from within our own membership are solid.

http://www.UNISON.org.uk/asppresspack/pressrelease_view.asp?id=1668