Schroders backs workers’ rights as investors throw down challenge to Silicon Valley

It is clear that Environmental, Social and Governance issues are now part of the mainstream, says James Moore

There are signs that Silicon Valley has woken up to the problem some of its noisier bigwigs have started to push back (iStock/Getty)

Step into a time machine and set the dial for, I don’t know, 20years back?

Got there? Now imagine an asset manager like Schroders publicly declaring its intent to back a series of shareholder resolutions covering things like workers’ and digital rights at some of the biggest companies in which it invests. The Amazon, Meta (Facebook) and Alphabet (Google) of the day.

Hold the front page. Alert the newswires. Tell the comment writers to sharpen their quills!

That story would have been everywhere because that sort of thing just didn’t happen then. There were a few activist funds knocking around that would intermittently raise those sort of issues and maybe back the odd shareholder resolution. But Environmental, Social and Governance (ESG) concerns were otherwise strictly niche.

The fact that Schroders backing a string of shareholder motions filed with Amazon, Meta and Alphabet attracted only limited attention today could in many ways be seen as a sign of real progress.

Money matters most of all to investors. It’s why they invest. But that they also worry about the workers in their companies, and customers’ digital rights, is heartening. They didn’t used to. The fact that the money managers they choose are willing to raise those concerns in private, and then in public, by declaring their intention to vote on them is similarly good news.

It is another mark of how ESG has become a genuinely mainstream part of the business of investing and managing money.

The flip side, of course, is that this is also a demonstration of just how serious these issues have become with the companies taking heat.

Organisations like Schroders aren’t generally in the habit of tub thumping. It is still very much a mainstream, establishment fund manager. Mainstream, establishment fund managers generally prefer to do their engagement with investee companies behind the scenes.

The only go public if this isn’t working; if their engagement isn’t getting anywhere and that fact is screamingly obvious.

On the subject of workers’ rights at Amazon – there are resolutions on working conditions, health and safety and freedom of association which the fund manager is going to back there – Schroders isn’t getting anywhere. To be fair, it isn’t just Schroders banging its head against that brick wall.

The same is true when it comes to the subject of digital rights at Meta, where motions raise concerns about the enforcement of community standards, child sexual exploitation, human rights, and user risk. Alphabet, meanwhile, faces resolutions calling for reports on data collection, privacy and security, and on management of information.

Amazon is one to watch particularly closely here. It is a Canadian organisation, Share, that has asked for a review of the application of the fundamental rights of freedom of association and collective bargaining.

It isn’t just Schroders backing that one. The motion has received the support of all the main voting advisors. Pirc has long had a progressive stance on these issues but Glass Lewis and ISS have been, as a rule, rather more conservative. They’re all on board.

Of course, this doesn’t mean their clients will fall into line. US asset managers have proved notably less forward looking than their European peers. Last week I reported on what appeared to me as backsliding on the part of BlackRock, the world’s biggest money manager, with respect to ESG, and the climate crisis in particular.

But the result at Amazon is nonetheless worth watching closely.

There are signs that Silicon Valley has woken up to the problem it faces here. Some of its noisier bigwigs have started to push back. We’ve started to hear words like “woke” and “mobs” being bandied around by rich people who don’t like being called out, a sure sign that they’re feeling nettled.

Common sense would suggest that the better route for them to take would be to address the issues being raised. They aren’t going away, however cross it makes these people. Motions will keep on being filed, backed and voted on, until they act. Good.