Institutional investors must do more to reduce in-work poverty and improve the quality of work in the UK’s private sector, according to a report published by ShareAction. The report evaluates the potential of investor-led strategies to address inequality and protect the economic interests of low paid beneficiaries.
The report suggests that active ownership of companies by their investors, through robust engagement and voting, can reap rewards. The right approach can generate strong, stable returns, whilst also supporting a shift away from chronic in-work poverty, zero-hours contracts and other features of precarious employment.
The research suggests that while there is more acknowledgement that human resources and human capital factors are material issues for investors – and this has been addressed by the Pensions and Life-time Savings Association and Investment Management Association – the data disclosed by companies is still not sufficient and it is difficult to compare between companies.
Writing in the Financial Times recently, Catherine Howarth, chief executive at ShareAction said, “For many Brits, the last decade has been characterised by sustained pressure on living standards driven by stagnant wages, precarious employment and the rising cost of essential goods.”
“Many of those now saving into workplace pension schemes are distinctly vulnerable in our economy […] It seems right to ask in an era of mass participation in the private pension system if schemes should take account of their members’ lives and needs in the here and now.”
The report recommends the development of a collaborative investor-driven programme to secure workforce reporting; strong engagement programmes by institutional investors to secure changes in company behaviour; and a range of policy changes including the strengthening of the Financial Reporting Council’s Stewardship Code for investors.