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Good labour relations aid retailers’ success

Author: Anna Pot, John Howchin, Kris Douma in Financial Times, Published on: 19 June 2011

Walmart is currently recruiting a new director of labour relations. The job description on its website states that the role of the director is inter alia to “support continued union free workplace”. So why should investors care? Research shows a positive correlation between good labour relations and financial success. Conclusions from analysis on US companies…showed higher employee satisfaction is associated with stronger company (share price) performance. This means good labour relations are essential for long-term success. For a retail company in particular, how workers perform on the “shop floor” determines to a large degree how satisfied customers are. Happy consumers are more likely to return and increase sales, and this is conducive to creating shareholder value…Several investors filed a shareholder proposal at the 2008 annual general meeting requesting that Walmart adopt the standards of the International Labour Organisation. They withdrew the motion as Walmart was willing to discuss its approach with investors. However, despite lengthy dialogue with investors, including Dutch asset managers APG, MN Services and the Swedish AP Funds, Walmart has not yet put this principle into practice. A much broader church of investors actively takes account of how companies manage labour issues. More than 736 (mostly institutional) investors worldwide, as signatories to the UN Principles for Responsible Investment…are committed to taking environmental, social and governance factors into account in their investment process. [also refers to Ahold, Kroger, Safeway]

Read the full post here

Related companies: Ahold Delhaize APG Kroger Safeway USA (part of Albertsons) Walmart