(Bloomberg) -- Investors are picking a new fight with the world’s biggest meat companies as coronavirus outbreaks sicken thousands of workers.
After tackling issues including the use of antibiotics, animal welfare and climate change, investors are turning their attention to plants that have become virus hotspots. Firms that manage $2.3 trillion in assets want meatpackers to adopt recommendations they say will keep workers safe and mitigate reputational and financial risks.
The investors are urging the likes of Tyson Foods Inc. and JBS SA to take steps including enforcing social distancing, providing personal protective equipment and opposing any federal or state policies that deny unemployment benefits or stimulus relief to staff that refuse to go back to work due to fear of being infected, according to a statement by the Interfaith Center on Corporate Responsibility signed by more than 100 global investors.
More than 10,000 American meat workers have been infected with the virus, and at least 30 have died, the United Food and Commercial Workers International Union estimates. Plant conditions -- including difficulty maintaining distancing and adhering to heightened cleaning standards -- increased risks for infections, according to the U.S. Centers for Disease Control and Prevention. Major facilities were forced to close, tightening meat supplies and pushing up prices for beef and pork.
“The issues raised in this statement are longstanding engagement themes that weren’t created by -- but only exacerbated by -- the Covid-19 crisis,” said Nadira Narine, a senior program director at the ICCR in New York. “Companies are quick to publicly champion essential employees’ health and safety as a top priority, but workers on the frontline in the meat sector report feeling more expendable than essential.”
The pandemic has highlighted worker conditions at slaughterhouses, where cold, damp factories and crowded workstations make infectious diseases particularly hard to control. The jobs are also low-paying and provide few benefits, further underscoring how labor inequality is one of the most significant rifts brought to the fore by Covid-19.
Three weeks ago, President Donald Trump signed an executive order to keep plants running amid the outbreaks. Since then, more than a dozen facilities have reopened. Union leaders and worker advocates have argued that maintaining production in spite of the outbreaks will lead to more infections.
Investors are also asking for increased worker safeguards, requesting companies to provide more protective gear, including “the most effective respirators available.” The money managers are also advocating to ensure testing is available and asking for an end to lobbying aimed at increasing factory-line speeds.
“If only these type of measures had been implemented early on, they would have resulted potentially in some lower output numbers for March and April but then you wouldn’t have had the big spikes in Covid-19 incidents,” said Peter van der Werf, senior engagement specialist at Robeco, a Dutch firm with $190 billion under management. Companies would probably also have avoided factory shutdowns, he said.
Tyson said in a written response that the health and safety of its team members is its top priority and the reason it has put in place additional safeguards, protocols and guidelines. They include taking temperatures, installing dividers, requiring the use of face coverings and designating monitors to help enforce social distancing.
JBS and its Pilgrim’s Pride Corp. chicken unit said they routinely and transparently engage with investors and have implemented similar measures to keep workers safe in the pandemic.
Investor pressure on meatpackers isn’t new. Members of the ICCR network have actively engaged with producers for many years and have advocated for less antibiotics use. Some have also addressed animal welfare and water stewardship. More recently, the FAIRR network has been imploring the industry to reduce its carbon footprint.
While worker rights have come to the forefront in the pandemic, such issues aren’t new either. The American Baptist Home Mission Society has for two straight years filed shareholder proposals on human rights due diligence with Tyson. The latest one was rejected at the company’s annual meeting in February, shortly after the first coronavirus case was confirmed in the U.S. Tyson’s board advised shareholders to vote against that proposal, arguing the company’s policies and practices adequately address the concerns raised, according to filings.
Shareholder activism has been more prevalent in energy and mining than in the food sector, largely because founding families or private owners still control voting rights. That’s the case with the top poultry companies in the U.S.: Tyson and Pilgrim’s Pride.
The Tyson family, for instance, owns all Class B shares, which gives it a 10 to 1 voting advantage, meaning not even all the Class A holders would be able to outvote the family.
That’s why passing shareholder proposals is almost impossible, said Mary Beth Gallagher, executive director of Investor Advocates for Social Justice, who has been engaging with the company for seven years.
Oxfam filed similar proposals that didn’t gather enough support at the annual general meetings of Pilgrim’s Pride and Sanderson Farms Inc. earlier this year. The NGO also sent a letter to poultry companies on April 16 requesting measures including paid sick leave, said Alex Galimberti, senior advocacy and collaborations adviser for U.S. domestic programs at Oxfam.
“This sector has a history of not respecting human and worker rights,” Galimberti said. “Its objective has been short-term profit without protecting the long-term sustainability of the sector. Now we see the industry’s fragility.”
Sanderson Farms said it hasn’t received investor pressure regarding worker safety during the pandemic. The company has laid out the steps it’s taking in a call with investors and added that it runs the slowest line speeds in the industry.
Divestment is still an option, but being an active owner is by far the most effective strategy, said Jeremy Coller, founder of the $20 trillion FAIRR investor network.
In a 2019 report, Human Rights Watch described the pressure felt by meat workers, for whom even a bathroom break is sometimes hard to come by. The group also highlighted the increasing risk of accidents as companies continue to lobby for waivers that allow them to run production lines faster.
“A worker in the meat and poultry industry lost a body part or was sent to the hospital for in-patient treatment about every other day between 2015 and 2018,” the organization said, citing data from Occupational Safety and Health Administration, or OSHA.
The report also highlighted poor salaries, adding that wages in the meat and poultry industry fell below that of the national average for manufacturing jobs for the first time in 1983. That gap widened to 24% in 2002 and stands at 44% now.
The meat crisis is also opening up space for alternative proteins.
Lauren Compere, director of shareholder engagement at Boston Common Asset Management, says her company doesn’t invest in meat stocks due to their environmental, social and corporate governance focus. Still, she is engaging with supermarket chains exposed to the packers and asking them to dedicate more shelf space to plant-based alternatives.
“As an asset manager, you have more options available to you, so we intentionally tilted our exposure to the food sector to companies where we feel there’s more of a focus and practice around health and well being,” she said.
Many meat companies still aren’t disclosing the number of cases and deaths associated with their employees, and the executive order has allowed them to operate again after closures had eaten in their earnings. The ICCR statement is directed at the whole industry, but focuses on publicly traded companies.
“We are concerned for the welfare of all essential workers on the frontline of the COVID-19 crisis in Colorado. In particular, given historic health and safety lapses, we are closely monitoring the meat processing facilities statewide,” said Colorado State Treasurer Dave Young. “It would be a grave error to not use this moment to push for systemic reform.”
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