Starbucks Investors Vote in Favor of Worker-Rights Assessment

Starbucks Corp. investors are asking the company to do a third-party assessment of how it treats its labor force, going against the company’s recommendation. The nonbinding proposal’s approval comes after a flurry of unionization across the coffee giant’s US cafes last year that has since slowed.

In the close vote, more than half of investors said they want the company to conduct an assessment of its worker-rights commitments. Starbucks shareholders cast their ballots during the company’s annual meeting last week.

Increasingly, companies are being held accountable for how they treat their employees, especially lower-paid service staff. The vote may set the tone for other large companies facing similar stockholder resolutions this proxy season. Those include Walmart Inc., Amazon.com Inc. and CVS Health Corp.

The Starbucks shareholder resolution on labor was filed last year by a group of investors including Trillium Asset Management, who say they’re concerned about reputational risks for the chain. The company is also facing accusations from the US National Labor Relations Board that its antiunion practices, including shutting down stores and firing activists, have violated the law. Starbucks has repeatedly denied any wrongdoing.

Read more: Schultz Rejects Allegations That Starbucks Broke Labor Laws

The Seattle-based coffee behemoth is already doing its own human-rights assessment that it plans to make available to stakeholders and other interested parties by the end of this fiscal year.

“This impact assessment work is already underway. It is clear from the vote result in the proposal that our investors share our commitment to our partners,” Starbucks said in a filing Wednesday. It added that the effort is meant to inform executives and the board on “any changes we can make to our operations to improve the partner experience.”

While Starbucks has been regarded as a strong employer over the years with relatively good pay and benefits, baristas at about 300 of the chain’s US locations have voted to unionize, asking for better working conditions. Executives at the company have reiterated the stance that it’s best for Starbucks to have direct relationships with its store workers instead of through a union. AJ Jones, chief communications and public affairs officer, responding to a question at the annual meeting, said that Starbucks wouldn’t enter into a labor-neutrality agreement with staff seeking to organize.

The assessment presents one of the first challenges for new Chief Executive Officer Laxman Narasimhan, who took the reins from longtime leader Howard Schultz on March 20. Schultz testified before a US Senate committee on Wednesday, defending the company’s union tactics, saying that the company hasn’t broken the law despite the NLRB’s allegations.

Separately, investors rejected a proxy resolution asking the company to change its CEO succession planning process.

To contact the reporter on this story:
Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story:
John J. Edwards III at jedwardsiii1@bloomberg.net

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