The first U.K. living wage resolution failed to win majority support at supermarket chain J. Sainsbury PLC's annual meeting Thursday, but did put Schroders, which voted against the resolution, in the unwelcome position of having to defend its ESG credentials.
The resolution coordinated by responsible investment group ShareAction and co-filed by Legal & General Investment Management was supported by a coalition of institutional investors with a collective £2.2 trillion ($2.66 trillion) in assets. Other co-filers included the £35 billion Brunel Pension Partnership, the £24 billion National Employment Savings Trust, Fidelity International and HSBC Asset Management.
Other shareholders, notably Schroders, voted against the resolution, which was tabled after gaining just 16.7% support. Sainsbury's management and major proxy advisory firms also opposed the resolution.
"We're disappointed that a large proportion of shareholders chose to prioritize short-term returns over the real long-term issue: rising inequality in our society," ShareAction campaign manager Rachel Hargreaves said in a statement. "As we deal with the continued effects of the cost-of-living crisis, the conversation round low pay isn't going to go away, and both employers and investors need to step up."
Schroders declined to comment on the vote, but as one of Sainsbury's top five shareholders had already declared that it would oppose the measure, saying that it failed to consider the business implications and wider impacts on stakeholders. It considers the company well-run and a sector leader when it comes to sustainability.
In a June 27 post, Kimberly Lewis, head of active ownership for Schroders, said the living wage campaign "is a test of whether important nuances in these debates can be heard."
Applying ESG factors without nuances could lead to "unthinking ESG" that could end up harming the credibility of sustainable investing, she cautioned.
"This vote, in particular, is a pivotal moment for active ownership," she said.
