The largest U.K. pension funds with around £400 billion ($496.5 billion) in combined assets launched practical guidance for their portfolio companies to improve worker conditions.
Asset owners want to increase the diversity of board members to ensure that the voice of workers is considered and acted upon as investors believe it would have financially material benefits to the performance of their portfolio companies.
Investors lead by Railpen, the in-house manager of the £37 billion Railways Pension Scheme, London, will seek to engage with companies — where relevant — to appoint workforce directors, who would ensure the workers' voice is included in discussions at board level.
Other signatories are the Border to Coast Pensions Partnership, Leeds, England; Brunel Pension Partnership, Bristol, England; Church of England Pension Board, London; Merseyside Pension Fund, Liverpool, England; and Universities Superannuation Scheme, London.
"Fulfilled, engaged and empowered workers are fundamental to the long-term success of companies. The COVID-19 pandemic and the subsequent 'Great Resignation' have highlighted how important it is that a company's most senior leaders genuinely consider and respond to the perspective of the wider workforce," Caroline Escott, senior investment manager at Railpen, said in a news release Wednesday.
Bruce Jackson, senior responsible investment analyst at USS, added in the release: "While we recognize this may not be suitable for all companies, we believe the inclusion of workforce perspectives at board level can align the interests of shareholders, management and workers over the long-term. It can also provide valuable insight into company operations to improve strategic decision making," he said.