For years, the Coalition of Immokalee Workers has waged a campaign to convince Wendy’s to join the Fair Food Program, an internationally renowned human rights partnership that protects farmworkers from abuse and ensures better wages. Many big retail food companies, from Walmart and McDonald’s to Chipotle and Burger King, have joined the Fair Food Program — but not Wendy’s.
The main power behind Wendy’s is Trian Partners, a powerful hedge fund run by billionaire Nelson Peltz. Trian is the top owner of Wendy’s and dominates its board of directors. The Coalition of Immokalee Workers has long sought to persuade Wendy’s — and its owners, like Peltz and Trian — to join the Fair Food Program.
Now, the Coalition of Immokalee Workers is intensifying and broadening its strategic focus on the money behind Wendy’s. On March 10-12, the group and its allies will stage a “Follow the Money March” across New York City, where it will highlight some major Wendy’s shareholders, including Wells Fargo and Goldman Sachs — and, of course, Trian Partners.
But one new focus of the campaign stands out: BlackRock.
BlackRock is the largest money manager in the world. It oversees $7.4 trillion in assets as of January 2020. It is a major shareholder of hundreds of publicly traded companies. BlackRock’s founder, chairman and CEO Larry Fink, is one of the most influential investors in the world.
Recently, BlackRock’s leadership has been speaking up more about the need for responsible, sustainable corporate governance. This claim could be tested over whether the firm, in the face of growing pressure from farmworkers and their allies, decides to use its immense shareholder leverage to advocate that Wendy’s join the Fair Food Program.
BlackRock’s Big Investment in Wendy’s
BlackRock is the third largest shareholder of Wendy’s. Only Trian Partners and Vanguard, another top asset manager, own more shares in Wendy’s than BlackRock.
According to the most recent proxy statement from Wendy’s, BlackRock owned 16,707,749 shares in Wendy’s stock, or 7.2 percent of the company, as of April 8, 2019. According to financial information database WhaleWisdom.com, that stake increased to 16,812,162 shares, or about 7.29 percent ownership of Wendy’s, as of the last quarter of 2019.
Clearly, BlackRock holds significant influence over the company — including the ability to push shareholder demands around sustainable investing that would have to be taken seriously.
Pressure Growing on BlackRock
BlackRock has tried to present itself as a socially and environmentally conscious firm concerned with environmental, social and corporate governance, including “labour issues,” and has said that it wants to use its huge investor power for good.
For example, Larry Fink recently published a highly anticipated letter to CEOs in which he acknowledged the growing public pressure for investors to act on climate concerns, declaring that “every government, company, and shareholder must confront climate change,” and that BlackRock “will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures.” BlackRock followed up these declarations by announcing new policies around its fossil fuel shareholding, such as limiting its coal investments — though these measures have been criticized as inadequate.
Despite its public statements, BlackRock has a track record of rejecting environmental, social and corporate governance measures for many companies it invests with. As finance reporter Jessica Beard wrote for an investor news site last October, BlackRock has repeatedly voted against shareholder proposals concerning environmental, social and corporate governance:
This included votes against proposals to create reports on sexual harassment, climate change, gender pay gap and human rights to water.
The asset manager also voted against a report on plans to reduce carbon footprint in alignment with goals as outlined by the Paris Agreement.
Beard also noted:
With regards to Amazon, BlackRock voted against all 12 shareholder proposals, including motions to create reports on climate change, sexual harassment, gender pay gap as well as a report on the impact of government use of facial recognition technologies.
When questioned, BlackRock defended its rejection of proposals related to environmental, social and corporate governance by saying that “blindly supporting proposals is an irresponsible approach to stewardship.”
Will BlackRock Support the Fair Food Program?
As pressure grows on BlackRock to use its shareholder leverage to get Wendy’s to join the Fair Food Program, it may prove a test over whether BlackRock’s statements on environmental, social and corporate governance are just public relations moves, or if the firm is genuinely committed to improving “labour issues” in the companies it invests in.
The Fair Food Program is widely seen as the benchmark for worker protection and human rights programs in the world today. It is a partnership between farmers, farmworkers and retail food companies that protects the safety of farmworkers in the fields, including from sexual harassment, and guarantees better wages for them.
Under the Fair Food Program, buyers agree to pay a small extra premium for the tomatoes they buy, which goes toward higher wages for farmworkers. They also agree to suspend their purchases of produce from any farms whose practices cease to be in good standing with the program’s code of conduct, giving farms a market incentive to ensure humane working conditions. The Coalition of Immokalee Workers carries out education programs with farmworkers to help them identify and report abusive behavior, in effect creating thousands of compliance monitors in the field. An independent third-party Fair Food Standards Council conducts regular audits of participating farms.
For companies looking to show shareholders that they take environmental, social and corporate governance seriously, the Fair Food Program might seem like a no-brainer. The program has received acclaim across the globe for its unique capacity to end abuse in the fields. For example, in 2015, the Coalition of Immokalee Workers received a Presidential Medal for the Fair Food Program. Secretary of State John Kerry presented the award, praising the Coalition of Immokalee Workers for its human rights accomplishments in combating human trafficking — “modern slavery,” Kerry called it — with the Fair Food Program. Speaking of human rights abuses that go on in the agriculture sector, Kerry noted that “thanks to the Coalition of Immokalee Workers Fair Food Program, the tomato workers in the fields do not have to face these abuses” and that the Coalition of Immokalee Workers has “changed the face of this industry.”
In 2016, the United Nations Special Rapporteur on Trafficking paid “tribute” to the Fair Food Program, saying it “empowers farmworkers” and calling it an “international benchmark.” In 2014, the chair of the United Nations Working Group on Business and Human Rights praised Walmart’s decision to join the Fair Food Program and lauded the program’s “smart mix” of tools that “deliver respect for human rights and better living standards for workers.”
Last month, the Coalition of Immokalee Workers was honored for its work around the Fair Food Program in a special issue of Time Magazine. Previously, the Fair Food Program has been praised by other major media and journals, such as The New York Times, Harvard Business Review and PBS Frontline.
Many major food retailers have come to embrace the Fair Food Program. Companies that are partners of the program include Walmart, McDonald’s, Burger King, Chipotle, Trader Joe’s, Subway and Yum Brands (Taco Bell, KFC and Pizza Hut).
But not Wendy’s. Now, as the Coalition of Immokalee Workers steps up its pressure on Wendy’s most notable shareholders, how will firms like BlackRock — firms with strong language about environmental, social and corporate governance, including “labour issues” — respond?
Will Other Investors Support Joining the Fair Food Program?
The Fair Food Program has been specifically lauded for its success in curtailing the harassment of, violence toward, and trafficking of farmworkers, particularly women. In 2018, Bernice Yeung — author of In a Day’s Work, a book about sexual harassment of low-income workers that was nominated for a Pulitzer Prize — called the Fair Food Program a “#MeToo-era marvel that other industries are rapidly trying to adopt, a novel approach that not only creates real consequences for harassment but also prevents it from happening at all. And all this in an industry often thought to be one of the most dangerous in the country.”
Big investors in Trian are expressing more concerns around protecting women in the workplace. The California State Teachers’ Retirement System (CalSTRS) board of trustees chair Sharon Hendricks is part of a group of over a dozen California female pension fund trustees that want to “improve corporate disclosures on sexual harassment, violence and misconduct” and emphasize the “risk to investors that sexual harassment and misconduct create” and the need for corporations to guarantee “a work environment free of sexual harassment and violence.”
CalSTRS invests over $1 billion with Trian — almost 10 percent of all the assets that Trian oversees. Just three worker pension funds — CalSTRS, the New York State and Local Retirement System, and Ontario Teachers’ Pension Plan — make up nearly 20 percent of the assets that Trian manages.
Meanwhile, some investors are directly calling on Wendy’s to join the Fair Food Program. Recently, the Interfaith Center on Corporate Responsibility and the Investor Alliance for Human Rights called on Wendy’s to join the program. In a letter to Nelson Peltz, a group of Wendy’s shareholders who visited Immokalee wrote that “what we witnessed firsthand convinced us that your joining is in the best interests of workers and the company.” In their letter they also described how during their visit to Immokalee, Florida, they witnessed firsthand how the Fair Food Program “has transformed the lives of farmworkers, their families, and their communities” and “provides certainty that workers are protected from abuse, violations of law, and the violation of their human rights.”
As the Coalition of Immokalee Workers intensifies its pressure campaign on Wendy’s shareholders with its Follow the Money action next week, it remains to be seen how big investors like BlackRock will respond. Will they engage with the demand to join the widely lauded human rights program, or will they ignore it? The answer to this question could tell us a lot about how serious firms like BlackRock are about their claims of support for more responsible corporate governance.