Investors representing trillions in assets under management are urging Starbucks to respect the workers who voted successfully Thursday to organize at least one local cafe in Buffalo, New York.
Signatories include New York City Comptroller Scott M. Stringer, the Northwest Coalition For Responsible Investment, the Sustainable Advisors Alliance and more. Trillium holds about $48 million worth of Starbucks shares.
“We are writing to urge the Company to accept the results of the December 2021 election and proceed expeditiously and in good faith according to the results,” the letter states.
“As investors, we believe that Starbucks should abide by international standards and best practices and its own words about engaging in good faith with workers to maintain positive labor relations,” it continued. “Effective human capital management is a key performance indicator that a growing number of investors prioritize.”
Starbucks didn’t immediately respond to a request for comment on the group’s remarks.
The letter also raises concerns that Starbucks meddled in the election process by closing stores and sending top executives, including Rossann Williams, Starbucks North American executive vice president and Howard Schultz, its former CEO, to Buffalo. The coffee chain giant has denied these claims, saying it was responding to employee concerns directly.
“I certainly apologize if anybody thought that was intimidation. It’s actually what I’ve been doing for 17 years, so whether it was something special to a partner or a situation, I can’t speak on every situation,” Williams said in a phone interview with CNBC on Thursday. “What I can speak on is our partners asked us for help and we showed up, and they were absolutely right. We’d let them down, and we apologized for that.”
In November, workers filed a federal labor charge, accusing Starbucks of illegal activity like engaging in a campaign of threats, intimidation and surveillance in response to the union push. The company has denied the allegations.
Starbucks Workers United also claimed that the voting list created by Starbucks includes ineligible employees who work at other Buffalo locations but were briefly assigned to the cafes voting on unionization.
Nonetheless, Thursday’s results mark the first successful attempt at unionizing Starbucks’ U.S. company-owned locations since it went public nearly three decades ago. The decision could send ripples through the restaurant industry.
Employees at Starbucks’ Elmwood Avenue location voted 19 to eight in favor of unionizing under Starbucks Workers United, an affiliate of the Service Employees International Union. Results at a second cafe on Camp Road went for Starbucks, with eight workers in favor and 12 opposing. But the union claimed that several submitted ballots were missing in that vote. A ruling at a third cafe on Genesee Street is pending due to challenged ballots. Both sides have until Dec. 16 to raise challenges with the National Labor Relations Board, and subsequent hearings could follow before results are certified.
On Friday, Starbucks shares were up more than 1%, giving the company a market value of about $137 billion. Shares have risen more than 9% year to date.
MKM Partners analyst Brett Levy wrote in a note to clients Thursday that he doesn’t think the decision will have an immediate impact on Starbucks’ strategy or financial results. However, Levy said that a more widespread push across Starbucks’ footprint for union representation could lead to another pay hike for workers down the road. Separately, baristas in Mesa, Arizona, have filed for a union election.
Additionally, if employees at other restaurant chains follow their lead, Starbucks is one of the companies that is better positioned to absorb higher costs, Levy said.
The full text of the letter follows:
Dear Mr. Johnson,
We, the undersigned investors, representing over $1.3 trillion in assets under management, are writing concerning how Starbucks is responding to the unionization effort by a group of its workers (“partners”) in Buffalo, NY. Specifically, we are writing to urge the Company to accept the results of the December 2021 election and proceed expeditiously and in good faith according to the results.
As Starbucks partners in Buffalo seek to form unions, we are concerned about claims that have surfaced in public reporting that appear inconsistent with international standards. First, rather than accept the three unions’ request to be voluntarily recognized, it appears that the Company attempted to use the National Labor Relations Board (NLRB) process to seek a single election for all stores in the region. This tactic suggests that the Company is trying to use the NLRB process, not in a neutral or good faith manner to have a free and fair election, but rather to weaken the unions as much as possible.
Furthermore, under NLRB guidance, union election campaigns should be allowed to proceed in “laboratory conditions,” but Starbucks has reportedly taken a number of steps to delay and frustrate efforts. The company appears to have indirectly intimidated employees through closing two of the Buffalo locations affiliated with the organizing effort, sending a top corporate executive, senior company officials, and managers under the premise of additional training, and introducing large numbers of partners to the stores after the announcement of union filings. This is in addition to reporting about the Company conducting captive audience meetings and instructing employees to consult the “Partner Hub” online, in which Starbucks employees have been required to hear and read anti-union rhetoric, including a November 6th voluntary meeting with former CEO Howard Schultz. Although Starbucks asserts that these actions are standard procedure, the sudden and numerous changes suggest that the company is trying to circumvent union activity to the fullest extent possible.
As investors, we believe that Starbucks should abide by international standards and best practices and its own words about engaging in good faith with workers to maintain positive labor relations. Effective human capital management is a key performance indicator that a growing number of investors prioritize. Partnerships between companies and labor unions is a time-tested method that can have positive human capital impacts. By giving workers independent channels to communicate with management regarding suggestions, concerns, and requests without fear of retaliation, unions foster more effective workplace feedback loops.
The formation of labor unions is also a fundamental human right recognized under international law. Employees exercising their right to form unions is recognized by the OECD Guidelines for Multinational Enterprises, the Universal Declaration of Human Rights, the United Nations Guiding Principles on Business and Human Rights, and the International Labour Organization. The ability of workers to organize, act concertedly, and engage in collective bargaining is an important human right that can be a net positive for companies and investors, and good for society. In contrast, allegations that the Company is not respecting its workers’ rights to exercise their freedom to organize raises reputational and legal risks for investors.
We therefore urge Starbucks Corporation, in keeping with the spirit of international norms and its pro-partner mission, to accept the results of the Buffalo elections and proceed expeditiously and according to the results.
Trillium Asset Management