ISS Urges Starbucks Shareholders Back Review Of Labor Policies

Proxy adviser Institutional Shareholder Services Inc (ISS) on Monday recommended that Starbucks shareholders back a proposal for an outside examination of the coffee chain's labor policies in light of its response to union organizing at hundreds of U.S. cafes.

Investors are slated to vote on a number of proposals at the company's March 23 annual shareholder meeting, including one aimed at understanding whether some of Starbucks' treatment of unionizing baristas violates its own state policies in support of collective bargaining.

Employees at more than 280 out of its roughly 9,000 company operated U.S. locations have voted to join a labor union since 2021.

A Starbucks spokesman declined to comment on the ISS report.

The National Labor Relations Board (NLRB) has accused Starbucks of unlawful anti-union tactics at stores across the country, including allegedly firing pro-union workers.

Workers United, the union representing most of the newly organized employees, has also said the company improperly shuttered unionized stores to block their efforts. Starbucks has accused the NLRB of misconduct and said the union failed to bargain in good faith by seeking to hold negotiations via video conference.

ISS concluded that "there seem to be credible reasons that may lend support to various accusations" raised by Workers United, the NLRB and Starbucks.

"Many allegations of wrongdoing and potential policy

changes are ongoing and highly nuanced," ISS wrote. "The proposed third-party assessment would benefit shareholders by

cutting through some of the noise and helping them evaluate the company's management of any related risks."

The proposal, made by a group of investors including Trillium Asset Management and the New York City Public Pension Funds, asks the board to commission an independent assessment of Starbucks' "adherence to its stated commitment to workers' freedom of association and collective bargaining rights" for its corporate and licensed locations.

In its proxy statement, the Starbucks board of directors recommended shareholders vote against the proposal because its minimum pay is already $15 an hour and it provides "the highest-rated benefits in the country for full- and part-time hourly workers."

It is also expanding health insurance options, tuition coverage and other benefits, it said.

Starbucks also said it "commenced efforts to conduct a human rights impact assessment" including labor rights, and that it expects to make the results available to shareholders.

The ISS report does not recommend yes votes for any of the other shareholder proposals.