Wells Fargo & Company shareholders will vote next month on a proposal seeking a review of the bank’s respect for key labor rights. This comes amid concerns from unions and others about some US companies’ responses to an uptick in efforts to unionize in recent years.
The resolution, filed by Segal Marco Advisors on behalf of the AFL-CIO Equity Index Funds, asks Wells Fargo’s board to ‘commission and oversee an independent, third-party assessment of [the company’s] respect for the internationally recognized human rights of freedom of association and collective bargaining.'
This assessment should ‘evaluate management interference when employees seek to form or join trade unions as well as recommend steps to remedy any practices that are inconsistent with Wells Fargo’s international human rights obligations,’ the proposal reads.
In its supporting statement, the proponent says freedom of association and collective bargaining are internationally recognized human rights according to the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the United Nations’ Universal Declaration of Human Rights.
‘However, Wells Fargo’s human rights statement, code of ethics and business conduct and supplier code of conduct are silent on [the company’s] obligations to respect these internationally recognized human rights,’ the proponent states. It also points to a report that last year there were ‘unfair labor practice charges… pending before the National Labor Relations Board alleging that Wells Fargo had violated its employees’ rights.’
The resolution may also help address human rights risks at Wells Fargo’s operations in other countries, the proponent states, pointing to the company’s operations in India and the Philippines. The 2023 ITUC Global Rights Index rates those countries as having no guarantee of rights and describes such countries as ‘the worst countries in the world to work in’, according to the proponent.
Board opposition
Wells Fargo unsuccessfully sought no-action relief from the SEC if it omitted the proposal from its proxy materials. The agency did not agree with the company’s argument that the resolution is so vague or indefinite that it is rendered ‘materially misleading’.
In the firm’s 2024 proxy statement, the board urges shareholders to vote against the proposal. One of its arguments is that ‘[f]ollowing the submission of a similar proposal at the 2023 annual shareholder meeting, which did not receive majority support, we engaged with many of our shareholders to understand their views and share our perspective.’
The proposal filed in 2023 by the AFL-CIO Reserve Fund urged the board ‘to adopt and publicly disclose a policy on its commitment to respect the international human rights of freedom of association and collective bargaining’. It received 34 percent of the votes cast, a figure that, while not a majority, is widely regarded by governance experts as significant.
In this year’s proxy statement, the board also states that it and its human resources committee provide oversight of, and are engaged in, matters related to human capital risk and human capital management, including employees’ rights relating to freedom of association and collective bargaining. ‘Our board and the [committees have considered the topic and related shareholder feedback in connection with its evaluation of the proposal and this statement in opposition,’ the proxy statement reads.
‘We respect our employees’ freedom of association and are committed to bargaining in good faith with the certified bargaining representative of our employees where one has been designated by election,’ the board writes. ‘At the same time, we continue to believe our employees are best served by working directly with Wells Fargo and our leadership. We have implemented, and are committed to maintaining, policies and practices [that] are consistent with applicable law regarding employees’ rights to freedom of association and collective bargaining.’
Among other things, the board states that it has taken steps since the 2023 AGM that include engaging third‑party experts to advise on the development and application of policies and practices that are designed to respect employees’ rights to freedom of association and collective bargaining, implementing additional training for management.
The AGM is scheduled to take place on April 30.
A company spokesperson declined to comment beyond the proxy statement.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
