WOKE WEDNESDAY: Union voting AGAINST their settlement, McDonald's sexual harassment, MSCI's (non) conflict of interest, and NYU's Alison Taylor interview clip

Live from a November-shaped headache shaped like a fallen oak leaf, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring AnalystHole Matt Moscardi In today’s ESG blindfold called November 15, 2023: A quick peek around our wonderful word of Random ESG awesomeness and a delightful preview of our conversation with NYU professor Alison Taylor

Our show today is being sponsored by nobody!

Higher Ground: How Business Can Do the Right Thing in a Turbulent World Kindle Edition

by Alison Taylor An indispensable guide to help companies navigate the new era of ethical challenges and risks in a volatile global landscape.

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1. General Motors workers are voting against the UAW contract

1. Union workers at Ford and Stellantis plants have been approving the tentative agreement that grants historic wage gains.

2. The tentative contract between the United Auto Workers and General Motors was in danger of being voted down Wednesday after three large local plants joined two others to oppose the deal.

3. Opposition against the contract appears to be coming from veteran General Motors workers who are disappointed union chiefs weren’t able to negotiate gains like stronger retirement benefits. The union also failed in its bid to restore defined-benefit pensions for all workers, but it did force the automakers to increase their contributions to 401(k) retirement accounts.

2. Starbucks workers union calls for walkouts at hundreds of stores ahead of holiday season

1. Starbucks workers at hundreds of US locations will walk off the job on Nov 16 as part of a union-organized action

2. In an echo of last year's strike, the Workers United union said on Monday that thousands of employees at hundreds of Starbucks locations will walk off the job on Thursday in a "Red Cup Rebellion." 

3. The planned walkouts on Nov. 16 coincide with Starbucks' Red Cup Day, when retail stores give away free reusable holiday-themed cups with coffee purchases to welcome the holiday season.

4. "Red Cup Day (November 16th) is Starbucks’s biggest sales event of the season – and also one of the most infamously hard, understaffed days for the baristas that work them," Starbucks Workers United said in a call to action

5. Workers are calling on the company to turn off mobile ordering on high-volume promotion days, improve staffing and scheduling issues, and bargain with the union.

3. McDonald’s has received 400 abuse complaints from its workers in the last 4 months—and its U.K. boss calls it ‘truly horrific’

1. McDonald’s is sprinkled all across the U.K. and employs thousands of Brits in its locations—and this week, concerns about the safety of those workers came to a head.  

2. The boss of McDonald’s in the U.K. said that the company has received over 400 complaints (some of which included sexual harassment) in a span of four months—sometimes up to two a week—during a Business and Trade Select Committee meeting on Tuesday.

3. Alistair Macrow, who runs McDonald’s U.K. & Ireland, told MPs that the experiences of some of the fast food chain’s workers were “truly horrific” and “very hard to listen to.”

4. “These cases… are absolutely horrendous. What I would like to be clear about is that we will tackle them and make sure that we do everything we can to eradicate them from the business,” Macrow said. 

5. The U.K. chief’s statement comes after an initial investigation by the BBC in July shed light on McDonald’s staff who were routinely harassed, bullied or sexually assaulted while at work. The report said that over 100 current and recent workers had allegedly been on the receiving end of such behaviors, following which the company kicked off an investigation. At the time, McDonald’s apologized and said it had “fallen short.”

4. Google CEO Sundar Pichai gives ‘rocking 75 minutes’ of tense testimony in Fortnite antitrust trial

1. Google CEO Sundar Pichai on Tuesday was summoned to federal court for the second time in two weeks to testify in an antitrust trial threatening to topple a pillar of an internet empire that he helped build.

2. In his latest court appearance in San Francisco, Pichai spent more than two hours defending the business practices of the Google Play Store, which distributes apps for the company’s Android software that powers most of the world’s smartphones.

3. At times, the soft-spoken Pichai looked nonplussed and frustrated by the confrontational questioning he faced. Other times he came across as a professor explaining complex subjects to the trial’s 10-person jury located just a few feet from a podium Pichai was allowed to use because he has difficulty sitting for prolonged periods.

4. FFA: Pichai 5%

5. ValueAct Capital builds stake in Disney

1. Activist investor ValueAct Capital has taken a stake in Walt Disney (DIS.N), sources familiar with the matter said on Wednesday.

2. ValueAct is the second activist investor to arrive at Disney after Nelson Peltz's Trian Fund Management last month signaled it would be pushing for multiple board seats after having abandoned a proxy fight earlier this year.

6. Goodyear’s CEO to Step Down Alongside Activist-Driven Overhaul

1. Goodyear Tire & Rubber Co. said it will seek a new chief executive officer, cut costs and weigh options for several business lines as part of a sweeping overhaul under pressure from activist Elliott Investment Management.

2. Richard Kramer plans to step down as CEO and chairman in 2024, the company said Wednesday in a statement. The board has retained an executive search firm to consider internal and external candidates.

3. FFA: Kramer 19% influence: underperforms in all performance categories 

7. Ralph Nader Profiles 12 Leaders Who Did It Right In The Rebellious CEO

1. Given Nader’s reputation as an anti-corporate crusader, it may be surprising to learn that he is not anti-business. Nader is anti-exploitative business. He believes that business profits should not come at the expense of “our social and natural world.”

2. The book focuses on 12 CEOs that Nader found to be “wonders of values and performance.” These leaders “chose higher ethical behavior, declining to avail themselves of the routine excuses about duty to shareholders, competitive riskiness, government regulation or other pretexts most executives employ for explaining why they are not making beneficial changes.”

3. The CEOs featured include: John Bogle (The Vanguard Group), Anita Roddick (The Body Shop; Natura), Ray C. Anderson (Interface, Inc.), Herb Kelleher (Southwest Airlines), Jeno Paulucci (Luigino’s, Inc.; Totino’s), Sol Price (FedMart; Price Club; Costco), Robert Townsend (Avis), Andy Shallal (Busboys and Poets), Bernard Rapoport (American Income Life Insurance), Yvon Chouinard (Patagonia), Gordon B. Sherman (Midas International), Paul Hawken (Project Drawdown; Erewhon Trading Company; Smith & Hawken; OneSun).

8. A SpaceX Worker Died and They Kept It a Secret

1. "SpaceX shouldn’t be exempt from protecting workers from being injured or killed just because they’re doing innovative work."

2. In June 2014, just nine months after retiring from the US Marine Corps, 38-year-old SpaceX employee named Lonnie LeBlanc was sitting on a piece of foam insulation to keep it on a moving vehicle when a gust of wind blew him him off, killing him.

3. As a shocking new Reuters investigation reveals, employees of Elon Musk's space company in South Texas didn't have straps to secure the foam while transporting it to the facility's main hangar in South Texas.

4. While the senseless loss of life is a tragedy in itself, it's particularly surprising that the incident was never reported to the public over the past nine years. Worse yet, Reuters found, there have been at least 600 injuries of varying severity since then that haven't been previously reported either — indicating a safety crisis at the notoriously scrappy rocket maker.

5. Since 2016, SpaceX has failed to consistently report the total number of annual injuries to the Occupational Safety and Health Administration (OSHA), despite it being a regulatory requirement. Roughly 400 of the 600 cases uncovered by Reuters occurred during these unreported years.

9. MSCI under fire for 'monetary conflicts of interest' over ESG ratings

1. A Liberum analyst has hit out at MSCI over its ESG ratings methodology, warning that they may feature “monetary conflicts of interest” from its index business.

2. In a Substack blog post yesterday (13 November), investment strategist Joachim Klement cited a study from Columbia and Emory University published in September titled 'ESG Ratings of ESG Index Providers', which found that ESG ratings from MSCI may be biased.

3. In the paper, the authors said the results "raised concerns about the credibility of ESG ratings and underscores the need to understand the incentives that shape the production of ESG ratings".

4. Comparing MSCI ESG Research, which receives most of its revenue from selling index licences, and Refinitiv, which gains the majority of its revenue from selling data, the paper found that ESG ratings from MSCI were systematically higher than Refinitiv, even after accounting for rating methodology differences.

5. Liberum's Klement said the study indicates "there may be even monetary conflicts of interest at play in some case", as companies with better performance "seem more likely to be upgraded by MSCI ESG and then included in the MSCI ESG indices".

6. "Companies with poor share price performance seem more likely to be downgraded and then dropped from the MSCI ESG indices. No such effect is visible in Refinitiv ESG ratings," he said. 

7. "It seems that MSCI ESG ratings change if the share price performance of a company changes. This happens despite the lack of change in ESG data and the fact that both MSCI ESG and Refinitiv use the same publicly available ESG data for each company."

8. Klement added: "Whether this is intentional or just coincidental is impossible to tell from the study, but one thing seems clear to me. ESG ratings should be independent of share price performance and while this is the case for Refinitiv's ratings, it is not for MSCI ESG ratings."

10. How 'ESG' came to mean everything and nothing

1. "ESG" was supposed to be a clear way for companies to explain their business decisions around environmental, social and governance considerations. How did the term go off the rails?

2. The fragility of the entire ESG movement – and in some aspects, a major catalyst for its downfall – may well lie in its name, which has morphed into an umbrella catchphrase with little concrete meaning.

3. First, argues Alex Edmans, a finance professor at London Business School, the words don't belong together. "Environmental and social is about how we serve wider society. Governance is about how we generate returns," he says. For instance, an environmental pledge could be a net zero plan. A social commitment could make sure to ensuring hiring is equitable. Governance refers to the framework of corporate policy, like CEO-to-employee pay ratio. And often, these ambitions are functionally incompatible.

4. However, in the years since firms announced these splashy ESG commitments, often boosting share prices and bolstering corporate reputations, the term has created more confusion – even trouble – than positive change. In fact, some of those ESG commitments have created myriad problems for executives, says Alison Taylor, a clinical associate professor at NYU Stern School of Business, US. Increasingly, the ESG movement has been labelled as "woke" capitalism, and accused of enabling greenwashing.

5. As a result, Taylor says that even as businesses continue to issue net zero pledges, they've stopped labelling their business decisions as "ESG". This could spell relief for firms that have faced increasing backlash for leaning into the term while failing to make any substantial changes, particularly in a time of growing public expectations around corporate responsibility.

6. While some of today's executives might be inclined to wash their hands of the term, NYU's Taylor says the next wave of leaders may cling to the broader concept more tenaciously – perhaps without the label. 

7. "I explain to my students that there was a time when business was politically neutral," she says. But for her students, the notion of a politically detached business is a relic of the past. "They tell me that's not an option anymore." 

8. Although her students may not be looking for commitments that are designated as ESG initiatives, says Taylor, they do hold the view that business' role in society is one that must recognise the movements around them, whether that be diversity initiatives, or divestment from fossil fuels.gm