Wednesday, March 16, 2022

In a stunning move, billion-dollar Starbucks investors urge the coffee retailer to go “union neutral”

Trillium Asset Management, which holds $48 million of Starbucks stock, is leading the charge on behalf of a billion-dollar-plus group of investors to push the coffee retailer to adopt a "union neutral" stance.

To date, more than 130 Starbucks stores in 26 states have petitioned the NLRB to unionize. Of the seven stores that have held elections so far, six have voted to unionize

According to the letter sent to both Mellody Hobson, Independent Chair of the Starbucks Board of Directors, and Kevin Johnson, its CEO (and obtained by CNBC), there exists grave investor concern that reports of Starbucks' "aggressive union-busting tactics" will harm the brand and its reputation (and, by extension, sales, profits, and, ultimately, share value).

With rapidly growing public support for unions, which currently stands at a high of 68% approval, we believe that Starbucks’ reputation may be jeopardized due to reporting of aggressive union-busting tactics. Consumer sentiment is changing, too. In a recent poll, 42% of Americans say they are less likely to shop with a company that is trying to stop employees from unionizing. This group of investors encourages Starbucks to pivot to a more collaborative and mutual relationship with its unions to uphold its reputation.

Among the reported "aggressive union-busting tactics" are alleged captive audience meetings and alleged retaliation against pro-union employees (including the cutting of hours and terminations). 

As a result, the investors "strongly recommend" that Starbucks do the following.

  • "Immediately adopt, implement, and publish a global policy of neutrality that applies to all current and future unionization efforts and elections." 
  • "Immediately cease all anti-union communications with employees (including through public statements, captive audience meetings, texts, websites, and on-site billboards)."
  • "Commit to negotiating with each facility’s established union in good faith."
What's most significant here isn't just that major shareholder investors are urging the coffee giant to be "union neutral," but instead why they are doing so. If close to half of Americans will cease frequenting union-busting employers, then all employers need to adopt a different, softer approach to unionization (at least for the time being), or be prepared to suffer the consequences to their bottom lines.

Because of the impact of Covid-19 and the Great Resignation/Reshuffling, the labor/management pendulum has swung further to the left than at any time in history. It will eventually swing back to the middle. Until then, however, businesses that seek to stifle union organizing with aggressively traditional union-busting tactics (e.g., captive audience speeches, terminating rabble-rousers) may face a customer-focused backlash. Simply, 20th-century union-busting is not playing well with 2022 union organizing. 

I'm not suggesting that employers go so far as to go "neutral" (as Trillium is urging Starbucks to do), but I am suggesting that businesses should be considering labor counsel who will speak softly and carry a not-quite-so-big stick, at least for the time being.