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May 13, 2009

Investors Support Passage of Employee Free Choice Act
    by Robert Kropp

In a letter to Congress, a group of institutional investors argue that passage of the bill would restore human rights in US workplaces and contribute to economic recovery. -- A group of 26 institutional investors, with assets under management of $372 billion, have sent a letter to Congressional sponsors of the Employee Free Choice Act of 2009 (EFCA), expressing its support for the passage of the bill.

The investors, all of which are signatories of the United Nations Principles for Responsible Investment (PRI), identify themselves as "long-term investors seeking both sustainable financial performance and the protection of human rights. Among the signatories of the letter are the AFL-CIO Employees Staff Retirement Fund, Calvert Asset Management, and Trillium Asset Management. Boston Common Asset Management, another signatory, is leading the outreach to S&P100 companies on the issue as well.

Passage of EFCA would "amend the National Labor Relations Act to establish an efficient system to enable employees to form, join, or assist labor organizations, and to provide for mandatory injunctions for unfair labor practices during organizing efforts." Under the bill, the authority to hold a secret ballot vote on union formation would transfer from the employer to workers.

The letter, sent on May 11, argues that "the freedom to form or join a union of one’s choice and to bargain collectively for the terms of employment are fundamental human rights," according to the UN's Universal Declaration of Human Rights as well as the core conventions of the International Labor Organization (ILO).

Citing an Economic Policy Institute study that links stagnation of average wages with a decline in union density, the investors noted that during the same time, executive compensation has increased dramatically. Such conditions depress "the prospects for sustained economic recovery," according to the letter.

The letter also cites a study by Human Rights Watch that concludes, "workers' freedom of association is under sustained attack in the United States, and the government is often failing its responsibility under international human rights standards to deter such attacks and protect workers' rights."

The letter states that companies with the best labor practices provide superior returns to shareowners, and that a company's policies on human rights is an important factor in predicting future financial performance. The investors "believe that an environment where labor rights are respected and workers are able to negotiate with management at arms-length often provides fertile ground for future business growth."

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