Investors managing $4.7 trillion urge firms to resist layoffs amid pandemic
The investors' statement came after the Labor Department reported more than 3 million people filed unemployment insurance claims last week
Investors managing more than $4.7 trillion are urging public companies to retain workers whenever possible and protect them through policies including paid sick leave for the companies' own business benefit over the long-term and to protect society amid the coronavirus pandemic.
New York City Comptroller Scott Stringer is among 195 investors that signed the open message to companies on Thursday after a week in which a record number of Americans filed for unemployment benefits. Almost 3.3 million people sought benefits last week, the Labor Department said earlier Thursday.
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It also follows the Senate passage of a $2 trillion stimulus package to address economic fallout related to COVID-19, which cleared the chamber unanimously after days of stalls and negotiations.
"Workers must be protected during the COVID-19 pandemic and its aftermath," Stringer said in a statement. "As shareholders, we expect companies to protect the health, safety, and economic stability of their workers. The long-term success of companies depends on the long-term success of employees, and this call to action is not just the right thing to do, but the smart thing to do."
The investors are asking companies to take five steps amid the coronavirus pandemic. They are that companies make emergency paid leave available to all employees including temporary, part-time or subcontracted workers; take measures to limit workers' exposure to COVID-19 as much as possible including through remote work, rotating shifts, cleaning or location closures; retain workers as much as possible and be mindful of potential discrimination-related issues when considering layoffs; maintain timely and prompt supplier payments and work with customers facing challenges; and practice ethical financial management including by suspending stock buybacks and limiting executive pay throughout the crisis.
The investors urged companies to take further measures if they can, such as offering hazard pay, assisting in accessing childcare or government support programs, providing laid off workers with employer-paid health insurance, and deploying resources in a way that addresses pandemic-related needs.
"While we acknowledge many of these recommendations may be out of reach, over the last several years we have seen corporations show leadership by using their power as a force for tremendous good," they said in the statement. "This leadership is critically needed as we face COVID-19 together."
As confirmed U.S. coronavirus cases approach 70,000, the largest clusters are in the New York City area where hospitals are already in danger of becoming overwhelmed and state and city officials are pressing for federal assistance in securing life-saving medical supplies including ventilators.
The investors — led by Stringer's more than $200 billion in pension fund assets under management, $500 billion coalition the Interfaith Center for Corporate Responsibility, and women-led firm Domini Impact Investments — are encouraging corporations to think beyond the current crisis and put policies in place to help stabilize the economy and ensure a fast return to normal operations when possible.
The welfare of companies is inextricably linked to the welfare of employees, suppliers, customers and communities in which they operate, the investors said, echoing a statement from an organization of CEOs, the Business Roundtable, in August that redefined corporate duty as to a broad set of stakeholders.
Boards of directors are accountable for the long-term management of their human capital strategy and will be well-served to retain well-trained, committed workforces that they have invested in, they said. The investors added that widespread unemployment will worsen crises related to the pandemic and threaten both basic social stability and financial markets, presenting both business and ethical arguments for companies to consider workers.