Sustainable Finance Newsletter: Looking for a living wage

By Ross Kerber

Nov 22 (Reuters) - Derived from traditional festivals, the U.S. holiday of Thanksgiving on Thursday customarily was a moment to "express gratitude for a bountiful harvest", according to this government website. For modern workers laboring at cash registers or restocking shelves, the bounty arrives in a different manner. Still, it's a good moment to consider their earnings in context, especially after the look at trends in executive pay in last week's newsletter.

Let's reflect via this week's main story below about how a large asset manager will press companies to pay a "living wage." It's part of a broader push by on the subject by the Interfaith Center on Corporate Responsibility. You'll also find links to stories about obstacles facing green jet fuel and new expectations for the SEC's long-awaited climate-disclosure rule.

As always please connect with me on LinkedIn where I welcome comments and feedback. If you have a news tip, potential content, or general thoughts feel free to email me at ross.kerber@thomsonreuters.com.

This week's most-read

ANALYSIS-US drive to make green jet fuel with ethanol stalled by CO2 pipeline foes

COLUMN-Panama copper drama another ESG flash-point for miners

Two men convicted in US of trying to sell Iranian petroleum

What's the right living wage to fight for? A new campaign by Legal & General Investment Management pressing supermarket chains to pay a "living wage" shows both the ambitions and limits of investor efforts to promote social equality. With some $1.47 trillion under management, the London-based firm known as LGIM has been one of the more outspoken big shareholder voices on sustainability issues. In its third-quarter impact report issued on Monday, the company describes its plans to pressure 15 big food retailers to pay living wages, and threatened critical proxy votes at companies including Walmart and Target if they didn't deliver by 2025.

It sounds like tough talk but one of LGIM's expectations is that targeted companies "Define what you consider to be a living wage." LGIM asks for other information like a list of partner organizations helping to figure out the living wages in each geography. LGIM executives acknowledge they are not beating companies over the head so much as emphasizing there's a difference between an employer's legal requirements and what workers actually need.

"It's the principle we're mostly driving for. It's a huge philosophical difference to say we pay whatever the law says is required, versus here's what is a living wage," said John Hoeppner, the firm's Chicago-based Head of US Stewardship and Sustainable Investments, in a recent interview. Labor activists have focused on getting companies to raise pay as a way to back up their talk of "stakeholder capitalism." The U.S. federal minimum wage has been $7.25 per hour since 2009. Figures for "living wages" vary but a well-known method to develop one is the MIT Living Wage Calculator from the Massachusetts Institute of Technology.

For an adult supporting one child in Cook County, Illinois, which covers Chicago, the state's minimum wage is $13 an hour, but that worker would need to earn $37.60 to make what MIT considers a "living wage" to pay for things like food, housing and child care. A Walmart representative said it is in active talks with LGIM, and listed various things it offers workers including "flexible scheduling, competitive wages, paid time off," health coverage and other benefits. "We prioritize our associates' total well-being," said the representative, Anne Hatfield, senior director of global communications, via email.

Walmart is the largest private U.S. employer. Its latest annual report listed 2.1 million "associates" globally. It said that among its 1.6 million U.S. employees, about 93% are paid hourly and about 70% were employed full-time.

Walmart recently hiked its average hourly wage to $17.50 and set the minimum wage at U.S. stores to at least $14 per hour.

Target representatives did not respond to questions. The company says it has more than 400,000 "team members.

A tight U.S. labor market and a growing economy have given workers in many industries leverage to seek pay hikes, including the recent settlement of strikes at big automakers.

Hoeppner said he wants to be modest about the influence of investor pressure brought by his firm and others, compared to market forces. "Of course economics is the driver" of many wage gains, he said. But he added that shareholder meetings move questions about pay to the fore. "Shareholder resolutions aren't what drives this but shareholder meetings have become moments of clarity," he said.

Company news Executing an overseas expansion plan, an arm of GS Caltex said it sold its first cargo of biofuel-blended marine gasoil to Maersk Oil Trading as the shipping industry tests new and cleaner fuels in a bid to reduce emissions.

A new trial should be held to reconsider a 1.8 billion-euro ($1.95 billion) fine against UBS for promoting illegal banking services and money laundering, France's top court ruled, though it left a guilty verdict stand. Investors in OpenAI are studying legal options after its directors ousted CEO Sam Altman, which sparked a potential mass employee exodus at the hot startup in the rapidly growing generative AI sector.

On my radar The SEC's long-awaited climate rule may scale back some of the most demanding greenhouse gas disclosure requirements it had proposed in March of 2022, says our story from Monday. But the agency keeps blowing past deadlines so who knows when it will get something out?

A reminder that my sharp colleagues plan lots of coverage of the upcoming United Nations COP28 climate summit to be held Nov. 30-Dec. 12 in Dubai, including a daily version of Sharon Kimathi's Sustainable Switch newsletter you can sign up for here. (Reporting by Ross Kerber; Editing by David Gregorio)