Jan 31, 2022 - Economy & Business

Investors push retailers to strengthen sick leave policies

Axios art of a thermometer pushing onto a stack of dollar bills

Illustration: Aïda Amer/Axios

Employees at big box retailers are finding allies among activist investors, as some banners move to reduce paid sick days.

Why it matters: Retailers are prime targets for ESG (environmental, social and governance) activists, who are pushing companies to strengthen worker rights at a time when the pandemic has revealed how valuable these employees are to the industry.

  • Management teams that don’t take these directives seriously face the risk of larger investor rebellions that could threaten director positions if shareholders decide to take things that far.

Between the lines: During the depths of the pandemic, retailers expanded sick pay.

  • Facing labor shortages and higher costs, some businesses have begun to curtail the benefit as the CDC cuts back on recommended isolation periods.
  • Trillium Asset Management, an investor with $5.6b in AUM, has filed a shareholder proposal against CVS, demanding permanent paid sick leave for all employees. Trillium filed similar paperwork with Target.
  • CVS has formally asked the SEC to block the proposal.
  • Kroger and The TJX Companies, the parent of TJ Maxx, have also been targeted with paid sick leave proposals, per the Financial Times.

Our thought bubble: Whether these ESG activists succeed in getting their companies to adopt these changes is TBD.

  • But if the SEC allows these proposals on the AGM ballot, and shareholders win a majority vote, or even a significant percentage, it's a significant hit to retailers' reputations.
  • Such damage comes at a time when banners are trying hard to attract customers and retain employees.

Richard covers the retail industry for the Axios Pro Retail Deals newsletter. Sign up to read more of his stories and analysis.

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