Brookfield Asset Management
Symbol: BAM (TSX/NYSE)
Annual Meeting Date: June 14, 2019
Filer: The Atkinson Charitable Foundation, supported by SHARE
Vote FOR shareholder proposal on Workforce Practices at Brookfield Asset Management
Shareholder proposal on Human Rights Due Diligence at Brookfield Asset Management
The disclosure of meaningful environmental, social and governance (ESG) metrics helps investors evaluate how a company manages key risks and upholds its responsibilities under international norms and frameworks such as the OECD Guidelines for Multinational Enterprises. These responsibilities include carrying out due diligence to avoid, prevent or mitigate adverse impacts linked to the operations of business relationships.
Research shows that strong workforce management practices are material to company performance. An analysis that reviewed 92 studies on human capital management found that the majority identified a positive correlation between companies’ training and human resource policies and investment outcomes.
Brookfield Asset Management Inc. (“BAM”) has more than 100,000 employees and relies on thousands more workers through contractors in countries ranked among the worst in the world for labour rights violations, including Colombia, the United Arab Emirates and China.
Although BAM publishes some limited examples of workplace safety practices, the company’s disclosure relies on qualitative value statements with insufficient meaningful and comparable metrics.
By virtue of its business model, managing and operating a diverse portfolio of real estate, infrastructure and private equity assets with a large employment footprint, BAM faces a broad range of workforce-related risks.
The Atkinson Charitable Foundation filed this shareholder proposal at BAM in order to seek additional information about workforce practices across the company’s global operations. The shareholder proposal reads:
RESOLVED That the Board of Directors of Brookfield Asset Management Inc. (“BAM”) expand its annual disclosure to shareholders, at reasonable cost and omitting proprietary information, to include key performance indicators (KPIs) on human capital management related to the company’s portfolio of alternative assets including real estate, infrastructure, renewable power and private equity. The enhanced annual disclosure should include:
- Comprehensive health and safety KPIs across the company’s global assets and operations; and
- Full reporting on the number and types of complaints received from employees, including contractors and temporary workers, the remedies offered under its grievance mechanism and the percentage of complaints resolved.
In order to provide comparable and consistent information, the metrics reported should align with internationally recognised good practice for reporting such as the Global Reporting Initiative and the Workforce Disclosure Initiative.
Relevance of the Issue to Investors
SHARE has engaged with BAM management on human and labour rights risks for more than three years on behalf of the Atkinson Charitable Foundation and other shareholders.
While BAM has disclosed policies, codes and guidelines related to its management of ESG risks in general, its current disclosure does not provide the metrics needed for investors to evaluate the company’s human capital management performance – particularly in the areas of occupational health and safety and employee complaints and grievances.
A few Brookfield subsidiaries, such as Multiplex Construction Europe Limited, report some health and safety metrics, but this is sparse and inconsistent across subsidiaries and BAM provides no aggregate data. As such, the proposal seeks enhanced workforce disclosure across the aggregate of BAM’s assets and operations.
In the context of the high-risk regions where Brookfield owns and operates assets, shareholders need better disclosure of workforce KPIs across BAM’s global operations. Disclosure of metrics such as total recordable work-related injuries, and number of fatalities, for instance, would help investors to evaluate the company’s progress against its stated commitment to “zero serious safety incidents”.
Vote Recommendation and Rationale
In its proxy circular, BAM recommends that shareholders vote against this proposal, arguing that the company places significant focus on having the highest standards of health and safety across operating businesses, and tracks and monitors performance in this area. Given it is collecting this information, the Company already has the information requested in the proposal and there should be little burden in disclosure of performance indicators to shareholders.
BAM also argues that as a global asset manager, the portfolio of companies it manages changes year-over-year as it acquires and sells businesses, therefore making year-over-year comparisons of safety performance not meaningful. This challenge is not unique. Other companies overcome the issue by providing disclosure at the portfolio level or providing information as to any changes in the scope of metrics, in order to make the metrics more meaningful. Furthermore, as a member of the Global Real Estate Sustainability Benchmark (GRESB), BAM already collects and aggregates some annual environmental and social data for comparison across much of its operations.
Finally, BAM states that it agrees that there is value in increasing reporting regarding its commitment to a positive work environment. The company says it has “robust processes” in place to receive and act upon employee concerns and that it endeavours to do so for the benefit of shareholders as appropriate. Disclosure of the information requested in the proposal, such as the numbers and types of complaints received from employees and contract-workers, and the measures taken to address workforce-related risks and concerns would help BAM to demonstrate to shareholders the robustness of its human capital management process.
Given the size of BAM’s global workforce and the risks to human and labour rights in the locations where it operates, additional disclosure is warranted for investors to evaluate the company’s human capital management practices. SHARE recommends a vote in favour of this proposal.
Vote FOR proposal at Brookfield Asset Management on workforce practices
Link to full proposal: https://share.ca/share-proposals/key-performance-indicators-kpis-on-human-capital-related-to-brookfield-asset-managements-portfolio-of-alternative-assets/
Analyst, Shareholder Engagement and Policy
Shareholder Association for Research & Education
[email protected] |
OECD Due Diligence Guidance for Responsible Business Conduct, 2018. http://mneguidelines.oecd.org/due-diligence-guidance-for-responsible-business-conduct.htm
Bernstein, Aaron and Larry Beeferman, “The Materiality of Human Capital to Corporate Financial Performance,” Pensions and Capital Stewardship Project, Labor and Worklife Program, Harvard Law School, April 2015.
David Kucera and Dora Sari. 2019. “New Labour Rights Indicators: Method and Trends for 2000-2015”, International Labour Review. http://labour-rights-indicators.la.psu.edu/