date: Wednesday 19 February 2003 embargo: 00.01 Monday 24 February 2003

Attention: Business, industrial, investment, pensions correspondents

Trade unions must use their shareholder power to make companies more socially responsible

Trade unionists should use their power as shareholders to stop excessive executive pay and to act against other failings in corporate governance, says a new TUC publication ‘Working Capital’ out today (00.01 Monday 24 February).

Launched to coincide with the TUC’s ‘Fair Shares’ conference the publication calls for trade unions to embrace shareholder activism. The TUC is specifically targeting the 900 members of its Member Trustee Network. These pension fund trustees have responsibility for invested funds amounting to around £260 billion, representing one-third of total UK pension fund assets.

‘Working capital’ outlines the kind of activity the TUC is planning, including:

• A programme of training for pension fund trustees to help them understand investment and governance issues.

• Promoting employment practices as an important area of company analysis for investors.

• Surveying fund managers’ voting records on controversial issues.

• Gordon Brown MP , Chancellor of the Exchequer, has given his support to the TUC’s approach. In his forward to ‘Working Capital’ Gordon Brown writes: 'I commend the TUC for this effort to develop a distinctive trade union agenda on institutional investment . . . Pension funds and insurance companies hold a huge pool of capital in the UK and the decisions taken by institutional investors affect the prosperity of each of us individually, and of the nation collectively. I am confident that institutional investors, committed to the active stewardship of their assets, can help to ensure that British companies are productive, responsible and entrepreneurial.'

Brendan Barber , TUC General Secretary Elect, said: 'Working people indirectly own most UK shares through their savings in pensions and insurance policies, so it is workers’ capital that is being managed by institutional investors. Trade unions have a duty to ensure that capital is invested sensibly, efficiently and in a way that does not cause harm to the very workers who have generated it.

• 'By highlighting institutional investment as a new area of work for trade unions we hope to encourage the development of a long-term and responsible investment culture in the UK that meets the needs of union members both as investors and employees.'

‘Working Capital’ argues that with the current concentration of institutional investment pension fund trustees have significant influence and responsibilities. It also notes how institutional investors have sometimes damaged employee interests even though the money they are investing is workers’ capital. Investors have often backed needless merger and acquisition strategies, job lay-offs and other activity that has not delivered long-term shareholder value or been beneficial to employees.

The paper explains the various points at which trade unionists can exert pressure in order to make sure that the capital that working people generate is invested in their best interests. In addition to educating trustees this will include working with analysts to help them factor employment issues into company analysis, and co-operating with institutional investors to address issues of common concern in investee companies.

Notes to Editors:

• The report 'Working capital' can be accessed on www.tuc.org.uk/workingcapital

• TUC ‘Fair Shares’ conference takes place on Monday 24 February at TUC Congress House London WC1 9.30am - 1pm. Media credentials are available, free of charge, from Moira Mooney on 020 7467 1225 or mmooney@tuc.org.uk

• All TUC press releases can be found at www.tuc.org.uk

Contacts:

Media enquiries: Liz Chinchen on 020 7467 1248 or 07699 744115 (pager) or email media@tuc.org.uk

Other enquiries: Tom Powdrill 020 7467 1201 or 07764 200 896 (mobile)

Press release (600 words) issued 24 Feb 2003