Activists are trying to force JD Sports, M&S and more to disclose low pay – all through shareholders

JD Sports has joined M&S and Next as the latest high street brand to have shareholders vote on a move to make the company reveal how many workers are on low pay – a ploy by campaigners to try and force the companies into paying more.

Rather than relying on moral arguments, activists at ShareAction have been trying to convince stock owners that poor pay can harm the company’s overall interests.

Shareholders rejected the motions – which would have forced the company to reveal how many staff were not being paid a real Living Wage – but those behind the campaign say it is a “warning shot”, and shows a growing appetite for transparency among investors.

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“A business model built on low wages is a risk for the vitality and growth of our UK economy as well as putting a strain on workers and families struggling to make ends meet,” said Jeanne Martin, ShareAction’s co-director of corporate engagement, saying that the vote was “a warning shot to JD Sports that low pay standards are no longer acceptable to many investors”.

There is solid reason behind this, said Joseph Evans of the IPPR think tank: “It’s true that low pay harms the economy and poses a long-term threat to shareholders’ interests.”

He added: “Low pay is a real systemic issue in the UK economy and it does hold down consumption, which is bad for businesses in sectors like retail. But can you get a critical mass of shareholders to actually realise that’s the real challenge?”

But ultimately the bottom line comes into it: businesses and investors will prioritise their profits. Where vacancies are easy to fill, there is little self-interested reason to boost wages in a way which might harm bottom lines, Evans added. 

Luke Hildyard of the High Pay Centre said the resolutions could force shareholders to acknowledge the issue. “The companies will be acutely aware of investor, media and societal interest in the pay of low-paid retail workers in future deliberations on pay and it seems very likely that this will exert upward pressure on their pay levels,” said Hildyard. 

While reducing staff turnover and training costs could benefit businesses, Hildyard said, “investors fundamentally want the company to make more profits so the value of their investment increases so many will be wary about raising costs thereby reducing profits, even if there are arguments that it will raise them in the long term.”

He added: “It might be in the interest of these savers for companies to raise the pay of their workers, even if it reduces the return to their pension a little bit – that can be offset by the improvements to their own working life and their communities resulting from a culture of better pay and working conditions.”

The idea of shares and investment being used to drive change is not new. “Activist investors” have a long history of buying enough shares to influence a company’s direction – although not typically for moral reasons. Meanwhile, there have been long campaigns to force pension funds to stop investing in fossil fuels. But a moral push coming from existing shareholders is novel, said Hildyard.

“Shareholder activism is a relatively recent but to some extent unsurprising development – the deployment of trillions of pounds of capital inevitably shapes the world we live in, so it’s entirely appropriate that this should be scrutinised and debated,” he said.

In fact, expecting shareholders to force change shows there is a decision to be made, said Evans: divest from the company, or stay in the room and influence decisions. “If all the socially conscious investors divest, does that just leave the company going in the direction of the mainstream view, and actually nothing changes?” he said.

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