Unions using ESG to control workers — and drain Americans’ retirement savings

Opinion by F. Vincent Vernuccio, Sam Adolphsen

ESG has claimed its latest victims: Starbucks workers.

In the days leading up to the company’s annual meeting last week, labor unions nominated three new board members, all former Democratic officials who are decidedly pro-union.

The nominations were designed to muscle Starbucks into accepting union demands — and it worked.

Just days before the meeting, Starbucks agreed to a collective-bargaining framework at unionized stores, leading the unions to withdraw their board nominees.

What does this have to do with ESG?


While many have rightly focused on the activist push for the “E” in environmental, social and governance investing, labor unions are advancing their own agenda under the guise of the “S” and “G.”

They’re pushing board nominees and shareholder proposals that aim to force more workers into union membership, even when workers don’t want it.

The Biden administration has smoothed the path for this underhanded strategy, and not only does it threaten workers, it endangers millions of Americans’ retirement savings.

new Institute for the American Worker report shines a light on labor unions’ reliance on ESG.

No one is more explicit about it than unions themselves.

The Teamsters recently stated  the “S” in ESG is “a critically important tool for advancing worker interests in the 21st century.” Similarly, the AFL-CIO has said ESG investing “advance[s] the causes of working people.”

Outside unions themselves, meanwhile, labor allies have rallied to the ESG banner, with New York City Comptroller Brad Lander calling a recent union campaign against Apple “ESG done right.”

And S&P Global has clearly stated that union issues “fall under the social aspect of sustainable ESG investing.”

The Biden administration has made unions’ ESG focus possible, fulfilling the president’s promise to be “the most pro-union president ever.”

In 2022, the Department of Labor rolled out a rule letting private-sector investment managers prioritize ESG, which sacrifices the financial growth investors want.

The rule applies to union pension funds themselves as well as investment funds that manage retirement savings for tens of millions of Americans.

These firms are broadly supportive of ESG, and under the new rule, they can use investors’ money to vote for union priorities. 

What exactly are those priorities?

The answer is simple: whatever will help them control more workers.

At Starbucks, that meant capitulating to union demands for a collective-bargaining framework at organized stores.

At other companies, unions and their allies support a host of shareholder resolutions that would push workers into unions without full information or a secret-ballot election.

One common union demand is “non-interference policies.”

Unions want to force companies to sit out unionization campaigns.

That means not talking to their employees about the drawbacks of unionization, as well as letting unions intimidate workers using card check instead of a secret ballot in unionization campaigns.

Companies like Delta Air Lines, Chipotle Mexican Grill, DoorDash, Netflix and Tesla have all faced union-backed proposals along these lines.

Another common resolution requires a third-party “assessment” of a company’s collective-bargaining policies.

The assessments are designed to provide ongoing negative media coverage, pressuring companies into accepting non-interference policies, card check and other union priorities, like unfettered access to workers — including at home.

Amazon, Walmart and CVS have faced such resolutions, and Apple recently adopted one.

Reports on “working conditions” and “diversity, equity and inclusion practices” serve a similar purpose, attempting to browbeat companies into accepting union demands.

What’s happening at Starbucks shows the end game is to give unions more power. Yet while unions win, workers lose — and so do the investors whose money is being used for political purposes.

Union pension funds, which are already famously mismanaged, are jeopardizing their members’ retirement savings.

But so are other investment firms on which millions of investors rely.

Research shows unionized companies can forfeit 5% to 10% of shareholder value, largely because they lose flexibility.

Sure enough, ESG funds tend to underperform the broader market. 

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But investors don’t want to underperform the market — they want the strongest possible return on investment.

President Biden has put special-interest goals ahead of investors’ retirement goals, none more so than labor unions’.

The unions that back him want to keep using other people’s money for their own purposes.

Since Biden won’t protect workers or investors, the next president must.

F. Vincent Vernuccio is president of the Institute for the American Worker. Sam Adolphsen is policy director for the Foundation for Government Accountability.

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