Starbucks urged by investors to adopt neutral policy toward union efforts

Several investors, led by Trillium Asset Management, are urging Starbucks to adopt a global policy of neutrality for all current and future attempts of its workers to organize. They also want Starbucks to reach “fair and timely” collective bargains with workers who vote to join the union.

In a letter to Starbucks CEO Kevin Johnson and Chair Mellody Hobson, the coalition of more than 75 investors warns of reputational risk for the coffee giant, citing growing public support for unions.

The outreach comes ahead of Starbucks’ annual shareholder meeting on Wednesday and includes signatories Trillium, SOC Investment Group, Parnassus Investments and New York City Comptroller Brad Lander. The group, which overall has more than $3.4 trillion in assets under management or advisement, says it holds at least $1.2 billion in Starbucks stock. This is the second such letter it has sent to the company’s CEO, the group said.

“We believe the way Starbucks has responded to union organizing activities suggests a departure from international norms and standards as well as from its commitments to them. Our concerns include Starbucks’ activities at stores that have organized after the Buffalo election such as alleged retaliatory termination of employees and continued captive audience meetings,” the letter says.

Starbucks did not immediately respond to request for comment.

To date, more than 130 Starbucks stores in 26 states have petitioned the National Labor Relations Board to unionize, according to organizers Starbucks Workers United. Of the seven stores that have held elections, six cafes have sided with the union. Five of those locations are in the Buffalo, New York, market, where the unionization efforts began last summer, and the other cafe is in Mesa, Arizona.

Starbucks has maintained that marketwide votes are appropriate as opposed to single-store counts so that all workers would be able to participate. So far, the NLRB has rejected that premise.

Starbucks Workers United has accused the company of retaliation and union-busting tactics, which the company has denied. Last week, the organizers said they filed an unfair labor practice charge with the NLRB, claiming Starbucks has cut workers’ hours as retaliation and financial punishment for organizing or supporting the union, which the company has also denied.

“The company has spent decades working to improve its ESG profile, build its reputation on environmental, social, and governance factors. We are really concerned that they are putting their reputation at risk,” Jonas Kron, chief advocacy officer at Trillium, told CNBC in an interview.

“Now they have to choose, they can keep down a path of respecting their workers by allowing free and fair elections by adopting this policy of neutrality … but if they don’t do it, then they’re going to risk burning all that goodwill they’ve built over the years,” said Lander, the New York City comptroller.

The coalition argues that respecting the union is in Starbucks’ best interest for productivity and growth.

“We believe that when workers’ rights are ensured, their interests represented, and their needs properly communicated, companies and workers alike benefit. Benefits may include lower turnover, more resilient and risk-tolerant operations, more effective feedback loops, higher employee satisfaction and productivity, and, in turn, higher quality and more innovative products and services,” the investors write in the letter.

“Customers have a choice, and this is going to be the one,” Dieter Waizenegger, executive director of SOC Investment Group, told CNBC. “The company should work very hard to make sure that it keeps its reputation as a people-positive company, and I think that should include really being a good partner to its partners.”

Starbucks shares closed down over 4% Monday and are down over 32% year to date.