Sean Farrell 

Unions seek City support for review of Sports Direct working conditions

Investors are beginning to share unions’ concern about the retailer’s treatment of warehouse staff
  
  

Staff in the warehouse at the Sports Direct headquarters in Shirebrook, Derbyshire.
Staff in the warehouse at the Sports Direct headquarters in Shirebrook, Derbyshire. Photograph: Joe Giddens/PA

Trade unions are seeking the support of City investors for a resolution to be put to Sports Direct’s annual general meeting calling for a fully independent review of working practices at the embattled retailer.

At a meeting on Tuesday the TUC and Unite, Britain’s biggest union, presented their resolution to representatives of leading fund managers including Aberdeen Asset Management and HSBC’s investment arm.

Influential pension funds such as the Railways Pension Scheme were also at the crowded meeting at the TUC’s headquarters in London as well as a representative from the Investor Forum, which works behind the scenes to put pressure on companies.

Unite confirmed the plan to submit a resolution but declined to comment further because the meeting was held in private.

Sports Direct – which did not immediately comment – will hold its AGM on 7 September at its head office in Shirebrook, Derbyshire, where the company also has its giant warehouse. The Guardian’s investigation into conditions at Shirebrook revealed an environment where workers were afraid to speak out over pay and conditions for fear of losing their jobs.

It is unusual for big fund managers to consult with trade unions about how to bring about change at a company. But investors have become increasingly alarmed about how Sports Direct is run, particularly after financial performance suffered, and are prepared to back the resolution.

A City source who was at the meeting said: “It doesn’t happen very often. The number of people in the room, the degree of attention paid and the close interest in the information that was coming from the unions is a sign that this company is causing a lot of concern.

“Most people now recognise that no company prospers if it exploits its workforce and this company looks like it might be exploiting its workforce. If the resolution is worded sensibly it will be difficult for sensible people not to agree with it.”

The meeting was held before MPs published a scathing report into Sports Direct that accused Mike Ashley, the company’s majority owner, of running the company like a “Victorian workhouse”. The business, innovation and skills committee said Sports Direct’s success is based on treating workers without dignity and respect.

Responding to the report, the Institute of Directors’ business group said Sports Direct risked damaging the standing of all British companies.

Simon Walker, the IoD’s director general, said: “I implore Mike Ashley to reflect on the deep damage he has done to public trust in business. He, the chairman Keith Hellawell and the board of Sports Direct should take immediate steps to improve conditions for his staff.”

The City source said: “The MPs haven’t pulled any punches and that is only going to stiffen [investors’] sinews.”

Ashley admitted to the business committee last month that conditions at Shirebrook were unacceptable. He has appointed a law firm, RPC, to conduct a review but the unions say RPC is not sufficiently independent because it has acted for Ashley on several occasions.

Ashley is also carrying out his own review, which he told MPs would never end. He increased pay for workers at Shirebrook in January to more than the minimum wage.

The Investor Forum, whose members include big investors such as Legal & General, met to discuss Sports Direct in December soon after the Guardian’s revelations about Shirebrook. The forum is understood to have discussed Sports Direct regularly since and is pushing for changes to take place before the AGM.

 

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