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Driven to the Edge: An investor briefing on freedom of association and collective bargaining at Tesla

Webinar Summary: Martes, Junio 4, 2024 – 10 am EST/4 pm CEST


Ahead of Tesla’s (TSLA) highly anticipated Annual General Meeting (AGM) which took place on Junio 13th, 2024, the Global Unions’ Committee on Workers’ Capital (CWC), along with SOC Investment Group, Domini Impact Investments, Folksam Group, and the Shareholder Association for Research and Education (SHARE) co-hosted a webinar to address critical questions for investors about the automaker’s anti-union practices and the associated risks to long-term shareholder value. Drawing from examples in Sweden, Germany and the United States, the panelists called on participating investors to support a shareholder resolution (Item 9) requesting the Tesla Board of Directors to adopt a comprehensive labour rights policy. This policy would explicitly commit Tesla to non-interference in worker organizing, good faith and timely bargaining, compliance with the highest labour standards, and a process to identify, protect, and remedy any labour rights violations.


To begin, a representative from the Swedish trade union, IF Metall, drew attention to the ongoing strike of Tesla workers in Sweden. For six years there were attempts to unionize Tesla repair shops. However, after a failed dialogue with the company and an organizing drive, around a third of the Swedish mechanics went on strike in Octubre 2023. IF Metall explained that walkouts are exceptionally rare in the country, and that IF Metall had not been on a strike in over 40 years. The country has an especially high level of union membership where almost 90% of the workforce is covered by a collective agreement. In this system, most employment matters are managed or regulated through the unions – not by state actors or courts. It is exceptionally rare for Swedish employers to refuse to negotiate when workers ask to form or join a trade union. However, in response to the work stoppage at Tesla, the company maintained its anti-union stance and broke international standards by bringing in replacement workers to substitute the striking workers. This generated a shockwave throughout Northern Europe and prompted other workers in Sweden, Denmark, Norway and Finland to act in solidarity with the mechanics. For example, IF Metall explained that over 7 months since the initial strike action, dockworkers, postal workers, transport workers, electricians and garbage collectors have taken actions against Tesla disrupting its operations at various points in its supply chain. It has impacted Tesla’s ability to ship new products into Sweden, to set up new superchargers, to license new cars, and even disrupted the company’s office mail and waste handling. The IF Metall representative went on to add that while it is difficult to estimate the total impact of these actions on Tesla’s operations, it is clear that after 7 months of strikes, the company has chosen to maintain its anti-union stance and adopted strategies to circumvent the primary strike and the solidarity actions. Given the importance of industrial relations in Sweden, the strikes and solidarity actions will likely continue until Tesla agrees to a collective bargaining agreement for its Swedish mechanics. At the moment the strike is gaining traction and slowly more mechanics are joining the strike.


Next in Germany, a representative from IG Metall – Europe’s largest industrial union – drew attention to violations of labour rights at Tesla’s first European Gigafactory in Berlin-Brandenburg. The factory employs more than 11,000 workers and manufactures a variety of Tesla products including batteries, vehicles, and powertrains. Since the factory opened in 2022 there have been reports from workers of intimidation and coercive pressure dissuading workers from unionizing. For example, workers have been told they would be fired or would not be considered for a promotion if they participated in union activities. These actions defy Tesla’s stated policies as well as international standards on freedom of association and collective bargaining according to IG Metall’s representative. In addition, there have been concerns raised around occupational health and safety at the Gigafactory in Germany. This includes an unusually high rate of work-related accidents requiring workers to take at least three days of sick leave. Workers have reported heavy production targets that do not account for human resources, high rates of injuries and exhaustion, as well as a culture of fear for taking sick days given the potential for punitive measures. These measures violate workers’ fundamental labour right to a safe and healthy workplace. To address these concerns, trade unions in Germany work to protect the rights and interests of workers through collective agreements with the employer. In Germany, trade unions often play a key role in investigating and improving health and safety standards after an incident, and they can act as a liaison with local communities. Given the importance of industrial relations in Germany – particularly in the automotive sector – IG Metall will likely continue its organizing efforts and will call on Tesla to agree to a collective bargaining agreement for its European Gigafactory workers by the time a majority of the workforce has organized.


Meanwhile in the United States (U.S.), the panel drew attention to reports of labour rights violations, health and safety concerns and worker discrimination. While U.S. labour law generally provides less protection for workers than European or international human rights standards, Tesla has been found to have unlawfully interfered with workers’ rights to form or join a trade union. Over the years Tesla violated U.S. labour law by interrogating workers over suspected unionization efforts, firing a worker who engaged in union activities, and preventing workers from discussing pay and working conditions with one another. Famously, the CEO of Tesla tweeted that employees would lose stock options if they joined a union in 2023 in violation of U.S. labour law. In addition, investigative reports by media outlets in the U.S. have revealed that Tesla has higher injury rates than peers, and that the company has a history of underreporting injuries. Tesla also faces a lawsuit by the U.S. Equal Employment Opportunity Commission and an investigation by the California Civil Rights Department, as well as a class action lawsuit brought by former and current employees over allegations of a hostile working environment where Black workers face severe discrimination and harassment.


To close the panel, Mary Beth Gallagher, the Director of Engagement from Domini Impact Investments based in the U.S., and Kiran Aziz, the Head of Responsible Investments at Norway’s largest pension fund, KLP, drew from the examples of Tesla’s anti-union apporach to discuss investor expectations of portfolio companies on labour rights. Aziz from KLP drew attention to her experience engaging Tesla bilaterally and collaboratively with a group of Nordic investors that wrote to Tesla’s board of directors about its opposition to unionization. Then, Gallagher from Domini shared her experience engaging with Tesla on labour rights for many years ultimately leading her to escalate engagement by working with SHARE, and SOC Investment Group in filing a shareholder proposal on the topic in 2022, and then again in 2024, with Folksam also joining as a co-filer. Both investors spoke about their responsibilities as investors to set expectations on their portfolio companies to ensure adherence to international labour standards and norms such as the ILO Declaration of Fundamental Principles and Rights at Work, the UN Guiding Principles on Business and Human Rights, and the Organisation for Economic Co-operation and Development (OECD) Guidelines. This aligns with their apporach to human rights due diligence to ensure the long-term value of their investments while minimizing risks stemming from human capital management. The investors drew attention to the gap in Tesla’s current human rights policy committing the automaker to local law instead of a higher international standard. They stressed that the proposal (Item 9) which requests the Adoption and Disclosure of a Non-interference and Collective Bargaining Policy, would address these gaps as well as the lack of alignment between Tesla’s current actions and respect for freedom of association and collective bargaining. Gallagher emphasized that the request for an updated policy was reasonable, proportional, and would explicitly support requests from workers who seek to exercise their freedom of association and collective bargaining rights, while also mitigating potential operational, legal, and reputational risks.


In conclusion, the panel demonstrated through examples in Sweden, Germany, and the U.S., that Tesla’s approach to unionization contradicted its stated policy and international human rights standards for interfering with worker’s fundamental labour rights. Importantly, freedom of association and collective bargaining are important enabling rights that help workers come together to advocate for better working conditions. When there is a strong trade union representation, investors can expect stronger mechanisms to ensure high health and safety standards or address discrimination in the workplace, to ensure sustainable productivity rates, and to manage workplace grievances fairly. This webinar was co-hosted by the Global Unions’ Committee on Workers’ Capital (CWC), SOC Investment Group, Domini Impact Investments, Folksam Group, and the Shareholder Association for Research and Education (SHARE). You can read more about the shareholder proposal (Item 9) in the exempt solicitation here.