Investor forces ethics on to Tesco agenda

A report from War on Want in 2006 found evidence that mainly women workers in Bangladesh regularly work 80 hours a week for 2 cents an hour in what it called "death trap" factories to produce garments for supermarket chains Primark, Tesco and Asda. The Fashion Victims report was based on research at six Dhaka factories employing more than 5,000 workers. The UK stores have all made commitments to pay a minimum £22 ($44) a month - calculated as a living wage in Bangladesh - but War on Want said wages started at £8 a month. Last month Action Aid published a report showing workers at overseas suppliers of UK supermarkets being paid poverty wages.

Now comes news that a small shareholder has amassed enough support to force the issue of ethical trading with suppliers onto the agenda at Tesco's annual shareholders' meeting on June 29. Ben Birnberg, a retired solicitor, wants to force the supermarket to adopt higher standards in its dealings with suppliers and farmers in low-wage countries.

Birnberg, who is also the company secretary at War on Want, has won the support of more than 100 shareholders, who speak for six times the number of shares required, to force Tesco to include a resolution demanding higher standards to be put to shareholders. The resolution would oblige Tesco to appoint independent auditors to ensure that workers in its supplier factories and farms are guaranteed "decent working conditions, a living wage, job security" and the right to join a trade union of their choice.

Birnberg had asked Tesco's directors to include the resolution to demonstrate their commitment to ethical sourcing by backing his resolution and circulating it to shareholders. Company secretary Jonathan Lloyd turned down the request, claiming it was "not valid", so Birnberg turned to measures included in the Companies Act to force the retailer to comply. Under Section 376 of the act he needed the support of at least 100 other shareholders who held an average of 2,000 shares each.

By the weekend of May 12, however, he had gained the support of more than 100 shareholders who speak for an average of nearly 13,000 shares each. He has had several large shareholders pledge their support, including the Joseph Rowntree Charitable Trust, an independent organisation based on Quaker values which is committed to "philanthropy which changes the existing power imbalances in society to effect real change."

Birnberg intends to deliver his letters of support to Lloyd at Tesco's head office, in Cheshunt, this week. The deadline for the resolution to be received in time for the June 29 annual general meeting is May 18. Lloyd had hoped to avoid the confrontation and had arranged to meet War on Want's campaigns director. A spokesman for Tesco said the supermarket group wanted "to chat through the issues" and believed it was better to do that "out of the public sphere."

Tesco could yet try to block the issue going before shareholders by demanding that Birnberg or War on Want pay for circulating the resolution and a statement explaining its aims. Birnberg, however, said the cost should only be small as it would be mailed out with other AGM documents. "This has been a bit of a struggle, but there has been enormous goodwill behind this from forward-thinking people," he said. "It chimes with the times and the arrival of Gordon Brown, who has always been concerned about conditions in the third world. We are trying to address this using shareholder power."

Support for Birnberg's resolution was boosted after an exchange of letters in the Guardian last month. Birnberg pointed out that Tesco boasted of its "market-leading package of pay and benefits" and insisted that it believed in "treating our partners as we like to be treated." The grocer has also stated that it is keen "to uphold labour standards in the supply chain."

Tesco's legal affairs director Lucy Neville-Rolfe responded with a letter saying it would be easier for the UK's biggest retailer to stop sourcing from countries with economic and social problems it cannot fix, but that trade was the right way to lift living standards.

The Guardian