- Aviva Investors’ CIO David Cumming told the BBC the firm would not invest in the Deliveroo IPO.
- He cited driver employment issues as a key concern, even though the firm invests in other gig economy companies.
- Many of these companies have had, or still have, the same issues Cumming described.
- See more stories on Insider’s business page.
One of the top UK fund managers has said it won’t invest in the upcoming blockbuster public listing of Amazon-backed Deliveroo, citing concerns including the welfare of the food-delivery company’s workers.
Aviva Investors’ chief investment officer, David Cumming, told BBC News on Wednesday the asset manager, which oversees over $500 billion, would not be investing in the delivery app’s hotly-anticipated London debut.
He told the BBC that investors were taking social responsibilities “a lot more seriously,” and that one of the key reasons Aviva was passing on the IPO was the fact that Deliveroo’s workers are “currently classed as riders [which means] they don’t necessarily get basic rights for minimum wage, sick leave or holidays,” he said.
“It’s an investment risk if the legislation changes,” he added.
But data shows Aviva’s current holdings include a stake in Deliveroo rival Just Eat, which has only very recently adopted better working conditions for its drivers and riders.
Aviva has had a stake in Just Eat since the first quarter of 2020. That stake was worth €6.64 million ($7.85 million) by the third quarter of last year, according to Bloomberg data. The company improved conditions for its workers in December, employing staff full-time, part-time, or on zero-hours contracts entitling them to the minimum wage, as well as holiday, sick pay, pension contributions and other benefits such as maternity, or paternity leave.
The asset manager reduced its stake slightly in the fourth quarter, in the same period of time when the delivery company made the changes, the data showed. Just Eat was not immediately available for comment when contacted by Insider.
“[The Aviva situation] parallels what we’re dealing with here in the US, in that you’ve got large asset managers that are talking a good talk and, sort of on the margins, trying to influence things, but they’re not really using the full power of their capital to move the needle on issues that are important to other investor stakeholders,” Ethan Powell, CEO of Dallas, Texas-based Impact Shares, told Insider.
Aviva also has exposure to Uber, according to the firm’s latest US regulatory filing. The ride-hailing app has been under scrutiny in the UK since 2016, when former drivers Yaseen Aslam and James Farrar took it to an employment tribunal to push for workers to be recognized as full-time workers. In February, after Uber lost the case in the UK supreme court, the company recognized its drivers as workers, not contractors.
Aviva first invested in Uber in 2019 with a stake of over $2.79 million, and has increased that investment over time. The firm’s current stake now stands at some $24.7 million, according to Bloomberg data. This amounts to a holding of about 0.02% in the company via index funds, according to an Aviva Investors spokesperson.
The spokesperson said the firm did not own Uber in its actively managed equity funds and has no material holding across its assets. That means Aviva fund managers haven’t decided to back Uber, but rather it’s bought shares as part of its role in tracking a stock index.
The firm also has a $3.67 million stake in Delivery Hero, according to Bloomberg data, another competitor which uses a similar model where riders are self-employed and do not receive the benefits of full employment.
Uber and Delivery Hero were not available to comment.
Investors are increasingly focusing on environmental, social and governance (ESG) criteria to ensure the sustainability and societal impact of investments. And ESG stocks have been some of the biggest winners over the last 12 months.
But many leading sustainability investors have called out the wider industry for ‘greenwashing’, also known as ‘green sheen’, where firms and businesses use marketing spin to persuade the public and shareholders that the organization’s policies and actions are environmentally friendly.
“The financial services industry is duping the American public with its pro-environment, sustainable investing practices,” Tariq Fancy, the former CIO of sustainable investing at BlackRock, the world’s biggest asset manager, wrote in an opinion piece for USA Today.
There is also a growing concern that such practices could spread into the “S” part of ESG, in the form of ‘social-washing’, where companies issue statements or policies that make a company appear more socially responsible than it actually is.
Aviva’s decision not to invest in Deliveroo is a step in the right direction, according to the UK’s leading union for gig-economy workers like delivery drivers, IWGB.
“We note that they still have investments in Uber, Just Eat, and Delivery Hero. We encourage Aviva to show the same conviction across the gig economy, and use their influence to push these other companies to adopt more ethical business models that prioritize these key workers,” Alex Marshall, IWGB’s president, told Insider.
Mark Sloss, former head of investment management models and portfolios at UBS Wealth Management Americas, who is now a partner at Wilde Capital Management in New Jersey, said asset managers may wish to meet a set of more socially-focused investment criteria, but that doesn’t always translate into immediate changes in their portfolios.
“There might be a separation. That might have been institutionally their first chosen step to take, as in ‘we can’t do it everywhere all at once, so we’ll start with our IPO investments and then we’re going to eventually broaden it and then going beyond that’,” he told Insider.
For others, the ESG approaches from many big firms just aren’t good enough. “ESG is marketing, they’re selling gender equity, they’re selling environmental stuff, but when you look at the portfolios, there’s a disconnect,” Liz Simmie, cofounder of Toronto, Canada-based Honeytree Investment Management told Insider.
“What these firms do is they hire a single ESG research person, or a little team. And then they have to create the story that they take ESG into consideration in all of their portfolio construction. The problem is they don’t,” she added.
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
