A number of institutional investors have come forward to voice their support for a shareholder resolution that could guarantee all Sainsbury’s workers the real living wage when it goes to a vote at Sainsbury’s AGM on 7th July.

The resolution, co-ordinated by responsible investment NGO ShareAction, is the first Living Wage resolution to be filed at a UK company. It already has the backing of co-filers managing £2.2 trillion, including Legal & General, Nest, and Brunel Pension Partnership.

Now Coutts & Co, the Coal Pensions Board, and Global Systemic Investors have declared their intention to support the proposal at Sainsbury’s AGM, increasing pressure on other investors to follow suit.

Leslie Gent, Head of Responsible Investing at Coutts & Co, said:

“We recognise the positive progress made by Sainsbury’s to match the Living Wage for its directly employed staff. As a Living Wage Employer ourselves we believe that this accreditation would set a standard for all UK supermarkets, and would provide the certainty and transparency that helps attract a high-quality workforce, today and in the future.”

ShareAction said it was in talks with several other investors and expected additional declarations of support in the coming days. It described the resolution as a “litmus test for investors’ social commitments amid the cost-of-living crisis”.

In April Sainsbury’s agreed to raise pay for staff in outer London, in a bid to convince the co-filers to withdraw the resolution, meaning all its directly employed workers now receive a wage equal to or above the current real living wage rates, set last November.

But it refused to do likewise for its third-party contractors, such as cleaners or security guards, and it has refused to make an ongoing commitment to match the real living wage rates in future. The rates will be updated in September this year and, as it stands, Sainsbury’s would not be obliged to match those new rates.

In May, after negotiations with the co-filing group stalled, Sainsbury’s chairman Martin Scicluna wrote to all shareholders, asking them to vote against the resolution. He argued that the firm’s pay rates were already higher than many of its competitors and that, “Accrediting as a Living Wage employer would mean that a third party – the Living Wage Foundation – would decide our colleague pay changes each year... We believe it is right for the Company and our stakeholders to make independent decisions regarding pay and benefits, rather than have them determined by a separate external body.”

ShareAction disputes those claims. It said that competitors including Lidl, Aldi and M&S already paid higher wages than Sainsbury’s. Recent announcements from ASDA and Morrisons means that soon they too will pay higher wages than Sainsbury’s.

Moreover, it said that living wage accreditation would not mean that Sainsbury’s would lose control over its wage levels. The Living Wage Foundation would merely set the minimum level, much as Sainsbury’s currently retains control over its wages despite the existence of a legally mandated national minimum wage.

In April Sainsbury's reported underlying profits of £730m, up 104% on 2020/21 and up 25% on 2019/20. In June it revealed that its chief executive, Simon Roberts, received pay worth £3.8m in 2021/22.

There have been calls from government for employers to minimise pay increases, on the basis that these are inflationary. But ShareAction argued that, “Living Wage accreditation does not seek inflation-busting pay rises, rather it provides protection for the lowest paid, to address the growing gap between their incomes and the real cost of living.”

The UK's Institute for Fiscal Studies has reported that the poorest households faced inflation in the year to April of 10.9%, three percentage points higher than top earners. The Office for National Statistics in the UK recently shared data showing that while median pay has risen 7.9% in the year to April in financial services, wages for retail workers have increased just 3.7% over the same period.

ShareAction noted that research has consistently demonstrated a positive business case for Living Wage rates, even in low-margin sectors such as retail, and that almost 10,000 businesses, including retail giant IKEA and half of the FTSE 100, were already accredited Living Wage employers.

Rachel Hargreaves, Campaigns Manager, ShareAction said: “There is no excuse for a highly profitable company with multimillion pound executive salaries refusing to guarantee all its staff, including subcontracted workers, a basic standard of living. Not only is the moral case compelling, there is a clear business case for employers. Further, low pay drives inequality which slows economic growth and stokes instability, presenting material risks to investors. We expect investors to support this resolution. The country will be watching closely to see how they vote.”