GES Newsletter
April 20, 2010

G4S plc, the world’s leading international security solutions group, has taken an industry lead in improving labour standards in emerging markets, as part of an ongoing constructive dialogue with GES Investment Services and its investor clients. Following a number of labour disputes, the company signed an agreement with the labour organisation UNI in 2008. Today, G4S’ new Corporate Responsibility Report reveals that the implementation process has already led to concrete improvements. Both G4S and UNI acknowledge the significance of GES’ and investors’ engagement in achieving progress.

G4S operates in more than 110 countries and has more than 595,000 employees worldwide. In December 2006 and January 2007, two complaints against the company were filed to the British government by the international trade union alliance UNI, charging G4S with systematic violations of the OECD Guidelines for Multinational Enterprises in twelve countries, mainly in emerging markets. The accusations included e.g. denial of freedom of association and unlawful dismissal of workers. After further research GES Investment Services was able to verify violations through official bodies, e.g. International Labour Organization, in at least five countries: Indonesia, Israel, Malawi, Mozambique and the United States.

On behalf of all its clients and together with one, the Norwegian life insurance company KLP, GES chose to pursue the case by engaging in an active ownership process with the company – a decision that has now proven to pay off.

Today, G4S publishes its Corporate Responsibility Report for 2009. It reveals concrete progress with the implementation of the framework agreement and includes endorsement from Jakob König, Senior Research Analyst at GES Investment Services, who has managed the engagement process:

“Since GES Investment Services two years ago became concerned about G4S’ frequent association to labour rights disputes, the company has demonstrated substantial improvements in its management of labour relations. Not only has the company engaged in constructive negotiations with labour organizations, to resolve disputes and work out structures to handle labour rights issues in challenging environments, but it has also demonstrated an excellent approach to investor dialogue during the process…”

Hanna Roberts, Research Manager and responsible for Engagement Services at GES Investment Services, said: “This is a very good practical example demonstrating that active ownership works and creates value for all parties. It simultaneously improves the company management of labour relations and reduces shareholder risks.”

Jeanett Bergan, Head of Responsible Investments at KLP, said: “We acknowledge G4S and the labour organisations for their continuous efforts to engage in dialogue and for reaching an agreement. The nature of G4S’ business and markets of operation is extremely challenging. In this the labour organisations play an important role in securing international labour rights.”

Debbie McGrath, G4S Group Communications Director, said: “During 2009, G4S made significant progress in building and implementing its CSR strategy and we are committed to our long term CSR goals. We have also improved our communication and engagement with key stakeholder groups to ensure that our strategy is aligned to their needs and that as our CSR programmes develop, we seek input and advice from those around us. We appreciate the constructive dialogue we have had with GES and their investor clients during this time.”

Alice Dale, Head of UNI Property Services, said: “Our experience with G4S is that they have been willing to dig right in to resolve problems that we have identified, whereas some of our other global partners in the security industry have been less aggressive about working to rectify clearly unacceptable labour practices we have confronted in their global business. The pace of rollout in our global agreement needs to accelerate but we are working on that. Regarding the role of investors, they provided critical pressure on G4S leading up to signing the UNI-G4S Global Agreement and they continue to be an important component of corporate social responsibility with every company we deal with in security and cleaning services worldwide.”