An interview with Edgar Hernandez, assistant director, department of strategic initiatives, The Service Employees International Union (SEIU).

SEIU is a labor union representing almost 1.9 million workers in over 100 occupations in the U.S. and Canada.

Explain your role and that of the SEIU

I’m the assistant director of the Capital Stewardship Programme within SEIU’s Strategic Initiatives Department and I’m also a trustee on the SEIU Master Trust Pension Plan. We represent 2 million members in the healthcare, public sector, and property services industries in the U.S., Canada, and Puerto Rico. We engage with public sector pension plans where our members are participants and in some cases our members are elected or appointed to serve on those boards of trustees. We work with those trustees on issues concerning investments, shareholder work, and retirement security.

You’ve targeted big brands like Coca-Cola, Netflix, and Amazon?

That’s right. As owners of companies, we intend to engage these companies on issues that we feel can negatively impact shareholder value. In some instances, our conversations are productive and when we can arrive at an agreement, we will withdraw the proposals that we file.

Previously, if our proposals went to a vote, we would have been worried about the results but that’s no longer the case. As an example, we filed a resolution with a company in 2021 which received a good level of support but we resubmitted the same proposal the following year at the same company and the proportion of support it received increased almost three times over. We went back to refile for a third time, at which point the company implemented the resolution ahead of the vote. In response, we agreed to withdraw the proposal. That was really exciting for us, to be able to consistently take on corporations that, whether they’re on the Fortune 500 or below that, still provide us with opportunities to engage and to see those engagements bear fruit.

Why are diversity and equality at the forefront of so many of your campaigns?

The demographic profile of SEIU members is very diverse. The majority of our members are women and people of color. A significant representation of our members are immigrants from Europe, Latin America, Asia, and Africa. Since the murder of George Floyd, we’ve been engaged in companies that have made statements in support of the movement for Black lives, and we want to make sure that they’re living up to the spirit of the commitments they made back in the summer of 2020.

Tell us about your ongoing campaign at Eli Lilly?

We believe that Eli Lilly’s lack of disclosure represents reputational risk when its lobbying contradicts company public positions. For example, Lilly states that it supports more affordable medicines yet it funds Pharmaceutical Research and Manufacturers of America (PhRMA) and AfPA’s opposition to lower prescription drug prices.

Lilly also opposes the state of Indiana’s border restriction laws, yet groups have asked Lilly to cut ties with The American Legislative Exchange Council (ALEC) because of its voter restriction efforts and the model legislation that they provide to state-elected officials so that they can pass those laws in their states. So, that’s why we’re asking for full disclosure of Lilly’s lobbying activity as an expenditure, so we can assess whether Lilly’s lobbying is consistent with its expressed goals and shareholder interests.

What campaign are you most proud of in your time at SEIU?

A couple of examples came to mind. When we first started our engagements on corporate board diversity, we were able to score some military victories at Facebook and Amazon. It really helped us understand and focus our shareholder work going forward. But I think, overall, I would say my proudest shareholder campaign has been asking for companies to conduct racial equity audits so that they can assess the company’s business practices, products or services, and the impacts these things have had on communities of color.

To date, we have come to an agreement at the following companies to conduct racial equity audits: State Street Global Advisors, Wells Fargo, Pfizer, Southern Company, Invesco, TransUnion, and KeyCorp. BlackRock also released its audit in April. In addition to these agreements, we have also filed proposals seeking audits which have received majority support at companies such as Apple, Home Depot, and Maximus. I think these have been some of the most important but also some of the most productive pieces of work that I’ve had the good fortune of being a part of.

What have you learned from campaigns that didn’t go as planned?

When I first started doing this work, shareholder resolutions rarely received majority support and it was really interesting to me that, when you look at a resolution, you need to really think about why the actual resolution failed to receive shareholder backing. Could it be because the risks to the company that were being pointed out in the proposals did not rise up to the level of investor concern we expected or that the proxy advisory firms didn’t endorse the resolution?

Overall, there’s not one company engagement that we worked on that stands out to me as a big lesson, but rather more the whole aspect of really looking at all of the companies where we filed proposals and learning what happened in different circumstances and understanding why these proposals sometimes didn’t succeed. I do think that those lessons we learned back then have really helped inform our work to this day.

What trends in U.S. ESG activism do you expect to see this year?

You’ll see more work on racial equity audit resolutions that have been filed for the shareholder season. I also believe that there’s going to be more activity relating to resolutions that were filed on freedom of association for this year and for the coming years as well. As you may have seen earlier this year, Apple agreed to conduct a freedom of association assessment. Just a few weeks ago, at Starbucks’ shareholder meeting, investors voted in favor of the company conducting a similar assessment.

I think it’s really important that workers that are at these companies understand the ins and outs of what takes place on a day-to-day basis, and that when they lend their name to a resolution it really gives us a heightened sense of credibility that it isn’t someone that doesn’t understand the business or is not exposed to what happens to workers on a daily basis. I think it’s really important when people see that workers are actually engaged in the shareholder process to try to address the issues that they feel are important for themselves, their colleagues, the company, and the overall performance of the corporation.