This is part four of an unfolding series on the Atria Senior Living chain of senior living facilities, and how they treat their residents and workers. So far:
Part three: Living and Working at Atria
Part two: Extreme Wealth Just Isn't Enough
Part one: When Seniors Are the Product
I have been writing this week about the Atria Senior Living facilities, which are owned by a Lazard-"affiliated" fund. The elderly people who live in these corporate-owned and managed facilities are treated as a product, neatly packaged up and flowing to the investors. Services for them are costs that must be reduced and reduced, while the rates increase and increase. Employees are an irritating necessity, not human beings to be fairly compensated and treated with respect.
What can be done about this?
The world recognizes that there is a problem with this kind of uninhibited greed. Many people and organizations recognize that such a system is not sustainable, harms the people who work for the companies, the communities around them, the customers and the economies in which they operate. Sure, a few executives make out like bandits for a while, but over time it doesn't do the rest of us any good, not even their companies. (Lazard and the Lazard fund that owns Atria, for example, have not been performing all that well. Meanwhile Wasserstein personally took home $42 million last year - even as Lazard stock lost 14%.)
Many recognize the problem, but how do you do something about problems like this?In response to the problem the United Nations invited a group of institutional investors to develop a set of "Principles for Responsible Investment." This led to the UN's Principles for Responsible Investment investor initiative which publishes these Principles and asks responsible institutional investors to sign a commitment to follow them. From the UN-PRI About page:
Well, at least two of the institutional investment groups that have signed these Principles are investors in the Lazard fund controlling Atria. They are responsible investors who have signed these commitments, and they are in a position to act on that commitment now.
There is a growing view among investment professionals that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios. Investors fulfilling their fiduciary (or equivalent) duty therefore need to give appropriate consideration to these issues, but to date have lacked a framework for doing so. The Principles for Responsible Investment provide this framework.
The Principles are voluntary and aspirational. They are not prescriptive, but instead provide a menu of possible actions for incorporating ESG issues into mainstream investment decision-making and ownership practices.
PGGM is a large pension fund in the Netherlands that serves that country's public social workers and health care workers.
La Caisse de Depot et Placements du Quebec ("CDP") -- a large public pension fund in Quebec.
These are prominent, large funds with good reputations on a global stage. They are responsible investors and take it seriously enough to be signatories to the UN-PRI. The Principles' FAQs say "The Principles suggest a policy of engagement with companies rather than screening or avoiding stocks based on ESG criteria (although this may be an appropriate approach for some investors)." I am writing here to encourage PGGM and CDP to ask Lazard to clean up their act, and have Atria treat their elderly residents and their workers better. Ask them to support the International Labor Organization's core conventions, especially Freedom of Association: "The right of workers and employers to form and join organizations of their choice is an integral part of a free and open society. It is a basic civil liberty that serves as a building block for social and economic progress. Linked to this is the effective recognition of the right to collective bargaining. Voice and representation are an important part of decent work." They work for YOU, you have responsible investment policies, and what Lazard is doing goes against these policies.
Now, how do we take on the larger problem of companies like Lazard and Atria? How do we take on the problem of companies squeezing and mistreating customers, exploiting and underpaying workers, and generally harming the communities around them? One way is to find out where you own money is -- your pensions funds if you are so lucky, and mutual funds you have if you are so lucky -- and encourage them to become signatories to the UN's Principles for Responsible Investment investor initiative. Another way is to support organized labor -- the only real voice and counterbalance we all have to fight against corporate power. Finally, just stay on top of this issue and be involved, because solutions are going to be proposed and discussed after the election.
I'll be writing more tomorrow, and maybe about some other investors involved with Atria and Lazard.
This post was sponsored in part by The Campaign To Improve Assisted Living.
Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson