Norway’s KLP, the largest pension fund in the country and a significant investor in Tesla, is contemplating assertive measures at Tesla’s upcoming Annual General Meeting (AGM). This move comes in response to CEO Elon Musk’s reluctance to engage in collective bargaining, a stance that has been a cause of concern for the fund.
Prolonged strike disrupts Tesla’s operations in Sweden
The catalyst for KLP’s concern stems from an ongoing strike by Tesla mechanics in Sweden, one of the longest labour disputes in the country’s recent history. This strike has significantly disrupted Tesla’s operations, drawing attention from several Nordic institutional investors, including KLP.
Elon Musk’s response and continued discontent
While Elon Musk indicated on Monday that the “storm had passed” regarding the strike, the dispute persists, with the union involved suggesting potential escalation. Musk’s remarks have been met with scepticism, with KLP’s head of responsible investments, Kiran Aziz, criticising his response as underestimating the gravity of the conflict.
Investor concerns raised in December letter
KLP was among the signatories of a December letter sent by Nordic investors expressing apprehension about the ongoing strike in Sweden and Tesla’s apparent reluctance to acknowledge the right to collective bargaining. The lack of a satisfactory response from Tesla has prompted KLP to consider further action.
Dialogue attempts and potential escalation
Aziz highlighted that KLP typically initiates dialogue with companies in its portfolio when disagreements arise. However, the lack of response from Tesla has left KLP exploring the possibility of escalating the matter, potentially through filing a shareholder proposal at Tesla’s AGM.
Impact on investments
Despite holding a substantial number of Tesla shares, KLP made the decision last summer to remove Tesla shares from its sustainable funds due to anticipated controversies. This decision underscores the fund’s commitment to responsible investment practices.
AMF’s intentions align with KLP
Another prominent investor, Swedish pensions manager AMF, shares KLP’s concerns and intends to take action at Tesla’s AGM. AMF echoes worries about transparency and workers’ rights, stressing the adverse impact of conflicts on long-term earnings.
Looking ahead
As KLP and AMF prepare to address Tesla’s AGM, their actions underscore the growing importance of environmental, social, and governance (ESG) considerations in investment decisions. Their efforts aim to ensure that Tesla, as a significant player in the automotive industry, upholds responsible business practices and addresses labour-related challenges effectively.