Investors should be wary of investing pension funds into companies that use precarious work practices, a new report has warned.
The report, from the Local Authority Pension Fund Forum, warns that business models based on zero hour contracts, agency workers, fixed term contracts and self-employed contractors could jeopardise investor returns.
It highlights the operational, legal, reputational and financial risks that businesses such as Uber, Sport Direct and Ryanair have been exposed to.
Ian Greenwood and Denise Le Gal, vice-chairs of Local Authority Pension Fund Forum, said: ‘Investors can no longer turn a blind eye to precarious work. This report not only demonstrates the reputational and legal risks, it also highlights a worrying trend of companies seeing workers as a cost to be cut rather than an asset to be invested in to create long-term value.’
The report provides investors with guidance to engage companies on the issue, such as asking if they have undertaken a cost-benefit analysis of precarious employment practices.
