Aviva Investors said it would not buy shares in Deliveroo’s flotation because of risks posed by the company’s treatment of its workers.
Deliveroo is planning a listing that could value the food delivery business at £8.8bn in the biggest London IPO for a decade. But the company has faced persistent questions about lack of employment rights for its fleet of delivery riders.
The risk to gig economy companies’ business models increased earlier in March when Uber lost a long-running legal battle and was required to award its drivers basic employment rights such as the minimum wage and holiday pay. Uber had argued its drivers were not workers but the Supreme Court rejected its claim.
David Cumming, head of UK equities at Aviva, told the BBC there was “a combination of investment risk and social issues that affect our judgment whether the shares are a buy or not”.
He added: “If they are classed as riders they don’t necessarily get basic rights for minimum wage, sick leave or holidays, and [Deliveroo] states a reclassification of employees as an investment risk to the business. We won’t be investing in Deliveroo for a number of reasons but that is one of them.”
Aviva Investors manages £365bn of assets and is an influential investor. The company’s stance illustrates the increased attention some money managers are paying to environmental, social and governance matters.
“A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important,” Cumming said.
Pirc, a corporate governance adviser, said: “After recent events at Uber it would be a brave investor that did not consider the nature of the employment relationship to be a central factor in deciding whether to invest in gig economy employers.”
Cumming also warned HSBC that it needed a proper framework for dealing with requests from the authorities in Hong Kong and that if it “continues to fail” Aviva could sell its HSBC shares. He said Aviva would prefer to keep its stake and engage with management.
A group of UK MPs wrote to Aviva and Legal & General on Monday calling on them to cut ties with HSBC over its support for national security laws imposed by Beijing on Hong Kong, where the bank makes most of its profit.
