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Planners support fund managers shun of Deliveroo

Financial Planners have supported the move by Aberdeen Standard Investments and Aviva Investors to shun Deliveroo’s flotation next month due to concerns over workers’ rights.

Deliveroo deems its 100,000 riders to be self-employed and pays them per meal delivery, as opposed to an hourly wage.

The food service company has said that drivers value the flexibility that their employment status gives them.

Similar statements were made by ride-sharing giant Uber before it lost a legal battle in the UK over drivers’ status in February. All 70,000 of its UK drivers will now be guaranteed a minimum wage, holiday pay and pensions.

The food delivery service has said it expects to be valued at around £8.8bn when it lists in London in April. However, Aberdeen Standard and Aviva Investors have both said they will not be investing due to concerns over workers’ rights.

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Keith Churchouse, Chartered Financial Planner at Chapters Financial, told Financial Planning Today that he thinks the fund managers are right to push for more rights for workers at gig economy businesses.

He said: “I think that what was originally referred to as the gig economy is maturing fast and the changes experienced for businesses, such as Deliveroo and Uber as examples, indicates that these are important and mainstream companies. I think their futures are both dynamic and exciting as they evolve post-pandemic. With this noted, I think the fund managers’ views are correct in wanting more for workers and this is a correct stance as the business will inevitably develop fast.” 

Martin Bamford, Chartered Financial Planner at Informed Choice, also welcomed the move from fund managers to shun Deliveroo’s IPO. He told Financial Planning Today that ethical investing is a big area of interest for Informed Choice which is currently in the process of updating all its client portfolios to include a positive impact overlay after partnering with Worthstone to access their research capabilities.

He said: “It’s excellent to see fund managers being more selective about the businesses they support. It’s all too easy to separate in our heads investment decisions from the real-life impact on people. If start-ups and growing businesses find it harder to access capital markets, unless they can demonstrate best practices when it comes to their people and impact on the planet, this should force more companies to shape up.” 

Andrew Milington, head of UK Equities at Aberdeen Standard, told the BBC’s Today programme that working conditions were a “red flag” and that the fund management giant “would not be comfortable that the way in which its workforce is employed is sustainable.”

He said that it would be interesting to see if Deliveroo can attract major investors over the long term “without making progress” on worker rights.

Aviva Investors has also expressed concerns and said it will not be investing in the food delivery service.

Chief investment officer David Cumming told The Times that workers’ rights is one of several reasons why they will not be investing in the IPO.

Aberdeen Standard recently made the decision to sell its shares in online clothing retailer Boohoo following allegations of worker exploitation.


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