PAI Partners Fails to Live Up to Its ESG Policy as Refresco Workers Complain of Safety Issues, Mistreatment

PAI Partners, a private equity firm based in Paris, is a co-owner of Refresco, the world’s largest independent bottling company.[1] Refresco produces beverages such as BodyArmor Sports Drink for Coca-Cola, Gatorade for Pepsi, Arizona Iced Tea, and Tropicana juices.[2]

PAI Partners prides itself on its responsible investing and on its stated concern for environmental, social and governance (ESG) issues.[3] However, Refresco’s actions appear to directly contradict PAI Partners’ ESG policy.

Current Labor Dispute

In June 2021, a majority of the almost 250 workers at the Refresco bottling plant in New Jersey voted to join the United Electrical, Radio, and Machine Workers union (UE). According to the UE, the mostly Latin American immigrant workforce started organizing with the union a year and a half ago to counter the abusive treatment by supervisors, low wages, minimal benefits, sexual harassment, constant schedule changes, and an unforgiving attendance system that penalized workers for getting sick.[4]

“With our union we will finally win the better pay and respect that we deserve,” said Cesar Moreira, a batching technician at Refresco.[5]

The Wall Street Journal reported that in the spring of 2020, workers at the Refresco plant staged a walk out to protest the unsafe working conditions during the pandemic after a manager berated a worker who was worried about the coronavirus and said he felt ill.[6] Workers reported that the company did not provide adequate personal protective equipment (PPE), putting their lives in danger. According to Refresco workers, one supervisor said that workers who had COVID should just “drink some Gatorade” and “break a sweat” at work and the company refused to change its attendance policy for workers who got sick or self-quarantined at home. The company also reportedly used the pandemic to institute 12-hour shifts.[7]

Refresco hired a notorious union busting law firm, Seyfarth Shaw, which has a long history of trying to prevent workers from organizing.[8]

Workers were not intimidated by Refresco’s aggressive anti-union campaign, and a majority of the workers voted to unionize. Refresco, however, is refusing to recognize the union and is contesting the results of the election, alleging that the polls were opened late during one of the two election dates and that Refresco’s observer was allowed “to serve as the interpreter to employees waiting to vote at the beginning of the morning voting session.”[9]

Past Labor Disputes

This is not the first time PAI Partners has found itself embroiled in a labor dispute involving one of its portfolio companies. In 2019, another PAI Partners’ company, airport concession company Areas, was involved in a labor dispute with hospitality union UNITE HERE. Areas had taken over concessions at several airports and drew criticism from UNITE HERE for not rehiring long-time employees who had been laid off by the previous operator.[10] Another labor dispute between Areas and UNITE HERE in 2020 led two board members of the Los Angeles County Employees Retirement Association (LACERA) to say that LACERA should not reinvest in PAI Partners until the labor dispute was resolved.[11]

PAI Partners’ ESG Policy

PAI Partners prides itself on its stated concern for environmental, social and governance (ESG) issues. “[I]n today’s world, businesses like ours and those we invest in are judged on more than just their financial results,” a recent ESG report from PAI Partners said. “Companies that exploit workers … face reputational impacts and lower sales.”[12]

PAI Partners’ ESG report also noted Refresco’s three pillars of social responsibility, one of which is “Happy People.”[13] 

Refresco’s actions appear to directly contradict PAI Partners’ ESG policy.

Health and Safety

The ESG report said, “As a long-term investor, we want to make sure that the companies in which we invest provide a safe and healthy work environment for their employees.” PAI Partners specifically cited that “Safety First” is Refresco’s highest priority.[14]  However, the US Occupational Safety and Health Administration (OSHA) has cited Refresco for nine serious violations in four states and fined the company tens of thousands of dollars since PAI Partners’ acquisition of Refresco in 2017.[15] OSHA defines a serious violation as “such that there is a substantial probability that death or serious physical harm could result.”[16]

“I’ve worked here for 22 years and have the scars to prove it, and I don’t want anyone else to have to go through what I did all these years,” said Licinia Ochoa, a machine operator at the Refresco plant in New Jersey.

Refresco OSHA violations

[1] https://www.paipartners.com/investment/refresco/

[2] https://www.ueunion.org/ue-news/2021/refresco-workers-new-jersey-pro-act

[3] https://paipartners.wpengine.com/wp-content/uploads/2018/05/7443_PAI_Impact_Low_Res.pdf

[4] https://www.ueunion.org/ue-news/2021/refresco-workers-new-jersey-pro-act

[5] https://www.ueunion.org/ue-news/2021/refresco-workers-new-jersey-pro-act

[6] https://www.wsj.com/articles/u-s-plant-workplaces-emerge-as-coronavirus-battlegrounds-11585775230

[7] https://www.ueunion.org/ue-news/2021/refresco-workers-new-jersey-pro-act

[8] https://www.jwj.org/wp-content/uploads/2014/03/JohnLogan12_2006UnionAvoidance.pdf

[9] July 2, 2021 letter from Seyfarth Shaw to the National Labor Relations Board

[10] https://www.buyoutsinsider.com/lacera-hears-from-airport-workers-union-over-pai-partners-investment/

[11] https://www.buyoutsinsider.com/two-lacera-board-members-support-not-re-upping-with-pai-partners/

[12] https://paipartners.wpengine.com/wp-content/uploads/2018/05/7443_PAI_Impact_Low_Res.pdf

[13] https://paipartners.wpengine.com/wp-content/uploads/2018/05/7443_PAI_Impact_Low_Res.pdf

[14] https://paipartners.wpengine.com/wp-content/uploads/2018/05/7443_PAI_Impact_Low_Res.pdf

[15] US Department of Labor Occupational Safety and Health Administration Enforcement Data, accessed 9/15/21

[16] https://www.osha.gov/laws-regs/regulations/standardnumber/1960/1960.2