Norway’s biggest pension fund, KLP, stands out among a number of Nordic stakeholders which are challenging Tesla’s opposition to any form of unionisation as strikes continue to hinder its business across Scandinavia.  

Collective bargaining, which sees employers and unions agree to minimum pay and conditions for all employees, “is the backbone of the Nordic economic and labour model”, says Kiran Aziz, head of responsible investments at KLP, which is among the group that has written to Tesla’s board over the issue. 

With NKr760bn (€67bn) in assets under management at the end of 2023, KLP is Norway’s biggest pension fund and holds around $163m-worth of Tesla shares.

Tesla’s business in Scandinavia has been paralysed by industrial action for more than four months after the electric vehicle (EV) giant refused to sign a collective bargaining agreement with its 100-plus workers in Sweden. 

A strike starting last October by members of Swedish union IF Metall who work at Tesla repair workshops has sparked sympathy strikes and blockades by 12 other unions across Sweden, Denmark, Norway and Finland. Collectively, these countries comprise the fourth biggest market for new car sales in the world. Across Scandinavia, Tesla charging stations are not being serviced, number plates not delivered and vehicles not offloaded from ships.

The situation has been billed as a culture clash between Tesla CEO Elon Musk, who openly opposes unionisation, and the Nordics, where more than 60% of workers are part of unions. KLP is part of a group of pension funds across the region which hold shares in Tesla, and have collectively $1tn in assets under management, that have joined the unions in pushing back against the EV maker by pressuring its board to reconsider its approach to unions.

Sweden has become a flashpoint for Tesla’s refusal to enter collective bargaining in any market. Some 90% of Swedish workers are covered by these agreements, in part because the country has no legal minimum wage. “When [companies] enter the Swedish market and they come with terms that are totally not in line with the practices here, it gives [added] importance” to labour market best practice, says Ms Aziz. 

However, she insists that KLP is taking a global view of the issue, and hopes its stance on Tesla has “a signal effect” and positive impact further afield. “As a global investor, there are certain expectations we have, regardless of where the company is based or operating,” she says. “Basic collective bargaining through a trade union [is a] human right recognised in international treaties, conventions and declarations.”

Tesla has not replied to the pension fund group’s letter, which it sent last December. “We are trying to figure out how to escalate,” says Ms Aziz. When KLP disagrees with the management of a company in its portfolio, it first tries to establish a dialogue with the company, before moving to outline its expectations to the board. As with all companies, she says the next step with Tesla could be filing a shareholder proposal at its annual general meeting. 

More on institutional investors:

• AustralianSuper boosts overseas investment
• London reaches out to capital investors in regeneration push
• Opinion | Institutional investors must rewrite FDI playbook

Unsustainable EVs

Tesla’s stand-off with Scandinavia’s unions and pension funds has sparked doubts over whether the world’s most famous manufacturer of EVs — a symbol of the green transition — is a sustainable investment. After IF Metall had tried for five years to secure a collective bargaining agreement with Tesla, KLP responded by dropping the company from its sustainability funds. “We did that before [the strikes began], because our portfolio managers were seeing that it [would] come to some controversy,” says Ms Aziz. KLP now holds its Tesla shares in other funds.

PensionDanmark, which also signed the group letter, went a step further and responded by selling its $70m-worth of Tesla shares on December 6. When asked if KLP would follow suit, Ms Aziz says: “Exclusion is the last tool we have, but this is where things have to be really unacceptable.” Her priority is to “make sure that we can at least establish a dialogue with Tesla's management and board”. 

The situation shines yet another light on the discrepancies plaguing the path towards a clean economy. “Tesla has done a great job when it comes to the green transition. We need to give it credit for what it has done,” says Ms Aziz. “But it’s about a holistic approach to sustainability.”

Do you want more FDI stories delivered directly to your inbox? Subscribe to our newsletters.