Responsible Contractor Policy
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The Responsible Contractor Policy (RCP) is an investment policy which is good for SEIU members and for pension fund trustees and participants because:
- It helps produce competitive rates of return by ensuring that contractors provide quality building services that add value to a pension fund’s real estate properties.
- It helps SEIU janitors negotiate good contracts and gives non-union janitors the opportunity to choose a voice at work free from intimidation or harassment by their employers.
The Responsible Contractor Policy requires that building service and construction contractors pay their workers fair wages and decent benefits. The contractors must also obey all labor laws, provide a training program and remain neutral if their workers try to organize a union.
Trustees of several large public pension funds have adopted this policy because it is consistent with their fiduciary obligation to plan participants. An SEIU study of the building service industry -- Impacts of Quality Building Management and Service on Real Estate Investments (pdf) -- concluded that high quality building services improve tenant satisfaction, turnover and mix. These in turn increase rent levels, occupancy rates, lease renewals and market image, thereby enhancing the market value of a property and its rate of return. As prominent real estate industry analysts put it, “Landlords in the real estate industry with the best services, like landlords in the lodging industry with the best service, will command above-average rents and occupancies over time.” (Jonathan Litt and Gary Boston from Salomon Smith Barney quoted in Pension Real Estate Association Quarterly , Spring 2000.)
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