Starbucks Corp. drew new investor backlash on Wednesday as a group led by public pension funds demanded shareholders block two directors from reelection at the March 25 annual meeting. The coalition cited the coffee chain’s ‘persistent failure’ to address labor tensions with its unionized baristas.

The investors, in a letter to shareholders, pointed to ongoing disputes with Starbucks Workers United. More than 3,800 baristas launched a nationwide strike late last year, the longest work stoppage in company history. Union demands centered on better staffing, predictable schedules and higher wages after months of stalled contract negotiations.

“We are concerned that, without a constructive relationship between Starbucks and its unionized workforce, sustaining the turnaround may prove difficult,” the group wrote. Signatories include New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, Trillium ESG Global Equity Mutual Fund, SOC Investment Group, Merseyside Pension Fund and the Shareholder Association for Research and Education.

The pressure tests new CEO Brian Niccol, who took over last year amid slumping sales. Niccol has prioritized operational fixes, but the labor fight has dragged on, complicating recovery efforts.

Starbucks pushed back in a statement. “We offer the best job in retail with hourly partners earning an average of $30 an hour and world-class benefits… all for those who only work 20 hours a week on average,” the company said.

This marks the second warning from the investor group. In January, they wrote directly to Knudstorp and Ford, criticizing the board’s decision to dissolve its Environmental, Partner, and Community Impact Committee. Starbucks reassigned those duties across other committees, with the full board now handling primary labor oversight, a company spokesperson told Reuters.

The labor row escalated after baristas began unionizing stores in 2021. Starbucks Workers United now represents workers at over 400 U.S. locations. Contract talks have yielded little progress, prompting strikes and protests.

Knudstorp, former CEO of Lego Group, has chaired Starbucks’ board audit committee since 2017. Ford, CEO of Land O’Lakes, joined the board in 2019 and leads the nominating committee. Neither responded to requests for comment.

Starbucks shares fell 0.8% Wednesday in New York trading, closing at $95.42. The company reported a 2% drop in same-store sales for its fiscal first quarter last month, though Niccol forecast improvement.

Investor activists have targeted corporate boards over labor issues before. Last year, similar pressure at McDonald’s led to governance changes. Starbucks faces a key shareholder vote next month as it battles to settle with the union and boost performance.

DiNapoli’s office oversees $270 billion in pension assets, including a $300 million stake in Starbucks. Levine manages New York City’s $278 billion funds. Their involvement highlights growing scrutiny on worker relations at major employers.

Starbucks said it remains committed to bargaining in good faith. Union leaders hailed the investor letter as a sign of shifting momentum. “Shareholders see what we’ve known all along: the board’s approach is failing everyone,” Starbucks Workers United said in a statement.