2002-03 Shareholder Advocacy Highlights(A)
The past year may one day be regarded as a watershed year in shareholder activism. Record high levels of shareholder support were registered for climate change resolutions, sustainability reporting resolutions, and sexual orientation policy proposals. An historic victory was won for concerned investors when the Securities and Exchange Commission mandated in March that mutual funds must begin reporting their proxy voting guidelines and records beginning in 2004.
We are delighted to share highlights from our recent dialogues and proposals.
Shareholder Proposal Results
* Trillium Asset Management co-filed shareholder proposals at YUM Brands and Cooper Industries calling upon the companies to produce a “sustainability reports.” Each received unusually high levels of support of 39% and 44%, respectively.
Filed in support of farm laborers fighting for decent wages and working conditions, and to make the larger issue of supply chain responsibility a priority for YUM Brands, our proposal called for the fast food company to report on its policies and practices related to social, environmental and economic sustainability throughout the supply chain, and how it planned to integrate sustainability objectives throughout company operations. For more information on the farmworkers’ struggle, visit the Coalition of Immokalee Workers online.
Sr. Susan Mika of the Benedictine Sisters in San Antonio, Texas, believes that the vote was so high at Cooper Industries due to appeal of the resolution’s “triple bottom line” premise, and the company’s merely average record in environmental performance, labor codes, and monitoring. Cooper is an industrial manufacturer. Shareholder groups have raised questions in the past about the wages Cooper pays to its Mexican maquiladora workers and have asked Cooper to establish a company-wide code of conduct.
* We are coordinating with members of the Interfaith Center on Corporate Responsibility (ICCR) to encourage companies in the manufacturing, auto, appliance and electric power industries to respond constructively to climate change. We are pressing energy giant ConocoPhillips for dialogue, and worked to advance a resolution at PG&E that drew 9.1%. The resolution drew particular attention to PG&E’s electric power plants in Massachusetts, which are the two dirtiest in the state. (For more information, visit Healthlink online.) One week after the vote, PG&E entered into negotiations with the state’s environmental agency to explore accelerated timelines for cleanup.
* Our resolution at Dow Chemical concerning its dioxin liabilities garnered 7.4% of the vote. This proposal was preceded by dialogue with management with colleagues from the Ecology Center of Ann Arbor, Michigan and the Environmental Health Fund. We will continue Dow to report on how it could alter its production processes and product makeup to eliminate the formation of any and all dioxins.
* Pepsi or Coke? We raised the issue of water scarcity with both companies last fall and found Coca Cola much further along in developing a response to an issue of urgent worldwide importance. To press PepsiCo further, we filed a first-of-its-kind shareholder proposal asking the company to consider the new business risks posed by the problem, which drew 8% of the vote. Just two weeks later, the New York Times reported that the village government of Pudussery in southwestern India revoked a Pepsi bottling plant’s water-use license, due to concerns that Pepsi is “overutilizing” local water resources.
* Working with Amnesty International, we filed and later withdrew a proposal at ChevronTexaco when the company agreed to implement a human rights program within the next year.
* Trillium Asset Management joined religious investors in filing this resolutions at Johnson & Johnson, Merck, and Pfizer concerning “standards of response to the health pandemic of HIV/Aids, TB and Malaria in developing countries, particularly Africa.” Withdrawals were negotiated at all three companies. While specifics vary, the companies generally agreed to increase their disclosure of their efforts to fight infectious diseases like HIV, TB, and malaria; agreed to do more to help large employers in developing countries obtain medical care for their employees and families living with HIV/AIDS, and agreed to further negotiations with shareholder advocates on the difficult issues of patent protections and WTO rules.
* Trillium Asset Management joined the New York City pension funds and members of the Equality Project in two filings asking companies to add ‘sexual orientation’ to their nondiscrimination policies. The proposal at J.C. Penney scored an astounding 93.3% — buoyed by the company’s recommendation to shareholders to vote in favor of the proposal. We withdrew a proposal at TXU when the company agreed to implement the proposal. A resolution at Emerson Electric failed to gain enough votes to qualify for resubmission in its third year.
* A second-year resolution at McDonalds, co-filed with People for the Ethical Treatment of Animals, called on the restaurant chain to extend its U.S. animal welfare standards to its overseas suppliers. Unfortunately, the resolution failed to gain enough votes to qualify for resubmission.
* We are currently working to encourage several companies we hold, including Cisco Systems, Ecolab, Sealed Air, and SYSCO, to improve their reporting on their social and environmental performance. In our outreach, we promote the use of a set of indicators developed by the Global Reporting Initiative, which include representatives from the UN and environmental, labor and business groups from around the world.
* We journeyed to Avon Products annual meeting in New York to question management about the presence of phthalates in some of Avon’s cosmetic products. Phthalates have been linked to male reproductive disorders when children are exposed at a young age or in the womb; the European Union has banned their use in cosmetics. Avon told us that it believes its products are safe but will need to continue to study the matter, given the EU’s ban.
* For several years, Trillium Asset Management has been part of a dialogue group with other social investment firms and Citigroup to encourage the company to embed human rights and environmental standards into their lending and underwriting criteria. In June, Citigroup and nine other banks announced a set of voluntary standards called “The Equator Principles” that commit them to follow the World Bank and IFC’s environmental review principles for project finance deals.
Shareholder Resolution Results
Nuclear wasteAmerenReport on risks of interim storage of nuclear fuel rods13.1%Human rightsChevronTexacoAdopt human rights policy upholding the principles of the Universal Declaration of Human RightsWithdrawn; agreement reached with companyPredatory LendingCitigroupLink a portion of executive compensation to ending predatory lending practices.7%Sustainability reportCooper IndustriesProduce a sustainability report44%YUM BrandsProduce a sustainability report39%Greenhouse gas emissionsConocoPhillipsReport on the operating, financial and reputation risks to the company associated with greenhouse gas emissions from its operations and products.Withdrawn on a technicalityDioxinsDow ChemicalReport on feasibility of phasing out dioxins from production processes and cleaning up areas of dioxin contamination6.9%PCB cleanupGeneral ElectricDisclose costs of delaying PCB cleanup6.9%Executive compensationGeneral ElectricReign in excessive executive pay packages9.9%Toxic air emissionsPG&EReport on the economic risks associated with emissions of carbon dioxide, sulfur dioxide, nitrogen oxide and mercury emissions, and the economic benefits of committing to substantial reduction of those emissions.9.1%Farm animal welfareMcDonaldsExtend animal welfare standards overseas4.8%WaterPepsi
Environmental and social impact of water usage8%Access to affordable drugsPfizerProvide a policy to provide affordable drugs to Africans for HIV/AIDS, TB and MalariaWithdrawnSexual orientationEmerson ElectricImplement sexual orientation non-discrimination policy9.9%TXUImplement sexual orientation non-discrimination policyWithdrawn (agreement reached)J.C. PenneyImplement sexual orientation non-discrimination policy93.3%Fair trade coffeeProcter & GambleBegin sourcing from Fair trade coffee sourcesTBDEqual employment opportunityWal-MartDisclose EEO-1 form (details workforce composition by race, sex and rank)12%