2003-04 Advocacy Roundup(A)
Shareholder activism professionals (admittedly, a job category you will not find in any Labor Department surveys) refer to it as “the season” – the months between the autumn deadlines for filing shareholder proposals and the spring shareholder meetings in which the voting results are announced. The season is the opposite of a quiet week in Lake Wobegon. We trade legalistic paperwork challenges at the Securities and Exchange Commission (SEC), meet with companies to persuade them to implement our proposals, and if that fails, we try to get large institutional investors to vote for them. (If that fails, well, summer’s on the way.)
In any event, the end of the season is always a good time to take stock (pun intended) of accomplishments, and share all the highlights that this space will allow. Additional information can be found at www.trilliuminvest.com.
From our Unqualified Good News department
Avon Products agreed to reformulate its products in Europe and the U.S. to remove dibutyl phthalates (DBPs), and to study the feasibility of removing them from products sold other world markets. DBP is a plasticizer found in various cosmetics ranging from nail polish to lipsticks. According to a report by the Environmental Working Group, phthalates may be linked to a number of male reproductive disorders.
In January, Citigroup announced new environmental initiatives commitments not to finance commercial logging in tropical rainforests or to loan money to any companies engaged in illegal logging, a significant problem in Indonesia and other biodiversity hot spots. Citigroup has also pledged not to finance projects within “critical natural habitats” unless the borrower can demonstrate that the project “will not significantly degrade or convert the critical natural habitat.” Citigroup will also seek to boost its financing of sustainable forestry and green energy projects and will account for the greenhouse gas emissions associated with the energy projects it finances. In May, Bank of America adopted its own environmental policies that go even beyond these commitments. Citigroup had made headlines in June 2003 when it worked with a set of leading European banks to develop the Equator Principles, which voluntarily apply World Bank environmental standards to the large infrastructure projects they finance, and Bank of America made signed on to the principles in April 2004. Trillium Asset Management has been meeting with these companies for several years (as well as JP Morgan Chase and Morgan Stanley), to encourage them to strengthen their environmental and social policies. We withdrew a proposal at JP Morgan Chase this year after the firm agreed to establish an environmental affairs department develop policies similar to Citigroup’s and Bank of America’s by October 2004.
In March 2004, following an extended dialogue with Trillium Asset Management and other leading social investment firms and environmental groups, Office Depot added strong new protections to its forestry policy and launched a new partnership with environmental groups to protect forests and biodiversity.
From the Qualified Good News department
We didn’t succeed in persuading the Administration to ratify the Kyoto Protocol, but our shareholder resolution at Anadarko Petroleum addressing greenhouse gas emissions did receive 31.4% of votes cast. (Shareholder resolutions don’t need to receive a majority vote to make a strong impression on management.) We’ll be pursuing further discussions with Anadarko. We co-filed a similar proposal at Apache Corp. with Boston Common Asset Management that received 37.1%.
Support for the second-year shareholder proposal at YUM! Brands (co-filed with the Center for Reflection, Education & Action and others), calling for a report on the social and environmental sustainability of the company’s operations, remained high (32.9%).
Support for the sexual orientation nondiscrimination proposal at ExxonMobil continued to inch upward (to 28.9%) despite the company’s ongoing PR campaign to convince the public that its current policies already ban this form of discrimination.
For the Long HaulA disappointing SEC ruling gave our climate change co-filings at American International Group and Chubb an early death. The agency reasons that assessing the risk from climate change is part of an insurance company’s “ordinary business,” and therefore inappropriate subject matter for a shareholder proposal. Who are we to argue? (We did, actually, but we got nowhere.)
Avon receives an honorable mention in this category, too, as we’re still pressing the company for more transparency and community accountability in its breast cancer fundraising activities.
Our resolution at ChevronTexaco addressing the company’s legacy of environmental damage in Ecuador gained 9% of the vote at the company’s stockholder meeting, where human rights activist Bianca Jagger seconded the proposal. This writer – who spent several days in the Ecuadorian rainforest examining contamination sites, meeting with communities whose environment and health continue to suffer, and unsuccessfully dodging mosquitoes – is optimistic that investor pressure on the company will pick as the situation becomes known by Northern investors.
Pfizer agreed to begin reporting on its political contributions on the company’s website, in response to a resolution asking for such disclosure co-filed with the Nathan Cummings Foundation and members of the Interfaith Center on Corporate Responsibility. The first year resolution, which we’d kept on the proxy, got 10.9 percent of the vote. A similar resolution at Merck received 10.35%.
A second resolution co-filed with ICCR members asked Pfizer to reaffirm its past commitment to limit price increases to increases in the Consumer Price Index; this proposal didn’t do as well, getting 5% of the vote.
Trillium Asset Management co-filed a shareholder proposal with ICCR members at Eli Lilly calling for the company to a report on its response to the HIV, TB, and malaria pandemics in the developing world. We withdrew the resolution after the company announced some new initiatives to address these issues, including an innovative partnership to fight multi-drug resistant TB.
Shareholder Proposal Results
(For the proposal texts, visit our shareholder resolutions page.)
Report on new initiatives to address legacy of pollution on indigenous lands
Report on risks of doing business with repressive governments
Produce a sustainability report
Greenhouse gas emissions
American Electric Power
Report how the company is responding to rising regulatory, competitive and public pressure to significantly reduce GHG emissions
American International Group
Report on feasibility of removing phthalates
Disclose costs of delaying PCB cleanup
Social Impact of Merger
Bank of America
Report on social impact of merger with FleetBoston
Impact of HIV/AIDS Pandemic on Business
Report on economic effects of the HIV/AIDS, tuberculosis, and malaria pandemics on the company’s business strategy, and its initiatives to date
Pharmaceutical Price restraint
Report on measures our company is taking to contain the price increases of its most-prescribed drugs to levels equal to or below the annual rate of inflation
Implement sexual orientation non-discrimination policy
Accept supply chain responsibility for workers and environment
Disclose EEO-1 form (details workforce composition by race, sex and rank)
11% (preliminary results)
Report on new technologies to cut water use
Report on activities to meet public interest obligations as channel capacity increases from the conversion to digital transmission
Report on corporate resources devoted to supporting political entities or candidates on both state and federal levels
Environmental and Social Criteria in Lending
Report on role as underwriter, lender and financial adviser for transactions in environmentally and/or socially sensitive sectors & consider implementing criteria