Trillium’s 2005 Shareholder Season Wrap Up
Note: The text of the shareholder proposals referred to in this article can be found on our proposals page.
If only the accomplishments of the shareholder season could be captured in a series of neat little statistics, like baseball. One figure (the percentage of “yes” votes) is all a corporation is required to record in its public filings, but that’s as un-illuminating as judging a pitcher by his batting average. Behind every resolution there’s a story. A withdrawal often signifies that the company has started to address the issues at hand in a way that satisfies the proponent. Any vote, however low, brings pressure to bear upon a corporation in a very public way, with sometimes interesting results. These back-stories don’t make it into mainstream media accounts of corporate annual meetings – and thank goodness for that, or there’d be no market for cheap, sensationalistic tabloids like Investing For A Better World.
We didn’t clobber the Yankees. In fact, all of the shareholder proposals we sponsored this year concerning social and environmental issues were defeated. So why are we smiling?
Season HighlightsIn April, Whole Foods made a surprise announcement at its annual meeting that it would update its private product labels to note that ingredients are derived from non-genetically engineered seed. Trillium, with other shareholders, had been pressing Whole Foods to do so since 2002. Our most recent proposal, which became moot upon the announcement, garnered 6.8% of votes cast.
We withdrew resolutions asking for a report on efforts to address climate change at Anadarko Petroleum and Apache Corporation, another oil and gas producer. After dialogues with both companies, we were satisfied that both are making reasonable progress toward inventorying greenhouse gas emissions, a reasonable short-term goal. We co-filed a climate change resolution at ExxonMobil that was the highest environmental vote ever at the oil behemoth. Thirty-four (34%) of votes cast favored the proposal to have the company report on how it is meeting its international obligations under the Kyoto Protocol. Our climate change resolution at Dominion Resources did not fare as well, attracting only 8.3% of votes cast.
Early this year, ConocoPhillips announced it is dropping out of Arctic Power, the main lobbying group pressing Congress to open the Arctic National Wildlife Refuge to oil and gas drilling. The move came after Green Century Asset Management, Trillium Asset Management and other shareholder advocates filed a shareholder resolution on the issue, which we withdrew once the company dropped its support for Arctic Power.
We also withdrew resolutions at Nucor and Reliant Energy when both companies updated their nondiscrimination policies to include a specific reference to “sexual orientation.” Similar proposals at Emerson Electric and ExxonMobil remained on the ballot upon those companies’ continued refusals to do the same, with shareholder support up from previous years (to 34% and 29.4%, respectively)
Speaking of high votes, a resolution on General Electric’s ballot calling attention for the umpteenth year in a row to the company’s efforts to delay cleanup of PCBs from the Hudson River, received its highest support ever (27.5%). We couldn’t get enough of GE this year. Last fall, we filed a proposal calling for GE’s subsidiary NBC to report on how its local affiliates are meeting their public interest obligations (e.g., public service announcements, public affairs programming, news programs, children’s programs). It was deemed excludable by the Securities and Exchange Commission on the grounds that it intruded on matters of ordinary business. But a third resolution at the company (and no, it is not personal) calling for increased transparency on political giving, scored 10.5%. A similar resolution at Southern Company garnered 11.2%, while one at Johnson & Johnson was withdrawn when the company agreed to more transparency and even to ensure its political contributions receive board-level oversight and accountability.
It was déjà vu all over again last fall when we co-sponsored a proposal at Home Depot calling for the disclosure of EEO-1 data, which provides a yearly snapshot of a company’s workforce demographics with respect to race and sex. In 2001, Home Depot entered into an agreement with a coalition of more than two dozen shareholder proponents disclose this data to investors upon request, but by 2004 it had changed its mind. Hopefully the 29% vote in support of further disclosure will cause some reconsideration of the reconsideration.
In March, activists put an end to the Taco Bell boycott when parent company YUM! Brands agreed to its longstanding chief demand: a penny-per-pound increase in the price paid for tomatoes picked by migrant fieldworkers for poverty-level wages under harsh conditions. In response, the shareholder coalition led by the Center for Reflection, Education and Action withdrew a proposal calling for a report on the company’s social and environmental sustainability initiatives. (See column in this issue.)
Look, Ma, No Resolution!In many cases, we made enough progress with companies that we never needed to file a resolution at all. Our three-year efforts to convince J.P. Morgan Chase to adopt environmental leadership policies similar to Citigroup and Bank of America yielded more progress this spring, when the bank unveiled a set of sweeping new environmental policies that govern the company’s global business activities. Under the new policies, the bank has adopted the Equator Principles, which apply World Bank environmental standards to financing of large projects like pipelines and dams financed by private banks. J.P. Morgan will apply the Equator Principles to projects greater than $10 million in environmentally sensitive industries, exceeding the threshold of $50 million set by the Equator Principles. In addition, the new policies include strong provisions addressing climate change, sustainable forestry, the protection of critical natural habitats, illegal logging, and the needs and concerns of indigenous peoples. In a particularly notable development, J.P. Morgan Chase is publicly advocating the reduction of greenhouse gas emissions and has committed to lobbying for better U.S. policies to address this key issue.
Our dialogue with chipmakers on environmental issues, water stewardship, and working conditions led Analog Devices to publicly report on its progress reducing water use and addressing other environmental issues. Semtech agreed to incorporate social responsibility issues like environmental standards and workplace practices into its annual supplier selection and review process.
Discussions with Starbucks encouraged the company to strengthen its policies discouraging the development of genetically engineered coffee or tea plants.
A Snapshot of 2005 Trillium Resolution and Dialogue ResultsTrillium Asset Management works in coalition with other social investors and non-governmental organizations to sponsor proposals. Those for which we were the “lead” shareholder are highlighted in bold.Voting Results
Climate ChangeGeneral Motors (5.2 %), Dominion Resources (8.3%), ExxonMobil (28.3%),
Pollution Legacy in Ecuador
Dow Chemical (7.7%)
PCB Cleanup in Hudson River
General Electric (27.5%)
Label Foods Re Genetically Modified Content
Whole Foods (6.8%)
Equal Employment Opportunity
Wal Mart (18.8% ), Home Depot (29%)
Sexual Orientation Nondiscrimination
Merck (8.8%), General Electric (10.5%), Southern Company (11.2%), Eli Lilly (6.5%)
Pfizer (10.2%), Avon Products (6%),
Land Procurement Policy
WithdrawnAnadarko Corporation, Ford Motors & Apache Corporation (climate change report), Johnson & Johnson (political contributions), Nucor & Reliant Energy (sexual orientation), ConocoPhillips (drilling in the Arctic National Wildlife Refuge
OmittedGeneral Electric (public interest broading obligations),), YUM! Brands (sustainability report)