Annual Summary of Shareholder Activity 2016-2017

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The events of these past couple of months have challenged us to reflect deeply on what it means to be human, to find God in corporate board rooms, in corporate engagements, and in the political system in which we find ourselves. Our strategy is clear and simple and it is a business case that calls us to live out of our Franciscan charism, to do the right thing as we continue to confront corporate structures and systems that exploit, alienate, and delude. As we write this annual report, there is a major request before the Securities and Exchange Commission (SEC) from the Business Roundtable (BRT), composed of CEOs of America’s leading companies, to discredit shareholder resolutions. The BRT proposes that an investor should have shares worth .15% of a company’s capitalization to file a resolution. This is somewhat absurd. To file with any company, we’d have to be a Warren Buffet!

It is clear that our recent resolution with Wells Fargo has made a strong case for resolutions and outcomes that have brought the company to a new awareness of greed and unethical entanglements. As of May 1, the Philadelphia City Council voted to remove its $2 billion payroll account from Wells Fargo. From recent communications, you know that the company is in the long process of dealing with mismanagement, fraud, and abuse, especially in immigrant communities. The Sisters of St. Francis of Philadelphia are grateful for having received outstanding support for this resolution and we will continue to press the company on remuneration and restorative justice for employees and customers. We have asked for strong remediation and grievance mechanisms. We expect the company to develop and implement a business-standards framework founded on values, ethics, transparency, and strong principles that begin at the executive and board levels and are embedded across all business lines, not just in the retail banking sector.

Our commitment to the care of creation is evidenced in our participation in the climate actions and marches—the most recent in Philadelphia—and visits to Harrisburg to meet with several senators and representatives on fracking, pipelines, and methane. We are grateful to Sr. Clare Christi Schiefer, who has some senate leverage, for being with us for a couple of such meetings. We continue to bring a strong message to corporations that includes environmental, social, and governance issues and equal access to the basic needs of life: human rights, healthcare, clean water, food, and employment. As Sisters of St. Francis of Philadelphia and members of the Interfaith Center on Corporate Responsibility (ICCR) and the Investor Environmental Health Network, we consider engagement with corporations an important part of our investment responsibility and commitment to sustainability. We strategize and focus increased attention to the Business Standards/Vision and Values of Corporations by expressing a deep concern for the protection of workers’ rights, community rights, indigenous people, and the rights of Mother Earth.

The following brief action summaries give insight into our shareholder engagement for 2016-2017.


HUMAN RIGHTS

Human rights and the rights of communities continue to be a part of most dialogues. We are supported and guided in our ministry by our Franciscan charism, the U.S. Conference of Catholic Bishops, and the UN Guiding Principles on Business and Human Rights: “Protect, Respect and Remedy” developed by John Ruggie. These principles are continually challenged. Even here in Pennsylvania, there is evidence of a failure to meet basic human rights and rules of engagement around free, prior, and informed consent (FPIC). FPIC is the principle that a community has the right to give or withhold its consent to a project that may affect the lands they own, occupy or use. Two recent bills passed the Pennsylvania House: House Bills 672 and 1071. Both pieces of legislation can strip local government and citizens from enacting laws to protect themselves and their local environment.

sears-logoAnadarko, Boeing, Chevron, Northrop Grumman, and Sears:  During the past four years we have worked diligently with all listed companies to develop a human rights policy that was more comprehensive than their business codes. All companies addressed their responsibility to implement the UN Guiding Principles: “Protect, Respect, Remedy.” Anadarko has developed a good policy statement that still needs additional work. Boeing is still working on human rights impact assessments to validate their policies and will review the “No Fees” campaign. Chevron has a good human rights policy and has agreed to a future dialogue focused on the human right to water.  Northrop Grumman has made very good progress in policy development related to human rights. The company will begin to work on policies for ethical recruitment. Sears has developed a strong human rights policy and is now working on ethical recruitment.


CLIMATE CHANGE

Our commitment to climate change is more important than ever because the Trump administration has removed the Environmental Protection Agency website as we know it and they have rolled back former President Barack Obama’s signature climate initiative, the Clean Power Plan. They have already weakened environmental protections of air and water and are opening up public lands for fossil fuel exploitation. In the Trump world, companies won’t have to report on how they are addressing the risks related to the goal of limiting global warming to 2°C. This video will help to join us in our work on climate change. A must see! Click here!

exxon-mobilApache, Anadarko, BP, Chevron, Conoco Phillips, ExxonMobil and many others:  
The good news, contrary to the Trump administration, is that all of these companies have been asked to protect public lands from new drilling. Many others are joining in the global effort to restrict climate change to less than 1.5 degrees and to keep fossil fuels in the ground. Ceres, an environmental organization with whom we work, announced that over 1,000 companies signed onto the most recent business statement on a low carbon future. According to a new report released today by the World Wildlife Fund, Ceres, Calvert Research and Management, and CDP, nearly half of Fortune 500 companies—48%—have at least one climate or clean energy target. You can’t miss this encouraging video by WWF. Click to download the full video.


HYDAULIC FRACTURING:  Curbing Methane Emissions

chevronApache, Anadarko, Chevron, Conoco Phillips, Chesapeake:  Each of these companies has engaged in major dialogues on the need for monitoring and disclosure of methane leakage on the grounds that “what gets measured, gets managed.”  A major focus has been on leak detection and repair which is a practice used to identify and repair components, including valves, compressors, pumps, tanks, pipelines and connectors in order to reduce greenhouse gas emissions and increase efficiency. All companies have taken some steps to be more vigilant in monitoring water, air, and chemicals. Dialogues continue to be productive.


ACCESS TO NUTRITION

general-millsGeneral Mills, Kroger, McDonald’s, Target, Yum! Brands:  A long-anticipated dialogue with General Mills is scheduled for later in May when we’ll convey our concerns regarding the lack of fresh ingredients in their products. Recent dialogues with the other companies resulted in mostly favorable outcomes. Product placement is important to supermarkets while marketing and sodium content has generally improved with McDonald’s and Yum!


FOOD

Hormel, McDonald’s:  The goal of our engagement has been to convince McDonald’s to cease the use of antibiotics that are important for human medicine in its global meat supply chain. Beginning this year, the company will no longer source chickens that have been fed these antibiotics but they have yet to address beef or pork, or the use of other antibiotics in their meat. When pressed by shareholders, the company said they are studying the issue and would not commit to a timeline for implementation. A shareholder resolution was filed and will be voted on at the annual meeting on May 26.


WATER – A HUMAN RIGHT

enjoy-coca-colaAnadarko, Coca Cola, Chevron, Lockheed Martin, Northrop Grumman and others:  According to ICCR, more than one in six people worldwide—894 million—do not have access to improved water sources and 2.5 billion people, including almost one billion children, live without even basic sanitation. Every day 6,000 children die from diseases associated with lack of access to safe drinking water, inadequate sanitation, and poor hygiene. Water is a human right recognized by the member states of the United Nations General Assembly and Human Rights Council which established the mandate to assist governments and stakeholders, including corporations, to respect, protect, and fulfill the human right to water.  The Sisters of St. Francis of Philadelphia work with the above-listed companies to ensure that there are policies in place that uphold the human right to water wherever they operate. We utilize several key indicators with each company to move them toward a strong human right to water policy.

WATER –  IMPACTS OF BUSINESS OPERATIONS

Archer-Daniels Midland, Campbell Soup, Hormel, Tyson Food:  Water use is an important issue in the company-supply chains. It’s difficult to manage supply chains that are vast and geographically dispersed. Meat companies received shareholder proposals due to water contamination at large farms and processing facilities. Campbell Soup is a leader in tracking water usage in facilities around the world, making use of the Aqueduct tool. They are making progress on measuring water used by suppliers but depend on coordination with their contracting farms..


CONTRACT SUPPLIERS/VENDOR STANDARDS

walmart-logo-2013Boeing, Darden, Ford, Hershey, Kroger, Proctor & Gamble, Sears, Target, and Walmart:  In our dialogues with these corporations, we are asking that supply- chain monitoring be a major part of the company policy throughout the global community. Each of these companies is at a different level of progress as you will see in the summaries. All companies are meeting the requirements of the California Supply Transparency Act. Some are using the Global Compact Principles, SHIFT, and/or the Sustainable Development Goals to address the issues of responsible sourcing of goods. We have introduced all companies to the “No Fees Campaign” and “Ethical Recruiting.” Kroger has increased the number of their social compliance audits over 150% since 2014. In 2016, they had 164 suppliers not approved due to violations. They are working on tailoring audits for farms since their current format is more effective with factories. They are learning the importance of ethical recruitment and incorporating those issues into future audits. Although disclosure of audit results is still weak, we’re encouraged by their use of the Sustainability Consortium’s mapping tool.


ACCESS TO CAPITAL

goldman-sachs-logoBank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, and Wells Fargo:  We have met with all seven financial institutions for a variety of purposes and issues. Risk culture, ethics, and loans to oil and gas companies have been front-line discussions. All banks have been asked to withdraw any support for the Financial Choice Act which would prevent ordinary shareholders from filing resolutions. Bank of America can be credited for completing a very transparent Business Review. The Wells Fargo fiasco has had a definite impact on shareholder dialogues with banks and there’s some anxiety about the possibility of decreased regulation under the current administration. Wells Fargo addressed this issue earlier in this latest article from CNBC which references our work. Click here to read.


TOBACCO

Walgreens_Logo_2Walgreens Boots Alliance (WBA):  Despite yearly dialogues with the company on tobacco sales in their stores, progress has stalled. WBA has held firm to their belief that their sales have nothing to do with smoking figures in general, contrary to CVS’ two published studies contending otherwise. We have collaborated with activist groups at the company’s annual general meeting (AGM) and with a researcher at the Department of Health and Human Services. Click here to read the PR Newswire article.

Comcast, Disney, Time Warner:  A test shareholder resolution was filed with Time Warner requesting they adopt the U.N. Sustainable Development Goals in relation to tobacco. It was withdrawn when it was challenged. Dialogues are being scheduled for June 2017 after the Centers for Disease Control publishes data on smoking images in movies. Although some progress has been made on smoking depictions, and all studios have relevant policies, loopholes continue to allow depictions to continue.

Atria, Reynolds, Phillip Morris:  We filed a very special resolution with Altria and Reynolds as a result of a multimedia campaign in Philadelphia that exposed the excessive advertising evident in storefronts in black and Hispanic communities in the city. The Philadelphia Inquirer report of July 16, 2016 strengthened our resolve to file. The resolution will be presented at the annual meetings in May. Click here to read the article.

Philip Morris has developed a draft human rights policy that is still being revised. ICCR is continuing to assist with language that includes the “No fees” campaign and ethical recruitment language.


ACCESS TO HEALTHCARE

merck_logo-svgDomestic Health: Abbvie, Bristol-Myers Squibb, Johnson & Johnson, Merck, and Pfizer:  Drug pricing transparency has been identified as ICCR’s priority this year. A shareholder resolution requesting increased disclosure was submitted at all of these companies along with companion filings on lobbying and independent chair. We lost SEC challenges on all pricing proposals but are attending each company’s AGM to present other resolutions and bring the pricing issue before the boards.

Domestic Health Insurance: Anthem, UnitedHealth:  A dialogue with Anthem, scheduled for Spring 2017, was abruptly cancelled by the company. UnitedHealth has agreed to a dialogue on May 25, 2017, which will include questions on their goals for healthcare under the new administration and the Department of Justice’s claim that they overcharged Medicare billions of dollars. Read more.

Global Health: Bristol-Myers Squibb (BMS), Johnson & Johnson, Merck, and Pfizer: Collaborations with the Gates Foundation, Clinton Initiative, Medicines Patent Pool, the World Health Organization (WHO), and others have fostered access one country at a time. Dialogue is scheduled with BMS for May 15, 2017. We met with J&J on December 2, 2016 and learned they helped the WHO move Prevista to the essential list in India and South Africa and are working on pediatric formulations of an AIDS vaccine with the Clinton Foundation. A December 13, 2016 dialogue with Pfizer revealed greater transparency on financial resources for research and development (R&D), the number of countries in which medicines are registered, and R&D to address neglected tropical diseases.


LOBBYING DISCLOSURE & VIRTUAL – ONLY AGM

anthemAnthem, Comcast, United Parcel Service:  We filed shareholder resolutions with Anthem and UPS on lobbying disclosure requesting greater transparency of money spent through trade associations and other third party grassroots organizations. The proposal with Anthem was omitted by the SEC. Comcast’s decision to hold virtual-only AGMs prompted our filing, but the SEC sided with the company on that proposal as well.


CONCLUSION

Finally, today, there is significant talk about Impact Investing of various kinds. Through our Community Development Loans and Social Justice Grants, we are keenly aware of the impact these aspects of corporate responsibility have on communities across the globe.  We have the accountability and impact reports. Shareholder advocacy is not as easily measured but we have many reasons to believe that this is definitely “Impact Investing.” We are “taking some necessary risks” to bring about systemic change in the corporate setting. 

– Nora Nash, OSF, and Tom McCaney

Copy of Shareholder Advocacy Action Plan