Annual Summary of Shareholder Activity 2018-2019

Our shareholder advocacy for a just society through corporate engagements, social justice grants, and community development investments is our way of offsetting some of the many aspects of vulnerability and dysfunction that we find in our society and world. With every oppressor of vulnerable people, angels emerge to offer assistance, comfort, and hope to those “who have no voice.” We use our voices in corporate engagements and are happy to report that there are angels present there also.

Our ministry with corporations is our way of emulating those angels by prophetically witnessing to our call to be human in the face of an exceptionally violent time—made more complicated by social fracturing, inequity, and inequality. Whether we are challenging pharmaceutical companies, such as AbbVie, Pfizer, Bristol-Myers Squibb, Johnson & Johnson or Merck, to stop pushing the price of life-saving medicines beyond the ability of those in need to afford them or Chevron’s refusal to adopt a consistent, comprehensive policy acknowledging a human right to water, the Sisters of St. Francis of Philadelphia stand with those without a voice. And the same is true as we engage with Sturm Ruger on gun safety, McDonald’s and Yum Brands on nutrition, the banking sector on investments in private prisons, and the climate wrecking industry of fossil fuels. These are among over 100 actions seeking responsible corporate behavior.

Our coalitions—the Interfaith Center on Corporate Responsibility (ICCR) and Investor Environmental Health Network (IEHN)—have responded assertively to emerging crises and corporate malfeasance throughout its 47-year existence. Companies have been confronted for their roles in the escalation of childhood obesity, predatory lending, violent video games, mountaintop removal mining, and the clear-cutting of tropical rainforests. In more recent years, ICCR and IEHN have tackled the issues of climate change, the opioid epidemic, private prisons and immigration, human rights and human rights defenders, e-cigarette use by teens, the chemical footprint of business operations, pharmacy benefits managers, and antibiotics in meat. This flexibility allows shareholders motivated by faith and values to utilize investments to hold the corporations accountable for the impacts their operations have on the communities in which they operate and on society as a whole.

As we reflect on this past year of portfolio review, we are very pleased to have had Natalie Wasek as our Franciscan Volunteer. Natalie took an active role in just about every aspect of our mission and work. All of us/you, our sisters, companions, and advocacy partners are the beneficiaries of Natalie’s many hours of research and general assistance with taking notes for corporate dialogues and adding her touch to a variety of engagements and projects. We believe that she had many special moments that she will share with you but the highlight was her question at Northrop Grumman when she asked a very well–crafted and authentic question (too long to share here). Thanks, Natalie, for walking in the footprints of our founders and being an ideal Franciscan Volunteer!

Again this year we will share highlight areas of our corporate engagements as part of our ongoing annual report. We can’t say that we have transformed any corporation because only the corporate entity can do that but we can say that we and our ICCR brothers and sisters have made some significant differences.


HUMAN RIGHTS

Human Rights and the Rights of Communities

As followers of Francis of Assisi who exemplified what it meant to be human and what it meant to be in solidarity with the leper and to love every creature, we hold the human rights of persons and communities to the highest standards. We experience God in the condition of being human; in the marketplace, in Wall Street and Main Street and in the corporate entity. We recognize that the United Nations (UN) Guiding Principles on Business and Human Rights (UNGPs) unanimously adopted by the UN Human Rights Council in 2011 as our map to integral engagement with corporations. The UNGPs have become the authoritative global framework on business and human rights.

In addition, we seek to ensure that our portfolio companies fulfill their responsibility to respect human rights in all contexts and have a responsibility to respect internationally recognized human rights—understood, at a minimum, as those expressed in the International Bill of Human Rights and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work.

Every day we are challenged to be the mediator of values and ethics as we witness to the unethical practices and the corrupt culture of some corporations. Together we address the human rights of persons or/and local communities.

Watch: Human Rights and Business

Amazon, American Airlines, Boeing, Booz Allen, Conoco Philips, Core Civic (private prison), Delta Airlines, Ford, GEO Group (private prison), Hershey, Kroeger, Lockheed Martin, Macy’s, Northrop Grumman, Sturm Ruger, J. P. Morgan Chase, Wells Fargo

Each of the above companies are at some stage of developing a human rights policy or have a human rights policy that is not in operation. Resolutions were filed at Amazon, Macy’s, GEO Group, and Northrop Grumman. All resolutions challenged companies to address the impact of human rights on the persons who were being violated due to the company’s lack of an effective and operative human rights policy. In each case we joined other proponents (ICCR members) in challenging the companies to note their lack of risk mitigation and disclosure, the lack of frequency in assessments and due diligence. In the case of the GEO Group, the Department of Homeland Security’s Office of Inspector General in October 2018 reported “serious issues relating to safety, detainee rights, and medical care” at a GEO-owned and operated immigration detention center in Adelanto, California. Inspectors found nooses made from twisted bed sheets in 15 of 20 cells inspected, despite one suicide and seven attempts at the facility last year.

It is important to note that Amazon has been exceptionally uncooperative with shareholders and had numerous resolutions filed at the AGM. Our Amazon cofiling noted the extent to which facial imaging technology may endanger or violate privacy or civil rights and disproportionately impact people of color, immigrants, and activists and how Amazon would mitigate these risks. This technology can readily be abused and the harms associated with this disproportionately affect vulnerable communities.

Along this same line, we were also the colead filer in a resolution with Northrop Grumman because the company has a $93 million contract with the Department of Homeland Security (DHS)’s Office of Biometric Identity Management to develop technology for the Homeland Advanced Recognition Technology (HART) database.[1] This database will expand the capacity of DHS to collect, store, and share biometric data, such as facial images, fingerprints, iris images, and voice, as well as biographical data, including personal identification numbers, citizenship status, and nationality.[2] There are concerns that the algorithms used to identify facial images that may be stored in the database have inherent racial bias, adversely impacting the right to nondiscrimination.[3] Kudos to Mary Beth Gallagher of the Tri State Coalition for her extra research and advocacy in this area as well as her individual effort to assist Hershey in developing a Human Rights policy.

Read: Shareholders Demand To Know How Northrop Grumman Will Protect Human Rights While Building Massive DHS Database

[1] https://news.northropgrumman.com/news/releases/northrop-grumman-wins-95-million-award-from-department-of-homeland-security-to-develop-next-generation-biometric-identification-services-system
[2] https://www.federalregister.gov/documents/2018/04/24/2018-08453/privacy-act-of-1974-system-of-records
[3] https://www.aclu.org/blog/privacy-technology/surveillance-technologies/amazons-face-recognition-falsely-matched-28

CLIMATE CHANGE/WORKING FOR CLIMATE SOLUTIONS

Apache, Anadarko, BP, Chesapeake, Chevron, Conoco Philips, General Electric, Proctor & Gamble, Southern Company, All Banks and many other companies

We make every effort to follow in the footprint of St. Francis of Assisi to care for creation. Our work to address the risks related to climate change focuses on emissions and disclosure under the Paris Agreement. Aligning with the Intergovernmental Panel on Climate Change (IPCC)’s report on the impacts of global warming above 1.5°, we have urged companies to reduce carbon and methane emissions, and report disclosures according to the Task Force on Climate Related Financial Disclosure (TCFD), and the Carbon Disclosure Project (CDP). Working with organizations such as the TCFD, CDP, Environmental Defense Fund, Catholic Climate Covenant, Investor Environmental Health Network, and Ceres enables us to do our work more diligently.

We participated in productive dialogues on disclosure, emissions, and the Just Transition. Our continued work with the oil and gas companies is constant since the industry is expanding locally and globally. We are not only dealing with fracking but also with pipelines, pumping stations, compression stations, and industrial complexes to send gas overseas. Presently we are working with the Clean Air Council and the Delaware River Basin Commission to prevent fracking and pipelines in the Delaware River Basin.

We recognize that the plastics industry, which is enabled by the excessive development of fracked gas, will continue to drive an increase in global plastics production. Though all of these companies have taken some form of climate action, it is imperative that they take much larger steps if they are going to align with the 1.5° scenario.

Watch: Greta Thunberg’s address to the EU on Climate Change


ACCESS TO NUTRITION

Campbell Soup, Kroger, McDonald’s, Target, Yum! Brands

As grocery retailers, Kroger and Target have a great deal of influence on the access the public has to nutritious food. Among the issues discussed in dialogues during the past year are marketing and promotional strategies, product placement, labeling, evaluating impulse items in checkout lanes, and responsibly caught seafood. An innovative idea we suggested is to remove candy from at least one checkout lane and replace it with an “autism-friendly” space with sensory provocative items such as Play-Doh, rattles, and puzzles. Although Target has not adopted this model, they have modified their lanes.

Kroger, which features numerous store-brand items throughout their stores, have expanded their Simple Truth and Private Selection brands to include more organic and natural foods. The company has taken advantage of its coupon program to make these products more affordable.

McDonald’s and Yum! Brands have been challenged to balance their fast food menus with items that meet one-third of the Recommended Daily Allowance established for the countries in which they do business. Both are global companies which means their menus are adjusted in different regions for preferences and cultural reasons. Yum’s evaluation is complicated further by the fact that they offer three distinct brands: Taco Bell, KFC, and Pizza Hut. We have had in-depth discussions with both companies on their advertising, particularly targeted to children and minority groups, with Yum and McDonald’s explaining their strict policies against marketing to children. However, these seem to apply only to traditional outlets such as TV, radio, and printed media. Social media is more complicated and needs further exploration.

Read: How do we secure the future of food on a planet in peril?


FOOD JUSTICE

Aramark, McDonald’s, Sysco, Yum! Brands

Antibiotics in meat is an ongoing issue with restaurants and other retailers. Recently McDonald’s set a policy to reduce the overall use of antibiotics important to human health which applies across 85% of the company’s global beef supply chain. This progress came after several years of contentious dialogue and shareholder resolutions. Sysco is a new engagement on antibiotics and we will reach out to request a dialogue. Aramark published a position statement on antibiotics stewardship, but has yet to adopt a metric-based policy on reducing its use.

Watch: Antibiotics in Meat

We have been in dialogue with Aramark, McDonald’s, and Yum! Brands on the subject of food waste. Aramark is a leader using the LeanPath tool to measure and minimize waste. They belong to both the Food Waste Reduction Alliance and the Environmental Protection Agency (EPA)’s U.S. Food Loss and Waste 2030 Champions. Both Yum and McDonald’s have policies addressing food waste although they focus heavily on donation programs. They have more control over “back of house” waste but there is an opportunity to address customer or “front of counter” waste through education which they have not tackled.


WATER ~ A HUMAN RIGHT

Anadarko, Apache, Chevron, P&G, Chesapeake, Lockheed Martin, Archer Daniels Midland, Campbell Soup, Coca-Cola, Monsanto, Tyson

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 numerous companies to ensure that there are policies in place that uphold the human right to water. Progress is slow.

We filed a resolution with Chevron on its due diligence process to identify and address risks related to the human right to water in its operations. Once again Tri State Coalition did extensive research on Chevron’s business activities nationally and globally and identified numerous adverse impacts on the human right to water. Extracting water from water scarce areas is a global issue for Chevron and has contributed to violent civil conflict. The Chevron resolution received a vote of 32.2%.

We will continue to urge companies like Chevron to respect the human right to water as well as to encourage companies to practice more responsible water use in their operations.

Watch: Fresh Water Scarcity


CONTRACT SUPPLIERS/VENDOR STANDARDS/ETHICAL RECRUITMENT/TRAFFICKING

Boeing, Darden, Ford, Hershey, Kroger, Lockheed Martin, Macy’s, Proctor & Gamble, Walmart, Cotton Industry

In our dialogues with these corporations, it is important to remember that recent global estimates found that 16 million people are trapped in conditions of forced labor in extended private sector supply chains. Over 70% are in debt bondage and are forced to work for industries such as manufacturing. Migrant workers are targets for exploitation, which includes discrimination, retaliation, debt bondage, and confiscation of wages through illegal deductions. Many times there is restricted access to personal documents, limiting workers’ freedom of movement which leads to forced labor and human trafficking. The companies listed above generally meet the requirements of the California Supply Chains Transparency Act but have not done the due diligence necessary to show how they are in total compliance with the standards. These companies may be doing Ethical Recruitment of Workers but have not provided assessments which include industry best practices. With each company we had productive dialogues related to various threads that give direction to improving the supply chain using the Sustainability Accounting Standards Board, the Sustainable Development Goals, and Global Reporting Initiative.

Watch: Forced Labor


ACCESS TO CAPITAL

Bank 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 especially related to human rights and the ongoing private prison/immigration/detention catastrophe. Special meetings were held with J.P. Morgan Chase and Wells Fargo on the salient issue of providing financial lines of credit to private prisons. Because of the pressure and due diligence necessary to assess the risks, both banks agreed to stop financing private prisons. Bank of America responded to the prison issue noting that they will provide an update to the Service Employees International Union on the company’s enhanced due diligence of private prisons and detention center operators (ICCR). Letters were sent to all financial institutions regarding their due diligence and investment approach to gun manufacturers and distributors.

All banks are being challenged to participate in climate risk assessments and the Task Force on Climate Related Financial Disclosure. Through the use of this resource companies will develop voluntary, consistent climate-related financial risk disclosures.

We are in continued engagement with Wells Fargo on the loan modification and foreclosure issues. Hundreds—possibly thousands—of citizens have lost their homes due to Wells Fargo’s mismanagement of loan modification documents for people who became ill or faced another financial difficulty. The bank’s stated goals of transparency and remediation are not yet evident.

Watch: Katie Porter Questions Jamie Dimon


TOBACCO

Walgreens Boots Alliance (WBA), Rite Aid

Despite yearly dialogues with Walgreens 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 AGM and with a researcher with the Department of Health and Human Services to energize broader support for the company’s divestment from tobacco.

Read: CVS Health Research Institute Study Confirms that the Company’s Tobacco Removal Decision Reduced Cigarette Purchases Nationwide

Both Walgreens and Rite Aid have announced that they have raised the age to purchase tobacco products to 21 in all their stores. This came as a result of both shareholder and congressional pressure. Rite Aid has also pledged to remove all e-cigarettes from their stores, citing the epidemic of vaping among youth. Although positive steps, these half measures do nothing to address the hypocrisy of healthcare companies peddling these deadly products while selling cessation products along side of them.

Comcast, Disney, AT&T/Time Warner

Comcast remains a laggard on smoking depictions in movies, not sharing their data on depictions, and rarely making themselves available to dialogue. Disney is the industry leader in limiting smoking incidents and in a recent dialogue revealed that they will fold all Fox new movies they acquired into their global policy. The Fox legacy movies in their portfolio will be required to be presented with the same warnings of smoking that Disney films include. In anticipation of AT&T’s acquisition of Time Warner, the ICCR shareholder coalition sent a letter requesting they implement substantial policies that limit smoking depictions in youth-rated movies. A newer concern is the accessibility of smoking incidents as more technological outlets are used to view entertainment. The good news is that after years of asking Comcast to withdraw from the American Legislative Exchange Council, the company did so in early June.

Altria, Phillip Morris International

Our resolution with Altria requested that information be made available to customers on the nicotine level in each product as well as asking the company to begin reducing nicotine levels in the brands to a less addictive level.  With the rise of e-cigarettes and tobacco-less products, it becomes important to mitigate adolescent and teen use of these addictive products. Unfortunately, the resolution only received a 3.90% vote. We will continue to address this growing issue with Altria and other tobacco companies. Student activists and other NGOs prove that tobacco companies need to be held accountable.

We cofiled a shareholder proposal with Phillip Morris International requesting that the company review its corporate adherence to youth marketing principles. PMI agreed to the report requesting the proposal and it was withdrawn. They stated they have a complete social media ban and do not pay “influencers” to promote their products.

After establishing the Foundation for a Smoke-Free World, PMI has committed itself to promoting the IQOS heat-not-burn tobacco technology as the nicotine delivery system of the future. Although the World Health Organization (WHO) has refused to sign off on IQOS, the FDA has recently approved its use in the United States.


ACCESS TO HEALTH CARE

Domestic Health: AbbVie, Amgen, Bristol-Myers Squibb, Johnson & Johnson, Merck, and Pfizer

Drug pricing transparency has been identified as ICCR’s priority this year. In prior years, ICCR has filed numerous resolutions asking companies to explain their rationale and methodology for the pricing of medicines. After failing to sufficiently influence these companies to re-evaluate their philosophy, ICCR members filed resolutions tying executive compensation to responsible pricing metrics. Although not all companies received filings, it resulted in withdrawals at AbbVie and Bristol-Myers Squibb.

A highlight was a recent in-person dialogue with Pfizer Board member Joe Echevarria asking for more transparency on the board’s involvement with pricing decisions. The company agreed to enhanced disclosure of their deliberations and determining factors on how they connect pricing with executive compensation.

Domestic Health – Pharmacy Benefits Managers (PBM): CVS Health, UnitedHealth

Consolidation within all aspects of the healthcare field has resulted in a lack of transparency and competition. The largest, Pharmacy Benefits Managers, which negotiate discounts and low prices with pharmaceutical companies and retail pharmacies on behalf of payers (insurance companies and customers), are now owned by retail pharmacies (CVS Health) and health insurance companies (Cigna owns Express Scripts and UnitedHealth owns OptumRx). Although there are clear conflicts of interest, little regulation exists.

In recent dialogues with CVS Health and UnitedHealth, both touted their effectiveness in negotiating prices down to provide the lowest costs to the payers. However, neither could provide hard data to substantiate their claims. PBMs have been accused of including drugs in their formularies that offer higher rebates thus garnering higher revenue for themselves (PBMs keep a portion of the “spread” between list price and net price). Further engagement is needed.

Global Health: Bristol-Myers Squibb, Johnson & Johnson, Merck, and Pfizer

Dialogues with each company are ongoing. Collaborations with NGOs have improved access to life-saving medicines in low-income countries. Bigger challenges remain in middle-income countries—like Vietnam, India, Morocco, Guatemala, Honduras—as well as several African and middle-eastern countries.

As pharmaceutical companies continue to move toward more specialized priorities, the international health system will get more fragmented. Merck, for example, has been working with the WHO to determine the value of Tegravir Pediatric formulation, an antiretroviral medication for the treatment of HIV/AIDS. Merck is one of the few companies still continuing its HIV/AIDS pipeline. It is difficult to evaluate a company’s access to medicines initiatives, since their efforts are drug-specific and dependent on cooperation from each country’s government.


OPIOID CRISIS

AbbVie, Abbott, AmerisourceBergen, CVS Health, Walgreens

The Investors for Opioid Accountability (IOA) coalition expanded its reach to engage retail pharmacies to determine their responsibility in the flood of prescription opioids in the U.S. CVS Health agreed to produce a report on board oversight of the company’s anti-diversion plan which convinced ICCR shareholders not to file a resolution this year. A 2018 dialogue with Walgreens failed to secure a commitment from their board to explain its role in oversight. A proposal was filed and received 60% of the vote. A follow-up dialogue is being planned.

Great progress has been made with AmerisourceBergen, a company that has programs on the ground to mitigate risks of opioid distribution but has not publicly addressed the epidemic in a forward-looking way. The board will produce a report and offer strategic plans by fall 2019.


GUN SAFETY

American Outdoor Brands, Dick’s Sporting Goods, Sturm Ruger

As we promised in 2017, we continue to use our collective voice to challenge unjust structures and call major corporations to address the issue of gun safety. We have had numerous occasions to address this issue and to some small degree have had some success with financial institutions. Our public message to stop Wells Fargo from giving financial lines of credit to the gun industry was received with some “venom” from the NRA but we’re stronger than that entity might assume. We continue to challenge Sturm Ruger and American Outdoor Brands through letters, dialogues, and resolutions. Our resolution with Sturm Ruger for this year was “suppressed” by the company by changing the filing date which prevented us from filing. Dick’s Sporting Goods has continued to change its gun policy and find new ways to lessen its connections with the gun business. CEO, Mr. Stack, doesn’t “want to be part of the story.” We are presently strategizing with an organization called “Guns Down America” to see how we might assist that campaign.

Read: This student decorated her graduation cap with QR code that sends people to a list of high school shooting victims


CHEMICAL FOOTPRINT PROJECT, PRODUCT SAFETY, PLASTICS

Hasbro, Dollar Tree, Dollar General, Proctor & Gamble, Lowe’s, Department of Defense Contractors, Armstrong

We have been urging companies to participate in the Chemical Footprint Project (CFP) to bring awareness to and reduce the use of chemicals of high concern in their products. We focused on dollar stores which offer low-priced toys and other products with harmful chemicals. After letters and conversations with both Dollar Tree and Hasbro, the two companies have started participating in the CFP. Lowe’s is also considering becoming a signatory to the CFP to meet goals of chemical reduction in their products. We are also engaging companies like Proctor & Gamble on plastic reduction. Acknowledging their plastic use, P&G has set goals to make packaging 100% recyclable, reusable, or compostable by 2030. We continue to urge Dollar General, Department of Defense Contractors, and other companies to participate in the CFP and reduce their harmful chemical and plastic use.


LOBBYING DISCLOSURE & VIRTUAL-ONLY ANNUAL MEETINGS

Abbott, American Outdoor Brands, Bank of America, Duke Energy, United Parcel Service

All companies are required to report their expenditures in Lobbying and Political Spending. Many companies avoid being totally transparent especially when it comes to grassroots lobbying. It is much more difficult to get pure numbers since reports are done at a local and state level. The resolution with American Outdoor Brands on virtual meetings was challenged at the SEC. We cofiled a resolution on lobbying with Bank of America and after dialogue with the company, we withdrew the resolution in favor of more transparency on grassroots lobbying, state lobbying, and inclusion of dollar amounts plus more disclosure on the website. The resolution on lobbying at Duke Energy received a 36.60% vote.


PUBLIC POLICY

As many of these issues have broad implications, our work often extends to the public policy of our state and federal governments. We have met with state representatives on the environmental impacts of natural gas pipelines, cosigned letters to U.S.D.A. on worker safety in meat processing plants, and the FDA on nutrition innovation policy. We are also signatories on hundreds of other letters to corporations and congressional representatives. We have joined public campaigns to pressure our representatives to initiate greater oversight of the distribution of opioid medications. We have cooperative and productive relationships with Pennsylvania Representatives Leanne Krueger, Greg Vitali, and Tom Killion as well as Congressional House Representatives Mary Kay Scanlon, Madeline Dean, and House Chair Maxine Waters. We will continue to seek public policy support for justice, equality, equal employment, and access to capital. We will continue to prevent the growth of the American Legislative Exchange Council. This group drafts state laws for many states that are often unconstitutional and anti-climate change.

Watch: Lawrence’s Last Word: Freshman Representative Questions Equifax CEO | The Last Word | MSNBC


CONCLUSION

We will continue to encourage and challenge companies in our investment portfolio to be diligent in their responsibilities for environmental, social, and governance practices. We all play a vital role in a just transition and have many opportunities to set clear expectations for companies in our work for justice and corporate responsibility. Sustainable and responsible investing represents everything we are and have in our allocation of time, resources, and skills. It is more than just financial. It is about how we the people of God choose to take care of our common home. As we move forward on this delicate and beautiful Earth, we encourage you to remain active in your citizen responsibilities.

Watch: The World is Just Awesome

Thank you or reading and participating in our ministry. If you have any questions please don’t hesitate to ask us: nnash@osfphila.org; tmccaney@osfphila.org.

Natalie Wasek
Thomas McCaney
Sr. Nora M. Nash, OSF