Transcript SHAREHOLDER ADVOCACY: Investing in Social Justice

SHAREHOLDER
ADVOCACY:
Investing in Social Justice
General Assembly 2005
Sponsored by UUSC and UUA’s
Committee on Socially Responsible Investing (CSRI)
Presented by Jim Gunning (UUSC & CSRI)
& Stephanie Leighton (CSRI), Portfolio Manager and
Director of Equity Research of Trillium Asset Management
UUSC:
UU voice for human rights
Vision statement
The UU Service Committee envisions a world free from
oppression and injustice, where all can realize their full
human rights.
Mission statement
The UU Service Committee advances human rights and
social justice around the world, partnering with those who
confront unjust power structures, and mobilizing to challenge
oppressive policies.
COMMITTEE ON SOCIALLY
RESPONSIBLE INVESTING
Founded by the UUA Trustees in 2001:
• Joan Cudhea, Chair
• Tim Blackwood
• Jerry Gabert, UUA Treasurer
• Jim Gunning
• Larry Ladd, UUA Financial Advisor
• Stephanie Leighton
• Susan Leslie, Staff Liaison
• Eva Marx, Board Trustee
• Rev. Sydney Morris, UUMA
• Rev. James Sherblom, Investment Committee
THREE PARTS OF SRI
To achieve a “triple bottom line” – social,
environmental, as well as financial
returns:
• Screening investments
• Community investing
• Shareholder activism
SCREENING INVESTMENTS
Positive and negative screens
Selection criteria:
►
Financial
►
Social
►
Environmental
POSITIVE SCREENS
Characteristics of companies and
industries to favor:
•
Good employment practices
•
Sound environmental policies
•
Good community relations
•
Safe products
•
Diverse boards
NEGATIVE SCREENS
Characteristics of companies and
industries to avoid:
•
Weapons and military contractors
•
Tobacco products
•
Gambling
•
Nuclear energy
• Alcoholic
beverages
COMMUNITY INVESTING
• Modest portion of portfolio (3-5%)
• Low or no financial return
Examples:
►
Community banks
► Affordable
housing
►
Micro-lenders
►
Others
SHAREHOLDER
ENGAGEMENT
Use share ownership to press for
corporate accountability on:
• Social and environmental issues
• Corporate governance/accountability
issues
SHAREHOLDER
ENGAGEMENT
Methods:
• Proxy voting
• Engagement with executives
• Shareholder resolutions
• Divestment (as a last resort)
HISTORY OF SHAREHOLDER
CAMPAIGNS
1970s
1980s
1990s
South Africa
South Africa
Human rights
Environment
Environmental
reporting
Global warming
Global codes of
conduct
Equal employment
Nuclear power
Equal employment
Sweatshop labor
Tobacco
Unsafe products
MacBride principles
Sexual orientation
non-discrimination
CURRENT ISSUES: SOCIAL
• Global human rights policies
• Contract supplier standards
• HIV/AIDS reporting
• Sexual orientation non-discrimination
• Water rights
• Enabling access to capital
CURRENT ISSUES:
ENVIRONMENTAL
• Global warming & climate change reporting
• Emissions reduction & energy efficiency
reporting
• Renewable energy sources
• Indigenous rights policy
• Recycling
• Pesticides and other toxic chemicals
• GMOs
CURRENT ISSUES:
GOVERNANCE
• Board diversity and independence
• CEO compensation
• Pay disparity
• Political contribution disclosure
• Separate CEO and Chair
EMERGING ISSUES
• Sustainability reporting
• Environmental justice
• Gender identity non-discrimination
• Alternatives to toxics
• Animal testing
• Israeli-Palestinian conflict
HOW CAN I GET INVOLVED?
• Vote your proxies
• Identify your issues – in coalition with
others
• Choose companies to approach
• Engage company executives – letters or
meetings
• File resolutions for annual meetings
• Have patience and persistence
PROXY VOTING
• Company annual meeting materials
• Unmarked proxy ballots are voted by
management
• Institutional investors hold many shares
• Investment managers (and mutual funds)
must now disclose how they vote
ENGAGEMENT
OF EXECUTIVES
• Stress ownership status – it’s OUR
company
• Raise awareness about issues
• Propose meaningful actions
• Consider “going public” on issue
• Agree on target dates
WHO FILES RESOLUTIONS?
• Religious organizations -- including the
UUA, UUSC & some UU churches
• Socially responsible investment firms
• Labor unions
• Public pension funds
• Other non-profits (NGOs)
• Individuals
HOW TO CHOOSE ISSUES
• Work in coalition with others
• Major resource is ICCR (Interfaith Center on
Corporate Responsibility)
►
Includes both faith-based and secular
organizations
►
Both UUA and UUSC are members
UUA: based on stated UU values
UUSC: mission-related issues
WHAT DOES SUCCESS
LOOK LIKE?
• Company agrees to meaningful discussions
• Company agrees to adopt our requests
• In both cases, we would agree to withdraw
resolution
• If the resolution remains on the annual
meeting agenda, we present the issue and
discussion follows
• Voting occurs, results are reported
NEXT STEPS OF PROCESS
• Depending on vote size, further meetings
with company executives
• Re-filing resolution in subsequent years
• SEC allows resubmission if resolution gets
at least 3% of vote (6% after second year,
10% after third year)
2004 RESULTS:
LABOR STANDARDS
• 17 proposals voted on -- average support 12.2%
• Disney vote was 29% (China operations)
• Delphi vote was 23% (low wages in Mexico)
• 99 Cents Only (19%) and Visteon (17%)
• Successful withdrawals at ExxonMobil (UUSC
co-filed), Big Lots, Jones Apparel
Note: statistics provided by IRRC – Investor Research Responsibility
Center (www.irrc.org).
2004 RESULTS:
EQUAL EMPLOYMENT OPPORTUNITY
• Four proposals voted on -- ranged from 11 - 16%
• 24 sexual orientation non-discrimination
proposals
►
21 withdrawn when companies agreed to adopt
►
3 were voted on – ranged from 27 - 62%
• ExxonMobil was 29% (UUA co-filed); ALLTEL
was 27% (UUSC co-filed) and in 2005 agreed to
adopt
Note: statistics provided by IRRC – Investor Research Responsibility
Center (www.irrc.org).
RECENT UUA
SHAREHOLDER ACTIVISM
• Primary filer at Home Depot and Conoco Phillips:
Both adopted policies of non-discrimination based on
sexual orientation
• Co-filer at HJ Heinz: Agreed to global code of
conduct but is resistant to independent auditors of
overseas operations
• Co-filer at Chevron and Glaxo SmithKline on
HIV/AIDS: Participated in meetings with executives –
Chevron adopted a global workplace policy for
employees and their families
RECENT UUA
SHAREHOLDER ACTIVISM
• Co-filer at ExxonMobil on sexual orientation
non-discrimination -- company may be relenting
on this issue
• Leveraged efforts of NYC Retirement System
and others by recruiting local UUs to attend
annual meetings and present resolutions
UUA CAMPAIGN
FOR EQUALITY
• Wrote most companies in our portfolio – about 200
letters
• Asked what they were doing with respect to 10
Equality Principles
Principles include non-discrimination on the basis of
sexual orientation, gender identity/expression, domestic
partner benefits
►
• Next steps – call company executives to verify
responses and/or explain issues
• Ask for adoption of Principles, or face a resolution
in coming year
RECENT UUSC
SHAREHOLDER ACTIVISM
• Unocal agreed to settle lawsuit on Burma
(Myanmar) for subjecting people to slave labor and
other crimes
• ExxonMobil agreed to engagement on shaping a
global labor standards policy
• ALLTEL adopted policy of non-discrimination based
on sexual orientation, after several years of
resolutions
• Wal-Mart asked to report on “sustainability”
RECENT UUSC
SHAREHOLDER ACTIVISM
• Unocal (now merged with Chevron) adopted a
global code of conduct
• Merck and PepsiCo asked to address the
HIV/AIDS pandemic
• Merck agreed to publish an annual report on their corporate
responsibility efforts including HIV/AIDS
• PepsiCo agreed to formulate a global workplace policy for its
employees and their families
• TJX agreed to a strong vendor standards
program, but remains resistant to increased
public reporting
HOW CAN MY CHURCH
GET INVOLVED?
• Local churches may invest based on SRI
UUA’s General Investment Fund, which has
screens for social and environmental issues
►
►
Investment firms that specialize in SR investing
►
SR mutual funds
• Vote proxies based on SR guidance
• Join coalitions such as ICCR
• Write letters to local companies on social
issues
INFORMATIONAL
RESOURCES
• Interfaith Center on Corporate Responsibility
(UUA and UUSC are members) www.iccr.org
• Social Investment Forum (UUA is a member)
www.socialinvest.org
• Shareholder Action Network www.san.org
Information on proxy voting:
• UUA www.uua.org/finance/sri/investing/proxy.html
• As You Sow Foundation www.asyousow.org
• Rockefeller Foundation www.rockpa.org
QUESTIONS & ANSWERS
THANK YOU
FOR ATTENDING
For more information,
please visit our websites:
UUA - www.uua.org/finance/sri
UUSC - www.uusc.org/info/shareholder.html
Subscribe to SRI-News:
www.uua.org/mailman/listinfo/sri-news