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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)

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SHAREHOLDER ADVOCACY: Investing in Social Justice

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  1. SHAREHOLDERADVOCACY: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

  2. UUSC:UU voice for human rights Vision statementThe UU Service Committee envisions a world free from oppression and injustice, where all can realize their full human rights.Mission statementThe 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.

  3. 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

  4. THREE PARTS OF SRI • To achieve a “triple bottom line” – social, environmental, as well as financial returns: • Screening investments • Community investing • Shareholder activism

  5. SCREENING INVESTMENTS • Positive and negative screens • Selection criteria: • Financial • Social • Environmental

  6. POSITIVE SCREENS • Characteristics of companies and industries to favor: • Good employment practices • Sound environmental policies • Good community relations • Safe products • Diverse boards

  7. NEGATIVE SCREENS • Characteristics of companies and industries to avoid: • Weapons and military contractors • Tobacco products • Gambling • Nuclear energy • Alcoholic beverages

  8. COMMUNITY INVESTING • Modest portion of portfolio (3-5%) • Low or no financial return • Examples: • Community banks • Affordable housing • Micro-lenders • Others

  9. SHAREHOLDER ENGAGEMENT • Use share ownership to press for corporate accountability on: • Social and environmental issues • Corporate governance/accountability issues

  10. SHAREHOLDER ENGAGEMENT • Methods: • Proxy voting • Engagement with executives • Shareholder resolutions • Divestment (as a last resort)

  11. HISTORY OF SHAREHOLDER CAMPAIGNS

  12. CURRENT ISSUES: SOCIAL • Global human rights policies • Contract supplier standards • HIV/AIDS reporting • Sexual orientation non-discrimination • Water rights • Enabling access to capital

  13. 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

  14. CURRENT ISSUES:GOVERNANCE • Board diversity and independence • CEO compensation • Pay disparity • Political contribution disclosure • Separate CEO and Chair

  15. EMERGING ISSUES • Sustainability reporting • Environmental justice • Gender identity non-discrimination • Alternatives to toxics • Animal testing • Israeli-Palestinian conflict

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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 valuesUUSC: mission-related issues

  21. 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

  22. 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)

  23. 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).

  24. 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).

  25. 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

  26. 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

  27. 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

  28. 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”

  29. 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

  30. 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

  31. 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 Networkwww.san.org • Information on proxy voting: • UUAwww.uua.org/finance/sri/investing/proxy.html • As You Sow Foundationwww.asyousow.org • Rockefeller Foundationwww.rockpa.org

  32. QUESTIONS & ANSWERS

  33. 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

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