Coffee, Climate Change and Sustainable Sourcing – J. M. Smucker Company (2012)

Whereas:

Our company is one of the four largest coffee companies in the world. It provides industry leadership through brands such as Folgers not only in consumer expectations but also with regard to pricing.

The coffee business is critically important for our company by providing approximately 40% of our company’s revenue. It is equally important to the well-being of 25 million coffee farming families worldwide.

Climate change may present a number of important risks and opportunities for our company and these communities, as it impacts temperature, rainfall patterns, frequency of severe weather events, and disease vectors, among other effects, in the world’s coffee growing regions.

According to Kenya’s Coffee Research Foundation director of research, “We have seen climate change in intermittent rainfall patterns, extended drought and very high temperatures.” Furthermore, “Coffee operates within a very narrow temperature range of 19-25 degrees (Celsius). When you start getting temperatures above that, it affects photosynthesis and in some cases, trees wilt and dry up.” Peter Baker, CABI Bioscience coffee expert, stated, “I often call coffee a Goldilocks plant. It likes it not too hot, not too cold. It likes it not too wet, not too dry.”

Competitors in the coffee business – Nestlé, Kraft, and Sara Lee – are making public efforts to address coffee sustainability and to provide for a consistent and reliable supply chain of quality coffee. All three have made public commitments to specific goals or data disclosures—often including targets, timeframes, and investment levels– of sourcing coffee in a more sustainable fashion.

Resolved: Shareholders request that within six months of the 2012 annual meeting, the Company develop and publish, at reasonable cost and excluding proprietary and confidential information, an enhanced green coffee sustainability plan that goes beyond its 2011 plan and includes (1) quantitative goals for quantities of certified coffee purchases; (2) a method for evaluating the success of the plan in addressing the challenges of climate change to the Company and the farmers and ecosystems in its coffee supply chain.

Supporting Statement: It is the Proponents’ intention that the enhanced green coffee sustainability plan provide investors with a reasonable level of detail about our company’s plan. Our company has not provided information about how much certified coffee it will purchase in terms of percentages or absolute amounts. We are not seeking to impose a specific goal, but seek a reasonable amount of disclosure. With respect to a method for evaluating the success of the plan, we believe our company should be able to provide its shareholders with some basic evidence that its plan is beneficial to the farming communities and ecosystems from which it sources coffee. While our company’s 2011 Corporate Responsibility report mentions the 2010 impact of TechnoServe on some farmers, there has not been any effort to discuss the beneficial impacts of Smucker’s green coffee sustainability plan on the environment, communities and/or our company.

Of Climate Change and Cost Curves

Natasha Lamb

As communities around the globe strive to meet ever-increasing energy demand and produce sustainable jobs and investments, we are at a crossroads where we must either aggressively adopt non-fossil fuel energy sources or risk exceeding the 2°C temperature rise already expected from the cumulative buildup of greenhouse gases in the atmosphere. Mainstream conventional wisdom holds that nuclear power must be embraced in the transition to a post fossil fuel future, and that solar and wind’s high costs and lack of scalability will consign their contributions to the margins. But as we discuss in this article, for reasons inextricably linked to their environmental profiles, nuclear power is still an unattractive financial investment, while solar and wind look increasingly attractive. Most compelling, the costs of providing nuclear power are rising while those of wind and solar are making their way down the cost curve.

According to researchers at the Lawrence Berkeley National Laboratory, photovoltaic (PV) systems costs have dropped 50 percent over the last 12 years, much of it due to module cost reductions that accelerated in just the past two years. According to another report, prepared by Dr. John O. Blackburn and Sam Cunningham of Duke University, these cost reductions have brought solar power to parity with nuclear. The Duke report draws on the work of Mark Cooper of Vermont Law School’s Institute for Energy and the Environment, concluding that third generation nuclear will cost 16 cents per kWh on average. The investment bank Lazard Ltd. estimates nuclear slightly lower at 12.3 cents per kWh and solar at 15.6 cents. But whether it is 12 or 16 cents one can expect the nuclear cost curve to start climbing, due to increased regulatory, safety, and permitting costs post-Fukushima. Meanwhile, solar’s cost curve is headed south and expected to be cost-competitive without subsidies by the end of the decade.

The Rocky Mountain Institute (RMI) sees great efficiencies ahead for solar beyond reductions in module costs. Its recent report, Achieving Low Cost Solar PV, asserts that installation costs alone, known as “balance of system” costs, represent half the cost of a solar system and can be reduced by 50 percent over current best practices. RMI’s Amory Lovins points to private equity as a gauge of where the smart money is flowing. In 2010, $151 billion in private dollars underwrote 50 gigawatts of renewable energy, while nuclear received no inflow at all. Lovins goes further to highlight wind energy’s inherent cost advantage over nuclear: “they [nuclear plants] cost two to three times as much as new wind power, and by the time you could build a reactor, it couldn’t even beat solar power.”

This last point is especially relevant, given the urgency of making the transition to clean energy sources in the midst of climate change. Although nuclear has been championed in some quarters as the “no carbon” solution, the time required to build a nuclear plant disadvantages it relative to solar and wind. New nuclear plant construction requires a 60-month timeline and is growing, versus 18 months for wind installations. While nuclear plants are stuck in the planning and construction phase, renewable energy installations can be quickly deployed. Further, with the cost of renewables continuing to decline over time, nuclear begins to look less and less competitive.

It is also important to consider whether estimates of nuclear energy’s potential contribution to slowing global warming are misleading. According to a Carnegie Endowment report, many estimates unrealistically assume nuclear would replace carbon intensive coal-fired energy generation alone. A more likely scenario is that nuclear capacity will displace natural gas, wind, solar, and other forms of lower-carbon energy as well. The all-coal assumption leads to artificially high emission reduction projections.

Nuclear generation is also burdened by high upfront costs. In fact, nuclear plants do not generate profits in their first decade, which is why financing, which can range from 25 to 80 percent of total costs, has been such a challenge. As taxpayers and investors, we should question the total costs, including waste disposal, disaster preparedness, healthcare, terrorist threats, and loan defaults. Cost overruns have been the norm for the industry. The Congressional Budget Office reported in 2008 that historic cost overruns were 207 percent prior to the Three Mile Island disaster and 250 percent following the event. Even the highly touted AREVA, a French nuclear conglomerate with third generation technologies, was one and a half years behind schedule and $1 billion over budget in building its Olkiluoto, Finland plant.

Solar is not the only alternative power source journeying down the cost curve. Many alternatives boast competitive cost structures. Wind costs 8.5 cents/kWh, geothermal 7.5 cents, and energy efficiency 2.5 cents, by far the cheapest with the least technology risk. These solutions are poised to transform the energy infrastructure globally, from a centralized generation model to a distributed, more efficient power system. Layer on “smart grid” technologies that enhance the efficient delivery of energy to consumers, and we will be able to effectively harvest solar and wind power from the center of the country and transmit it to higher density population centers.

But cost breakthroughs alone will only go so far to hasten the adoption of wind, solar and other clean technologies when government incentives reward nuclear and fossil fuel development. Public policies must practice a “reverse discrimination” in favor of subsidizing non-nuclear renewables. A forthcoming report by the Intergovernmental Panel on Climate Change will argue renewables could provide up to 77 percent of the world’s energy needs by 2050, but only if the government and private sector were willing to invest up to $5.1 trillion through 2020, and $7.2 trillion in the decade following.

Despite the sunny outlook [pun intended – Ed.], the critical question is how to achieve reliable baseload power when the sun is not shining and the wind is not blowing, as intermittent energy sources only produce power about 30 percent of the time.

Natural gas is currently the most viable alternative given its lower carbon profile, but the bulk of the U.S.’s abundant gas beds must be extracted with hydraulic fracturing (or “hydrofracking”), a technique linked to highly publicized instances of groundwater contamination and well blowouts. It remains to be seen whether drillers will rise to the occasion to mitigate the risks to public health and the environment, or whether far reaching legislation will be necessary.

Projected technological advances hold the promise that solar may one day contribute to baseload needs. The World Resources Institute report Juice From Concentrate: Reducing Emissions with Concentrating Solar Thermal Power, promotes Concentrating Solar Thermal (CST) power as a base load solution. CST combines solar power and thermal storage to power steam turbines around the clock.

As ESG investors, we look for the most viable, cost competitive technologies that also deliver the least environmental, social, and governance risk. Representative Ed Markey (D-MA) articulates the importance of the investor’s perspective:

Wall Street is what did in the nuclear industry after Three Mile Island and Chernobyl…It is Wall Street again today that is going to believe that nuclear power has become an increasingly risky financial investment.

As ESG investors, the onus is on us to determine risk in the context of cost curves, climate change, and viability. Given the trend lines, it’s clear for the foreseeable future that solar and wind are truly clean, safe and renewable, while there is little evidence to support the inclusion of nuclear power in an ESG-screened portfolio.

—

Nuclear Power Finds Some Acceptance Within the SRI Community

Milton Moskowitz

I was 18 when two atom bombs were dropped on Japan, and I remember feeling relieved because it meant that we probably would not need to sacrifice thousands of soldiers’ lives in a frontal invasion of the Japanese mainland. There were few dissenters to this action, which did accomplish its mission. Seeing the destruction wrought in Hiroshima and Nagasaki, the Japanese government surrendered, ending World War II.

It’s eerie that 66 years later nuclear energy is again causing havoc in Japan, although this time it was self-imposed. The combination of a 9.0 earthquake and subsequent tsunami crippled the Fukushima Daiichi nuclear plant operated by Tokyo Electric Power (TEPCO). It’s a disaster predicted 32 years ago in the movie, The China Syndrome, where utility executives are portrayed as obtuse deniers of any dangers associated with nuclear energy operations. Tokyo Electric Power is the world’s largest privately owned electricity company, and it has been cast in the same light as the executives in that movie, charged with ignoring previous warnings about design flaws. The Economist, in its April 2 issue, cited this appraisal of TEPCO by the well known Japanese management consultant, Kenichi Ohmae: “This company is really rotten to the core.” TEPCO shares on the Tokyo Stock Exchange have slid 83 percent since March 11, the day the earthquake hit.

It’s interesting that the first warnings about the hazards of nuclear energy came from the scientists whose research paved the way for the atomic bomb, among them Hans Bethe, Leo Szilard, Enrico Fermi, J. Robert Oppenheimer. They founded The Bulletin of Atomic Scientists to express their concerns. Oppenheimer once said: “When you see something that is technically sweet, you go ahead and do it and you argue about what to do after you have had your technical success.” And in 1946 Albert Einstein said: “The unleashed power of the atom bomb has changed everything save our modes of thinking, and thus we drift toward unparalleled catastrophe.”

Early investment advisors using social screens took their cue from this group, establishing nuclear power as a no-no for investment along with tobacco and weapons production. General Electric, Westinghouse, Babcock and Wilcox and Emerson Electric were thus rendered ineligible for Social Responsible Investments (SRI). No new nuclear plants have been ordered in the United States since 1978.

SRI’s position on nuclear power began to soften with the advent of climate change and sustainability as important social issues. The argument here is that we need to reduce our carbon footprint to curb the warming of the globe – and in that struggle nuclear power can play a role. Compared to coal, it is clean energy, provided it doesn’t implode. One of the major converts to nuclear power was Stewart Brand, founder of the Whole Earth Catalog (in 1972) and someone who had a long association with environmentally-conscious groups. He changed his mind about nuclear energy in 2004 and has since debated Amory Lovins on this subject. Here is Brand’s view:

Coal’s waste stream of carbon dioxide is turning the Earth into a solar cooker. Nuclear’s waste stream is tiny by comparison, and it’s easily contained and monitored locally. Furthermore, with fourth generation reactors, the spent fuel can be reused.

Also pro-nuclear: the Obama administration.

These ideas have had an impact in the world of social investing. No advisor that I know has added General Electric to its portfolio but at least two leading mutual fund operators – Calvert and Pax World – have relaxed their total ban on companies with nuclear involvement. Bennett Freeman, Calvert’s Senior Vice President of Sustainability & Policy Research, explained the firm’s position:

In 2007 we decided to allow for the first time investment in companies that may have legacy nuclear plants, but only in certain funds. We do not invest in companies that are developing new nuclear capabilities. We made the change for several new funds, not as any kind of endorsement of nuclear power, but because we felt it was important to have a full spectrum of energy options. If you’re a utility like Florida Power & Light, which is generating 40 percent of the wind capacity in the United Sates, we want to acknowledge that affirmatively. We don’t want to penalize you because at the same time you’re operating a few legacy plants from the ’60s and ’70s.

That’s quite a different position from the one held by Physicians for Social Responsibility, a longtime campaigner against use of nuclear power. After the Fukushima plant blew up, the group issued a broadside which said: “Nuclear power is uneconomical. Nuclear power is polluting. Nuclear power is a health threat.”

Nothing equivocal about that statement.

Sysco – Climate Change Related Water Risk

RESOLVED

Shareholders request that by April 2012, the Board of Directors provide a report to shareholders (at reasonable cost and excluding confidential and proprietary information) on how Sysco is assessing water risk to its agricultural supply chain and action it intends to take to mitigate the impact on long-term shareholder value.

SUPPORTING STATEMENT

Water management is an emerging strategic business issue. The Securities and Exchange Commission states in its 2010 “Guidance Regarding Disclosure Related to Climate Change”, that climate change and water may challenge companies “dependent on suppliers that are impacted by climate change, such as companies that purchase agricultural products from farms adversely affected by droughts or floods.” http://www.sec.gov/rules/interp/2010/33-9106.pdf

Our company acknowledges the business risk of climate change and water shortages in section 1A of its 2010 Annual Report. However, additional information on its efforts to mitigate the risk of water management is limited to a brief mention in its 2010 Sustainability Report, where Sysco states that in 2009 it began tracking irrigation water used in its integrated pest management program (a relatively small proportion of its agricultural supply chain).

The United States Department of Agriculture (USDA) reported in 2009 that “No matter the region, weather and climate factors such as temperature, precipitation, CO₂ concentrations, and water availability directly impact the health and well-being of plants, pasture, rangeland, and livestock.” Specifically, climate change affects average temperatures and temperature extremes; timing and geographical patterns of precipitation; snowmelt, runoff, evaporation, and soil moisture; the frequency of disturbances, such as drought, insect and disease outbreaks, severe storms, and forest fires; atmospheric composition and air quality; and patterns of human settlement and land use change, which directly impact crop yields and meat production. http://www.usda.gov/img/content/EffectsofClimateChangeonUSEcosystem.pdf

A JPMorgan Global Equity Research report on water entitled “Watching Water – A Guide to Evaluating Corporate Risks in a Thirsty World” states that an inadequate supply of water in a food company’s agricultural supply chain presents several serious risks. Specifically it argues, “water-related disruptions in the agricultural supply chain may have a dramatic impact on the industry’s economic performance.”

Sysco was invited to participate in both Carbon Disclosure Project (CDP) and its companion survey, CDP Water Disclosure. CDP is an independent not-for-profit organization that holds the largest database of primary corporate climate change information in the world. The company has declined to participate in either survey, even though 95% and 65% (respectively) of companies in the same sector responded.

Leading food companies such as Unilever, General Mills, and Sodexo evaluate their agricultural supply chain and incorporate water scarcity and climate risks into their sustainability strategy and business planning. For investors in corporations with extensive agricultural supply chains, information about their exposure to and management of water risk is essential to the evaluative process. We believe the adoption of a sound water risk management plan will offer Sysco competitive advantage and enhance opportunities for long-term sustainability for the company and its shareholders.

SEC Issues Ground-Breaking Guidance on Climate Change Risk Disclosure

[We're pleased to excerpt this press release from Ceres, the Investor Network on Climate Risk and the Environmental Defense Fund. Trillium Asset Management Corporation participated heavily in the lobbying efforts that lead to this breakthrough.]

Contact:

Peyton Fleming, Ceres, 617-733-6660 or fleming@ceres.org
Steve Tripoli, Ceres, 617-247-0700 x155 or tripoli@ceres.org
Sharyn Stein, EDF, 202-572-3396 or sstein@edf.org

Download the Ceres/EDF Fact Sheet – SEC: Companies Must Disclose Climate Risks & Opportunities

Leading Investors Hail Today’s Landmark Decision

WASHINGTON, D.C. (January 27, 2010) – The U.S. Securities and Exchange Commission today issued new interpretive guidance that clarifies what publicly-traded companies need to disclose to investors in terms of climate-related ‘material’ effects on business operations, whether from new emissions management policies, the physical impacts of changing weather or business opportunities associated with the growing clean energy economy.

The guidance, the first economy-wide climate risk disclosure requirement in the world, was approved in a formal vote at today’s SEC Commissioners meeting in Washington. The lack of specific guidance until now has resulted in weak and inconsistent climate-related disclosure by public companies.

Today’s decision comes after formal requests by leading investors for the SEC to require full corporate disclosure of wide-ranging climate-related business impacts – and strategies for addressing those impacts – in their financial filings. More than a dozen investors managing over $1 trillion in assets, plus Ceres and the Environmental Defense Fund, requested formal guidance in a petition filed with the Commission in 2007, and supported by supplemental petitions filed in 2008 and 2009.

Investors hailed today’s new guidance and said it goes a long way to meeting disclosure needs outlined in their petition.

“We’re glad the SEC is stepping up to the plate to protect investors,” said Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), the nation’s largest public pension fund with more than $205 billion in assets under management. “Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.”

“Today’s vote is a clarion call about the vast risks and opportunities climate change poses for US companies and the urgency for integrating them into investment decision making,” said Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, a network of 80 institutional investors with $8 trillion in collective assets. “The business risks of climate change cannot be ignored. With this guidance investors can make more sound decisions based on better information – and businesses will have a level-playing field with clear standards and expectations for disclosure.”

“Companies across America are poised to prosper and create new jobs in the clean energy economy,” added Environmental Defense Fund President Fred Krupp. “Investors have a right to know which companies are planning to be part of the clean energy future and which are lagging behind.”

Today’s decision is the latest in a series of major policy actions over the past year requiring more robust climate risk disclosure across various industry sectors. Those actions include:

• The Environmental Protection Agency’s new mandatory greenhouse gas (GHG) reporting rule, requiring some 10,000 facilities that are large sources of GHGs to report those emissions to EPA, beginning data collection on January 1, 2010.
• The National Association of Insurance Commissioners’ (NAIC), the organization of insurance regulators for the 50 states, unanimously approved a mandatory requirement for insurers with annual premiums of $500 million or more to disclose climate risks to regulators, shareholders and the public beginning in May 2010.
• A growing spate of climate disclosure related litigation, as well as subpoenas by New York’s Attorney General to five of the nation’s largest power companies regarding their climate disclosure in SEC filings. Three of those cases have been settled, including a major settlement in November, after the companies agreed to boost their disclosure.
• A record number of shareholder resolutions seeking information on companies’ contribution and responses to climate change.

The Congress has also advanced major comprehensive climate protection legislation, including first-ever House passage of strong climate and energy legislation in June that caps greenhouse gas emissions; similar legislation is under consideration in the Senate.

Under SEC Chairman Mary Schapiro’s leadership, the SEC has also been active on disclosure issues. In October, the commission decided to allow shareholder resolutions that seek information from companies on the financial risks they face from social and environmental issues, including climate change. The decision reversed a rule that prevented investors from directly asking companies about the impacts of climate change and other pressing concerns on their bottom line.

The SEC is also evaluating a formal request from investors last June that companies be required to disclose material ESG (environmental, social and governance) risks. Schapiro has asked the new SEC Investor Advisory Committee to consider the request and make recommendations to the Commission.

To Maryland State Treasurer Nancy Kopp, who attended today’s meeting, the importance of the SEC’s decision is simple.

“State Treasurers invest vital taxpayer funds. We oversee public retirement and pension systems, college savings plans and more,” she said. “As investors safeguarding the economic welfare of so many state citizens, we have to be informed about the risks of companies we invest in. Easy and understandable access to accurate, comparable information regarding these very real risks – and climate change is certainly one of them – is essential to protect the investments our states depend on.”

Last June, Ceres, EDF and The Corporate Library issued a report showing that S&P 500 companies – including those with the most at stake in responding to the risks and opportunities from climate change – are providing scant climate-related information to investors. The study was based on an analysis of 10-K and 20-F filings by 100 global companies in 2008.

….

About Ceres
Ceres is a leading coalition of investors, environmental groups and other public interest groups working with companies to address sustainability challenges such as climate change. Ceres also directs the Investor Network on Climate Risk, a network of 80 institutional investors with collective assets totaling $8 trillion. For more information, visit http://www.ceres.org

About EDF
Environmental Defense Fund, a leading national nonprofit organization, represents more than 500,000 members. Since 1967, Environmental Defense Fund has linked science, economics, law and innovative private-sector partnerships to create breakthrough solutions to the most serious environmental problems. For more information, visit http://www.edf.org

The Smart Grid Brings Smart Tips for Energy Use

Knowledge is power? Not according to Google and Microsoft. These firms and many others have recently rolled out energy efficiency tools designed for consumers to use on the emerging smart grid. The hope is that knowledge will bring less power, fewer blackouts and reduced carbon emissions.

Investors are beginning to sit up and take notice of smart grid technologies, especially since the Obama Administration’s stimulus plan directed over $4 billion to the young industry. There’s been much talk about how a smart grid can reshape the utility industry, but smart grid technology also will bring about changes for you and me. This spring Google offered a glimpse with the introduction of PowerMeter, a web-based widget that displays and tracks information on home electricity use in near real-time. Turn on your heater and watch your energy use spike. Put on a sweater instead, flip the heater off and feel gratified watching your energy bill fall. Similar technologies are being developed by large players such as Microsoft and start-ups such as Tendril. Some companies are focusing on bringing this technology to smart phones, such as Trilliant’s Energy Valet, being developed for the iPhone.

Accessible to about one percent of U.S. households, Google’s PowerMeter isn’t yet ready for primetime. Fortunately, there are other tools already available for the rest of us. In July Microsoft released  Hohm, an application that offers customized tips for saving energy. I tested Hohm with my mother and she was relatively pleased. After surviving a fairly tedious survey that takes an hour to fully complete, she was given a personal energy profile including a dozen energy saving tips prioritized by costs and savings. Some suggestions were too generic, but others were very helpful. She got detailed advice on a water heater upgrade she’d been thinking about, plus a few simple fixes that can save her hundreds of dollars a year and reduce her carbon footprint by thousands of pounds.

While Microsoft’s Hohm offers good suggestions for one-time home improvements, Black & Decker’s Power Monitor is better suited to change everyday habits like forgetting to turn off the lights. The Power Monitor is a handheld display that wirelessly connects to a sensor attached to a regular meter.  The portable Power Monitor then displays the cost (per hour or month) of current energy use. You can also isolate the cost of running individual appliances like a TV or toaster. The Power Monitor reminds me of the Toyota Prius and its dashboard display of its engine and fuel mileage. Just by monitoring this display, many Prius drivers learn to drive differently and conserve fuel. For some, it has become a game of sorts.

It’s nice to see tools like PowerMeter, Hohm, and Power Monitor making it easier than ever to conserve electricity at home. While the rocky economy has delayed many wind and solar projects the advantages of energy efficiency remain strikingly clear – using less is cheaper and cleaner than using more.

Trillium Subadvised Green Century Balanced Fund is First U.S. Mutual Fund to Report its Carbon Footprint

The Green Century Balanced Fund, which is subadvised by Trillium, just announced that it is the first U.S.-based mutual fund to disclose its carbon footprint. 

The carbon footprint analysis was conducted by Trucost, and the results indicate that the carbon intensity of the Balanced Fund is two-thirds less than that of the S&P 500 Index.

Click here to read the carbon footprint report and full press release.

Climate Change Shareholder Resolution Wins Majority at Idacorp

In a precedent setting victory, a shareholder resolution filed by Trillium Asset Management Corporation (“Trillium”), As You Sow, and Calvert that asked Idaho Power to establish greenhouse gas emissions reduction targets received 52% of the vote.  This is the first time a climate change resolution has received a majority vote — the first majority vote recorded for a climate change shareholder proposal.  In response to the vote, Idaho Power CEO LaMont Keen said that the company took this message seriously, and would work to meet the resolution’s request for a report by September 30th. 

The resolution received the endorsement of the Idaho Statesman.  Newspaper endorsements of shareholder resolutions are quite rare.

Read the full press release here.  

Read an Idaho Statesman op-ed about the resolution by Trillium Assistant Portfolio Manager Lauren McLean here.

“Climate Change Shareholder Resolution Wins Majority at IDACORP AGM” [PR Newswire]

Click on the link below to view article

Climate Change Shareholder Resolution Wins Majority at IDACORP

PR Newswire, May 21, 2009

Trillium Asset Management Corporation Celebrates 25 Years

We’re 25!

This year marks the 25th anniversary of Trillium Asset Management Corporation (“Trillium”). We’ve done a lot of learning and experimenting, had some adventures and even birthed some offspring (spinoff organizations, that is). As part of our ongoing celebration, in this issue we’ve pulled together excerpts from the last 25 years of Investing for a Better World® and its earlier incarnation, Franklin’s Insight, from the days when we were known as Franklin Research & Development Corporation. We hope you enjoy this trip down the memory lane of both Trillium and the social investment industry. We extend our deep thanks to the many writers who contributed over the years, including columnists Milt Moskowitz and Elliot Sclar, and former co-workers Steve Lippman, Simon Billenness and Patrick McVeigh.

Editor’s Notes: Some of the material has been edited from the original version. Dates indicate when we reported on events, not necessarily when they occurred. Due to space limitations, authors are credited only when the first person voice is used.

In our first issue (Winter 1983), in “Our Intent,” we wrote:

There is a growing need to rethink the process of investment in this country. We are in an age of jet-propelled, satellite-transferred, and computerized legal tender. Light years removed from the barter system, employers, producers and owners conduct business immersed in a glowing avalanche of statistics and CRTs. Efficient as this system might be, human it is not. The question we pose is this: In these times of electronic transfers and VisiCalc, who protects the people? In a multi-billion dollar company whose shares are bought and sold with lightening speed for numerical reasons by proxies in the names of “owners” who never see their stock, what motivation is there for the company to care whether it intrudes or destroys in the name of profit? To divest or not to divest is a question to be answered by the investor, but to fail to make a statement is to allow the power of ownership to lie untapped.

August 1989

As far back as 1989, ESG (environment, social and governance) analysis, a now-popular version of social investing in which social advocacy is entirely optional, was an emerging trend. We were wary. Social investing argues for something more than opportunistically profiting from social ills. As social analysis increasingly enters the mainstream of money management, it is increasingly important to reclaim the movement’s roots in social change. To invest in a firm simply because it will profit from a particular social issue is not enough. Corporations have the ability and the resources to respond to major social ills. Those that respond with creative positive solutions to these problems will help to bring about a healthy future from which all can benefit.

December 1989

The unthinkable has happened. The Wall has come down. The Cold War is over. History has changed. And the party in Europe has begun. Change in Eastern Europe strikes us as the most bullish of all possible events for our society and financial markets. We’re ready to party if our defense budget is cut. July 1990 And they’re still in business. Only read this if you need to. In what is surely a first, the clothing manufacturer Esprit (ESH) has begun to run ads and attach labels to its apparel asking consumers not to buy these products unless it is something they really need. The company believes that unless we become more responsible consumers and stop over-buying, we will exhaust the resources of the Earth.

December 1993

I had the honor of attending a reception for Marland Mold in Pittsfield, Massachusetts. We helped the company’s employees to purchase the company. About 40 jobs were saved in the short run and it is hoped that many more will be created. The investment made by a union pension fund and other parties is groundbreaking, risky, and very unconventional. But last night I looked into the faces of the workers, mostly over 40, whose jobs had been saved. It was everything to them; the pride of ownership and hope of the future success was palpable. Directly in back of this decision to invest money were families, human dignity, self-sufficiency, hope, and last, but by no means least, a Happy Holiday Season with bread on the table. ~Joan Bavaria

April 1993

It was a public relations nightmare for Wal-Mart Stores (WMT). Shown a videotape of children working in a Bangladesh factory that made Wal-Mart shirts, CEO David Glass appeared dumbfounded. These allegations made by Dateline NBC illustrated dramatically the fact that corporate responsibility includes not just a company’s own operations but also the operations of its suppliers. One U.S. company has already shown the Dateline NBC story to its Asian buyers and suppliers.

May 1995

I was falling asleep with the news on when my husband shook me and said, “It’s that kid, that kid you wrote about.” In the morning I thought I had been dreaming until I saw the news. Iqbal Masih had been shot and killed. Iqbal was last year’s recipient of the Reebok Human Rights Youth in Action Award. Iqbal was fighting for the rights of children held in bonded labor in Pakistan. Millions of Pakistani children are chained to looms in carpet factories, as Iqbal was from the age of four until he escaped at age 10. Their small hands are prized for their ability to tie tiny tight knots in the carpets they export to the West.

We all feel sadness at the loss of human life. When a child dies somehow the sadness is magnified. When a child is murdered it is almost incomprehensible. Iqbal has left his mark. He helped to open the eyes of the world to the appalling conditions in which some children are forced to live. He died with a fire in his belly and the belief in his heart that children have a right to a childhood, a right to education, a right to be free. ~Holly Davenport

April 1996

In the midst of frenetically filing last-minute resolutions to address corporate complicity in the death of the Nigerian dissident Ken Saro-Wiwa, I discovered that the pension funds of the three trade unions were also filing similar resolutions. Initial efforts to coordinate proved difficult. A Teamsters official cut short our initial conversation with the comment: “Sorry, I have to leave now for a demonstration outside the Nigerian embassy. I will try to call you back this afternoon if I don’t get arrested.” ~Simon Billenness

July 1998

Years before 9/11, Trillium protested Unocal’s courtship of the Taliban as the oil company pursued a contract to build a gas pipeline through Afghanistan. At the mic at Unocal’s annual meeting, I noted its pledge “not [to] conduct business with any party in Afghanistan until peace is achieved and a government recognized by international lending agencies is in place.” The Chairman tried to cut me off (actually addressing me as “young lady”), but I entreated him to pledge right then and there that Unocal wouldn’t lay the pipeline until women’s rights were fully restored in addition to the advent of something that passes for peace. My request was not honored. ~ Shelley Alpern [Unocal dropped its plans in January 1999, citing the need to cut costs. We observed that "the real story is that feminists and human rights advocates have made Afghanistan too hot to touch for American companies."]

November 1999

In a conference room overlooking Lake Louise in the Canadian Rockies, Cherokee leader Rebecca Adamson made a desperate appeal to a conference of socially responsible investors. “You are our last hope,” she said. Governments and businesses had betrayed the world’s indigenous peoples time and again, and if concerned investors couldn’t make a difference, she explained, they and their lands were doomed to extinction sometime in the next century. Her maps displayed clearly how the lands nurturing the world’s remaining fossil fuel, timber and mineral resources are one and the same with the lands that nurture the last of the world’s First Peoples. Her words moved the attendees deeply.

December 1999

The hot ticket in London last March was the first conference of the Global Reporting Initiative (GRI), an offspring of the U.S.-based CERES environmental coalition. As the name suggests, the enthusiastically embraced draft guidelines aim to do internationally what CERES has done so effectively in the U.S. – promote a widely recognized standard framework for corporate environmental reporting. The GRI Guidelines extend this concept to include social and economic elements of sustainability.

Spring 2001

The memory of warrior and spiritual leader Tasunke Witko – Crazy Horse to most of us – is so sacred to the Lakota Nation that his descendants and admirers wouldn’t even think about naming one of their children after him. That commercial enterprises appropriate his name for profit is galling. Wrote his descendant Seth Big Crow about Crazy Horse Malt Liquor: “The ploy here is to romanticize the life and death struggle of a Lakota Warrior, as a macho-myth appealing primarily to young urban men. The message is DRINK THIS PRODUCT AND BECOME ‘CRAZY HORSE.’ In reality, this strategy promotes both stereotyping and alcohol abuse. Our young people can be particularly vulnerable.” [In April 2002, Stroh Brewery settled with the estate of Crazy Horse and offered a public apology; two years later, a settlement was reached with Hornell Brewing.]

Fall 2001

In 2001, our columnists reflected on American resilience in the aftermath of the World Trade Center attacks. Milt Moskowitz wrote: In many cases within the workforce, the impetus to do something – to help the victims of families – was so strong that individuals came forward with actions on their own, not prompted by any corporate directive. The best example is probably the drive at Southwest Airlines (LUV) for employees to donate part of their pay to the New York relief effort. This was a campaign that originated in the employee ranks – and in the end every single Southwest employee participated. …Farnum Brown wrote: Sadly, it seems our country is at its best in times of crisis. Stranded in Tucson after 9/11, I spent the last few days driving back home to Durham. I ate in a lot of truck stops and stayed in a lot of motels. I found civility, diversity, humor, helpfulness and an expansiveness of spirit you have to call “heart.” I hope that spirit guides our leaders in their awesome deliberations. I hope they show the world that we as a nation are not only strong, but also wise.

Summer 2007

What is the social responsibility of media? Is there a civic dimension of social responsibility distinctive to media companies? And does a media company’s social or civic performance have any systematic impact on its bottom line? Trillium Asset Management has created a special research and advocacy vehicle to explore these questions. It’s called the Open Media and Information Companies Initiative (Open MIC). Before the internet, one could argue that what was good for the business of media was bad for democracy: consolidation of ownership and a corollary loss of diversity in media. Going forward, what’s good for the business of media appears to be just what democracy requires: the expansion and amplification of individuals’ ability to create and share information – our ability, in a word, to communicate.

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Scenes from a Shareholder Meeting

May 2001

In Indonesia, ExxonMobil has security arrangements with the military and police, a relationship blamed for civilian massacres and other human rights abuses. In May 2001, Radhi Darmansyah traveled from Aceh, Indonesia to confront ExxonMobil CEO Lee Raymond directly at the stockholder meeting. We printed excerpts from the transcript.

RD: While you made $26 million last year Mr. Raymond, more than one thousand six hundred of my people were killed, maimed, or tortured around your facilities in Aceh. I am here to ask for your help. We, the Acehnese, are asking that ExxonMobil stop working with the Indonesian military for its security forces, because the Indonesia military is murdering its citizens in Aceh. They are murdering my brothers and sisters. They are raping and keeping schoolgirls as sexual slaves. I ask you today to please issue a public statement that you will not return to Aceh until my land is free of human rights abuses, and until my people are free….

LR: I believe your time is up. (Radhi continues.) I’m sorry you’ll have to come back another time. Sister Pat, I think we’re about to move on to the next item. You have three minutes. (Radhi continues.) Sister Pat, he’s using your time….I think you should turn off the light of Number 1, please. You understand you’re out of order? (Radhi still continues.) Sister Pat, please! I’m getting ready to move on to the next item. (Deliberately not calling on Bianca Jagger, who is at the microphone.) Sister Pat has the floor for three minutes [to continue her remarks concerning her shareholder resolution]. Thank you.

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South Africa

How to leverage the influence of corporations to bring about the end of apartheid was the main preoccupation of the social investing movement in the 1970s, 80s, and into the early ‘90s.

April 1984

Au contraire! On March 23, 1984 the Wall Street Journal published an editorial, “Playing with Africa.” The writer insinuated that the divestment movement is improper strategically and self-righteous morally. Au contraire! Divestment is one of the three major strategies currently used by investors to oppose one of the great moral blots on western civilization. (The other strategies are shareholder action and the Sullivan Principles.) The divestment movement in legislatures represents a grassroots concern. It has emerged in part due to the ineffective policies of our current administration towards the Afrikaaner power structure. Feeling blocked by the administration, Americans are turning to the legislative branches. It must be time to become optimistic about the investment movement. To earn such negative notice in America’s largest business daily’s lead editorial is a fairly solid indicator that success is being scored.

June 1985

It is heartening to note that over the past month the South African divestment movement has garnered

an equal share of the headlines. Public leaders, organizations, college students and investors have raised a tumultuous outcry over the immoral nature of apartheid and corporate participation in its continuance. It is important to note that what divestment advocates are fighting for is not only the establishment of human rights in South Africa, but also an acceptable level of morality from American corporations.

August 1986

The first shareholder resolution ever regarding South Africa passed. With the support of 68% of shareholders, Pizza Inn has been told to sign the Sullivan Principles.

June 1987

Reverend Leon Sullivan called for all American firms to pull out of South Africa within the next nine months. Sullivan is the author of the Sullivan Principles, a code of conduct that has directed the employment practices of U.S. firms in South Africa since 1977. In announcing his decision to abandon the doctrine that bears his name, Sullivan noted the increasing atrocities within South Africa.

March 1990

Let freedom sing! We, along with the rest of the world, rejoice in Nelson Mandela’s release from prison after 28 years of captivity. Now is not the time to consider slowing divestment pressures or easing economic sanctions lest the apartheid forces in South Africa think they have gone far enough already. When political democracy comes to South Africa, the time for divestment to end will be at hand.

June 1993

The African National Congress is now encouraging investment in South Africa, asking companies to support the “Platform of Guiding Principles for Foreign Investors.”

June 1994

The miracle is not the overthrow of the white supremacist rule. That, we have agreed for years, was inevitable. But many of us used to think that the only way it would happen would be through bloody black revolt, poorly armed and kamikaze-like, with massive numbers of deaths, as the disenfranchised youth of the black tribes, with nothing left to lose, simply overwhelmed their elders and acted out a primal scream. History and the forces of justice seem to have had another end in mind. If the current of today’s events continues on course, black South African leaders have written an amazing, miraculous story of human dignity, forgiveness and heroic tenacity. ~Joan Bavaria

March 1998

In Robert K. Massie’s new book, Loosing the Bonds, a blow-by-blow account of the dismantling of apartheid in South Africa, he concludes that “the most striking aspect of this story is that our seemingly rigid and material world is so influenced by ideas.” It was certainly the force of ideas that got corporations to change the way they did business in South Africa. Or, as Massie put it so eloquently: “We have control over our ideas, our ideas have material consequences, and, in the end, as a people, we become what we believe.”

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Burma

April 1994

Advocates for corporate withdrawal from Burma recently scored a major victory. In March, Amoco announced its exit from the country before mid-year. Although Amoco states that it withdrew for “economic” reasons, there is little doubt that the continual public pressure from activists and shareholders was also a factor in the firm’s final decision to withdraw from Burma.

August 1996

In a recently smuggled video, Aung San Suu Kyi, the Burmese opposition leader whose election victory six years ago was annulled by the military, called for international sanctions to be imposed on Burma.

June 1999

The Free Burma Coalition announced a boycott of Suzuki and targeted the San Diego marathon and a post-marathon concert, both sponsored by Suzuki. Quite by chance, the band scheduled to headline the concert was Hootie & The Blowfish, a money management client of ours. We approached the band to brief them on Suzuki’s involvement in Burma and see if they were interested in working with us to apply leverage on the company. For the concert, the band invited Free Burma Coalition activists to distribute information. Many of Hootie’s band and crew sported stickers and T-shirts that proclaimed “Suzuki Out of Burma.” Before they would play, the band had the organizers remove the giant Suzuki banner at the back of the stage. To cap the evening, Hootie gave an interview to VH-1 denouncing Suzuki’s ties to the Burmese military.

December 2000

In March, I sat in the public section of the U.S. Supreme Court to watch the justices hear oral arguments in the case of the Massachusetts Burma Law. It is not every day that you witness the Supreme Court debate the constitutionality of a law you helped write and enact. Three months later, the Supreme Court struck down the law as unconstitutional. While unanimous, the Supreme Court’s ruling was very narrow in its scope. The Free Burma movement faces a new challenge: how to re-launch the campaign to enact local Burma laws despite the political and legal obstacles thrown up by the Supreme Court ruling. ~Simon Billenness

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Championing Lesbian, Gay, Bisexual and Transgendered Rights

Starting in the 1990s, Trillium played a leading role in organizing shareholders to press corporations to implement more progressive policies for their lesbian, gay, bisexual and transgendered employees, resulting in numerous policy changes.

May 1988 An anonymous corporate respondent to the National Gay Rights Advocates survey on AIDS in the workplace illustrates [homophobic] hostility all too well. In response to the question “Does your company have a policy that forbids employment discrimination against workers with AIDS?”, the company replied: “We shoot gays – much less gays with AIDS.” The question “Does your company’s employee medical plan cover AIDS-related medical expenses?” elicited the reply, “Just enough to cover the cost of the bullet.”

June 1991

In a press release, Cracker Barrel Old Country Stores (CBRL) crowed that “it is inconsistent with our concept and values… to continue to employ individuals whose sexual preferences fail to demonstrate normal heterosexual values which have been the foundation of values in our society.” We have written that the company recently eliminated this policy and chose to have no policy at all. Actually, decisions about hiring gays and lesbians are now made on a store by store basis. Such persons are not hired in areas where it would “disrupt” business. [In November 2002, a shareholder resolution calling for a nondiscrimination policy received 58% of the vote - the first social issue shareholder proposal to win a majority vote since the anti-apartheid campaigns of the 1980s.]

September 1991

In what is the first such move by a major U.S. company, Lotus Development announced that it has begun to offer a full range of family benefits to the “spousal equivalents” of gay and lesbian employees.

April 1996

Kudos from Johnson & Johnson Employee. I want to thank you for influencing my employer to adopt a written policy which bans workplace discrimination based on sexual orientation. Such a policy has been a long time coming. Here’s to the power of socially responsible stockholders! ~Name withheld.

March 1997

Chrysler’s CEO Bob Eaton released a simple statement declaring that the company would not tolerate harassment or discrimination on any basis, including sexual orientation. It took a full-blown national protest campaign, the lobbying of the United Auto Workers, internal lobbying from employees, pressure from shareholders such as ourselves, considerable media coverage, and scores of letters from concerned consumers who’d decided now was not the time to buy a Jeep Eagle.

July 1996

We testified before the U.S. House Committee on Small Business Subcommittee on Government Programs in support of a federal bill to ban sexual orientation-based discrimination in the workplace. The fairness and simplicity of this bill is one of its most compelling features. Affirmative action is not mandated by this bill. It contains no reporting requirements, and imposes no regulation. It does not compel employers to grant spousal benefits. The Employment Nondiscrimination Act (ENDA) simply embodies the principle of nondiscrimination that already enjoys the wide support of the American people. Americans have mixed feelings about homosexuality, but there is little confusion about where the public stands when it comes to job discrimination. In repeated surveys, Americans support laws protecting gay men and lesbians from discrimination in the workplace. [ENDA has yet to pass.]

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Climate Change Blues

December 1990

If we only knew then what we…oh wait, we did. You do not wait for unemployment to reach 10% before you adjust portfolios for a recessionary environment. Similarly, it makes little sense for the government to wait for the greenhouse effect to be causing massive problems before reacting to it. We continue to ignore early warning signs rather than aggressively promote energy conservation… as our government stays committed to allowing the “market” to find the answers.

April 2000

How long ago it seems… At some point, however, the overwhelming evidence and public concern about global warming will reach critical mass. When this happens, only the companies that diversified into alternative energy sources and worked with the scientific and environmental community to mitigate environmental problems will survive.

Summer 2004

Ten years ago, members of the Interfaith Center on Corporate Responsibility began serving companies with shareholder proposals calling for action to reduce greenhouse gas emissions. As the science of global climate change has become more certain, support for these resolutions has steadily increased. The average level of support in 2001 was 9.3%. This year, a new high was reached at 37.1%. Resolutions at Ford (F) and General Motors (GM) received only single-digit votes of support. Somehow the automakers have managed to convince investors that dragging out the life of the internal combustion engine for as long as possible is sound environmental policy.

Spring 2008

The Investor Network on Climate Risk is a coalition of 60 institutional investors (including many state pension plans and Trillium) with a combined $5 trillion in assets. It has partnered with major corporations to call for federal legislation to curb greenhouse gas emissions, and also asked the Securities and Exchange Commission to oversee corporate disclosure on climate change. This is a rare situation indeed, where both corporations and investors are calling for more government regulation, not less.

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Ceres

September 1989

At a press conference in New York City began another major campaign to alter corporate behavior. Under the banner of the Coalition for Environmentally Responsible Economies (the acronym is CERES – the Roman goddess of agriculture), co-chairs Joan Bavaria and Denis Hayes, founder of Earth Day, announced a new coalition of environmentalists and social investors. Ceres’s goals are multifold. To begin, the coalition has issued a set of environmental standards called the “Valdez Principles.” [On March 24, 1989, the tanker Exxon Valdez spilled 10.7 million gallons of oil, which, while not the world's largest spill, appears to be the most significant in terms of environmental damage. More than 1,100 miles of beach have been contaminated and more than 90,000 birds and 1,000 sea otters have already died. Delays on the part of Exxon and the Alyeska Pipeline Company allowed the damage to intensify. Emergency crews did not even reach the Valdez for ten hours.] A shareholder campaign, led by the Interfaith Center for Corporate Responsibility and the New York State Controller’s Office, will ask corporations to become signatories to the principles.

January 1990

Exxon (XOM) has received nine shareholder proposals dealing with environmental issues, including a proposal to sign the Valdez Principles.

April 1990

I will never forget the experience of touring Prince William Sound. Emotions ran high in Alaska last week. Captain Hazelwood’s verdict was handed down days before the anniversary, and since he was staying in our hotel, the press was omnipresent. Third World organizers pleaded for compassion, progressive companies urged cooperation, old institutions defended archaic policies, and environmentalist choked with emotions when describing animal rescue operations and serious economic and cultural chaos that followed the spill. Above it all, the majestic and awe-inspiring beauty of Alaska gave us a sense of our place.

July 1991

An unexpected benefit so far of the Valdez Principles is the large number of companies that have drafted environmental policy statements or conducted environmental audits as a way to halt the groundswell of support for the Principles. General Motors (GM), for example, wrote and introduced its first environmental policy statement in time for its annual meeting. While deficient in comparison to the Valdez principles, it is still an improvement for the company. Waste Management (WM) issued a 160-page environmental audit that largely reflected the goals of Valdez Principles.

May 1992

Two days ago, Ceres sponsored the first conference for the 42 companies who have signed the Valdez Principles. I was privileged to be the person to introduce Senator Al Gore. I am a real neophyte at Washington politics, so I was hyper-aware of all that happened. What struck me the most about the experience was intensely personal, though, since I relate on a very small scale to a quasi-political life by traveling and meeting with lots of people. When Senator Gore entered the room, with all the usual charisma, poise, and flawless grooming, I recognized in his eyes the effort to focus (“Where am I?”), the veneer of calm (which may in this case be real), and the aura of impermanence (he was only passing through). But he was gracious, appropriate, eloquent, and very much in the moment. I was impressed, as I have been in earlier meetings with him. ~Joan Bavaria

February 1993

Corporate America is beginning to see the light. Sun Company (Sunoco – SUN) has just become the first major corporation to become a signatory to the Ceres Principles.