2008 Advocacy Review

For our 2008 advocacy efforts, we’re pleased to report a fair amount of progress — never as much as we’d like (we’d like superhero powers), but enough to confirm that shareholder activism remains a potent tool for change.

Climate change. Our shareholder resolution at ConocoPhillips requesting a report on the environmental and social impacts of tar sands drilling won almost 28% of the vote, an impressive vote in this arena. Our resolution at Bank of America addressing its financing of coal-fired power plants and mountaintop coal removal was deemed inadmissible by the Securities and Exchange Commission (SEC), but we eventually sat down with bank officials to express our displeasure in a more intimate setting. Our takeaway: don’t expect BAC to stop funding these projects any time soon, even while it invests more and more in less carbon-intensive projects. Alliant Energy agreed to our request to report publicly on its efforts to incent customers to reduce their energy use, leading us to withdraw a resolution.

Human Rights. We co-filed a resolution led by our friends at Domini Social Investments at Nucor after media reports linked the company’s supply chain to forced labor. Nucor agreed to implement a formal policy and code of conduct expressing opposition to forced labor, and to dialogue with us on how to best report to shareholders on this issue, leading us to withdraw. We also spent time in conversation with Talbots, Target, Liz Claiborne, Nike, Gap and Jones Apparel on how their purchasing practices put pressure on their suppliers that can lead to a higher risk of labor violations.

Experts on the genocide in Darfur have declared that if anyone has any influence over the Sudanese government that is perpetrating the atrocities, it would be China. China sells arms to the government, and two Chinese oil companies operating in Sudan provide major revenues. Since we don’t own shares in any of the Chinese or other foreign firms in Sudan (and US firms are prohibited by sanctions), we’re talking to their investment bankers and investors on Wall Street. This last year we filed resolutions with Morgan Stanley, Merrill Lynch, and JP Morgan Chase. We withdrew at Morgan Stanley and Merrill after constructive dialogues on diminishing the risks they incur from these relationships. Our resolution at JP Morgan received 7.7%, enough for us to proceed with a re-filing should it prove necessary.

Political contributions transparency. How much corporate trade association money is being diverted to ads and groups that are shaping the election this year? No one knows for sure, but it could run to the hundreds of millions, according to the Center for Political Accountability. In 2008, our resolution at Procter & Gamble prompted the company to commit to greater transparency, while Ford Motor and General Motors remained resistant despite resolutions.

Employment nondiscrimination. We withdrew a resolution at Pentair after the company agreed to add sexual orientation to its nondiscrimination policy. Our resolution at Expeditors International on the same drew 52% in support – and a strange silence from company management and the Board of Directors. Perhaps they’re waiting for a super-majority, or just like flouting the will of their shareholders. We’ll re-file and let you know.

Environmental Justice. Chevron‘s shareholders defeated our resolution addressing the strength of the company’s global environmental standards in light of its issues in Ecuador, Nigeria and elsewhere. The good news, however, is a major break in the multibillion-dollar lawsuit Chevron faces in Ecuador for Texaco’s widespread rainforest pollution. After more than a decade, the company has finally agreed to explore a settlement.

After persistent nudging, Toyota Motor Corporation is starting to take seriously the contradiction between its supposed boycott of Burma, and the Burmese involvement of the independent company Toyota Tsusho that has a distributorship in that country. As this progresses, as the saying goes, you’ll read it hear first.

Nucor – Report on Modern Slavery

WHEREAS

• Bloomberg Markets Magazine reported in a cover story that “Nucor Corp., the second-largest U.S. steel company, buys pig iron made with charcoal produced by slaves.” The article reported that these suppliers were identified by Brazilian labor officials as using slaves and also discussed the use of illegal logging in charcoal camps. (The Secret World of Modern Slavery, by Michael Smith and David Voreacos, Bloomberg Markets, December 2006)

• The US State Department reports: Brazil “is a source and destination country for men, women, and children trafficked for the purposes of … forced labor” and the government’s efforts to address this “widespread” issue were “insufficient.” (U.S. State Department Trafficking in Persons Report (June 2005))

• The State Department reports: “Internal trafficking of rural workers into forced labor schemes was a serious problem” and “[t]his typically occurred when employers recruited laborers from poor, rural towns and transported them to remote areas where escape was difficult. Workers then were obliged to toil in brutal conditions until they were able to repay inflated debts.” (US State Department Country Reports on Human Rights Practices (Released March 6, 2007))

• Nucor’s General Counsel stated: “Any amount [of pig iron] that is sold with the use of slave labor is too much.” (Secret World of Modern Slavery)

• Slavery is an international crime, actionable in the United States under the Alien Tort Claims Act (ATCA). The ATCA has increasingly been used against corporate defendants, including Drummond, Unocal, Coca-Cola and Talisman.

• Amazon deforestation is a significant problem, with implications for indigenous peoples, biodiversity and climate change. Nucor’s pig iron purchases may be exacerbating this problem.

• In our view, Nucor faces significant reputational and legal risk from its Brazilian supply chain, but has published no information about its efforts to mitigate these risks. Nucor refuses to engage in dialogue with proponents about these issues.

RESOLVED

Shareholders request the Board of Directors to review the company’s policies and practices related to its global operations and supply chain to assess areas where the company needs to adopt and implement additional policies to ensure the protection of fundamental human rights and to report its findings to shareholders, omitting proprietary information and at reasonable expense, by October 2008.

SUPPORTING STATEMENT

We recommend the review include:

1. A risk assessment to determine the potential for human rights abuses at the company’s operations or at the operations of the company’s direct and indirect suppliers, in each country where the company operates or purchases raw materials, with a particular focus on the use of child labor, or forced or trafficked labor, whether in the form of prison labor, indentured labor, bonded labor or labor persuaded by false incentives.
2. A report on the current system in place to ensure that the company and its suppliers are implementing human rights policies in their operations, including monitoring, training and addressing issues of non-compliance.
3. The company’s strategy of engagement with internal and external stakeholders relating to human rights issues.