Each year, most of the work we do takes place behind the scenes and seems, at times, to be measured more in inches than miles. But each year also brings a few gratifying breakthroughs that justify our larger, collective effort. Following are some of the highlights of 2007:
Newmont Mining Reviews Global Community Relations
In a first for a U.S. mining company, Newmont Mining Corporation (NYSE: NEM), one of the world’s leading gold producers, agreed to support a social resolution sponsored by CBIS and ten other faith-based investors that called on the company to produce a report addressing community-based opposition to its operations in the U.S. and around the world. Our shareholder resolution, which was supported not only by leading proxy advisory firm Institutional Shareholder Services but also by Newmont’s Board of Directors, received 91.6% of the vote at Newmont’s annual meeting April 24, 2007, the highest vote total ever for a CBIS-sponsored resolution.
As faith-based holders of Newmont shares, we were concerned by a pattern of at-times violent community resistance to company operations in recent years in Peru, Indonesia and Ghana over issues such as mining waste disposal procedures, water pollution, development of sacred sites for mining operations, jobs and wages, and population resettlement from lands acquired for mining. Rather than oppose us, Newmont agreed to form a committee of independent board members to evaluate its global community relations policies, the reasons for such strong opposition to its operations in several countries, and to take steps to reduce such opposition. The company also agreed to publish the results of its review in a report to shareholders prior to its 2008 annual meeting. CBIS congratulates Newmont on this strong step. We hope the company produces a substantively thorough report that proves to all stakeholders that it takes this issue seriously.
Abbott Labs Lowers Price of Key AIDS Drug
During 2007, CBIS led an Interfaith Center on Corporate Responsibility (ICCR) shareholder group seeking dialogue with Abbott Laboratories (NYSE: ABT) seeking improved access to AIDS medicines by the poor in the developing world. In one well-publicized instance, Abbott decided not to register a new form of an important AIDS medication known as Aluvia in Thailand after price negotiations with the Thai government broke down. To our knowledge, no pharmaceutical company has ever withdrawn an AIDS medication in response to a pricing or licensing dispute. In late March, CBIS and 15 other ICCR shareholders issued a press statement criticizing Abbott’s handling of the issue. Following negotiations with the World Health Organization, and pressured by criticism from CBIS and other socially responsible shareholders, Abbott subsequently announced that it would reduce the price of another important medication, Kaletra, by 50% — from $2,200 to $1,100 — in 40 low- and middle-income nations. Advocacy for better access to medicines by the poor in the U.S. and in developing nations remains a key element of CBIS active ownership initiatives, one that we believe supports shareholder value and social justice.
Companies Feel the Heat on Global Warming
Global public opinion in 2006 swung in favor of decisive government action to reduce international greenhouse gas emissions, and the 2007 proxy season followed suit with increasing pressure on companies from institutional investors. The SRI news tracking website SocialFunds.com reported that 39 climate change resolutions were filed in 2007, asking companies to reduce emissions, report on their climate change strategies and invest more money in renewable energy.
CBIS joined with our SRI partners to file climate change resolutions with three companies — ExxonMobil, Ford and Chevron. All three resolutions asked the companies to move beyond policy analysis and public relations programs and adopt quantitative goals along with tangible plans for emissions reduction.
The most impressive vote total among the three was the 31% vote received at ExxonMobil. While the total is relatively high for an SRI-sponsored resolution, it is especially strong in this case because mainstream institutions are generally more comfortable supporting “reporting resolutions” (which ask a company to disclose data) than “policy resolutions” such as the one we filed (seeking a change in strategy).
The 14% vote at Ford was stronger than it appeared because the Ford family controls about 40% of the company’s outstanding voting stock, and it is likely that most of those shares did not support our proposal. Ford is attempting to recover profitability through difficult restructuring and repositioning of its product line. Our shareholder group believes the best way forward includes a commitment to much more fuel-efficient and climate-friendly cars and trucks, given the growing probability of carbon regulation, rising gasoline prices and the near certainty of continued growth in environmental concerns on the part of car buyers.
Chevron has done more than most oil companies to prepare for a low-carbon future, and we are generally satisfied with the progress of our multifaceted dialogue that encompasses reporting, public policy and strategy issues surrounding climate change. But shareholders need benchmarks and metrics in order to measure progress — thus our decision to file the resolution for the 2007 proxy season. The 8.5% vote total is respectable for a first-year resolution and large enough to allow us to file again next year if necessary, demonstrating the importance of the year’s campaign against the SEC’s proposals.
We plan to continue our engagements with all three companies and will file resolutions again in 2008 if we judge that to be the best way to encourage progress.
All three climate change resolutions asked the companies to move beyond policy analysis and public relations programs and adopt quantitative goals along with tangible plans for emissions reduction.