CBIS pursued active ownership initiatives with 34 companies in 2009 — about the same number as in 2008 (36) — including 30 corporate dialogues and four shareholder resolutions. Several companies agreed to engage us in meaningful dialogue in 2008, so the resolution process was no longer a part of these initiatives. As a result of this shift in tactics, in 2009 we filed considerably fewer resolutions than the 11 filed in 2008.
Our issue focus remained substantially unchanged. Human rights (11 engagements) and the environment (7 engagements) accounted for about half the total. Human rights includes issues such as global labor standards, vendor standards, corporate activities in Sudan, and a new issue for 2009, human trafficking. The environment includes climate change and environmental justice. In 2009, we continued our engagements with four international companies — Royal Dutch Shell, GlaxoSmithKline (divested in August 2009), Sony and BP. Our dialogue on environmental issues with FelCor Lodging, a company in CBIS’ small-cap portfolio, also continued.
Human Trafficking
In 2008, CBIS conducted the fourth formal survey of participant attitudes about socially responsible investing (SRI). Based on the survey results, we began work in 2009 on a new issue that is generating heightened concern among participants: human trafficking. This issue ranked high on the 2008 SRI survey’s list of participant concerns.
Human trafficking is the exploitation of people for revenue through sex, forced labor and the sale of human organs. One form of human trafficking is commercial sexual exploitation (CSE), the business of forcing unwilling victims to exchange sexual favors for money or other compensation such as housing, food or clothing. Among the many individuals affected by CSE, the most vulnerable are children forced into prostitution and child sex tourism.
In 2009, we started a dialogue with global hotel chain Wyndham Worldwide — operator of more than 7,000 hotels under well-known brands such as Ramada, Days Inn, Howard Johnson, Super 8 and Travelodge — to examine ways hotel operators can prevent the use of their facilities by human traffickers. We are also working with nonprofit groups and government agencies that are active on the issue. The dialogue at Wyndham, led by CBIS, focuses on the development of policies that help the company prevent the use of its hotel facilities for child prostitution and child sex tourism. These are, in many respects, human rights issues that corporations can combat with approaches that have proven successful in related areas (such as vendor standards), including policy development and implementation, employee training, performance monitoring and reporting. Religious and other concerned SRI investors have considerable experience and expertise helping global companies in these areas, and we plan to put this experience to use in the fight against CSE.
Our longstanding dialogue with Macy’s on vendor standards evolved during 2009 to include measures the company can take to oppose the use of forced labor and child labor by cotton harvesters in Uzbekistan. As described in the “Active Ownership Successes 2” section, a highlight of the year was Macy’s decision to instruct its clothing suppliers to discontinue sourcing textiles from mills that use cotton harvested in Uzbekistan, a major exporter of cotton to garment factories worldwide and a country where journalists and activists have documented widespread use of government-approved forced child labor during the annual cotton harvest.