The conference, themed Justice Sown in Peace, recognized the 60th anniversary of the seminal Catholic social tradition encyclical, Pacem in Terris. Among the notable keynoters were Sr. Helen Prejean, CSJ and Marie Dennis of Pax Christi International.
I presented a paper entitled “Investing in Swords or Plowshares?” The paper explores how Catholic institutions may apply faith-consistent investing, drawing inspiration and guidance from CST, to attend to issues of conflict and peace in their investment portfolios. While the conference is immersed in CST, for the actual presentation of the paper, I was delighted to be joined by Mark Regier of Everence Financial, ministry of the Mennonite Church USA. Mark has also served as governing board chairman for ICCR. Additionally, two ICCR members were in attendance.
Focusing on the “preferential option for the poor,” Ann Roberts of Dana Asset Advisors and I presented at the 2019 conference., and in 2025, SGI hopes to return to the conference as it attends to the 10th anniversary of Laudato Si’.
The slides used in the oral delivery of the presentation are available here.
One year ago today, Russia launched an invasion of Ukraine. Appropriately, today’s headlines report the devastating consequences in lives lost and displaced persons. There have been somewhere around 300,000 military and civilian deaths, and the conflict has generated an additional 8,087,952 Ukrainian refugees living abroad and millions more displaced within the country. The Ukrainian government database of crimes of aggression and war crimes committed by the Russian military ended the week at 71,321, according to this tweet. The gruesome tally underscores both the severe and systemic nature of Russia’s violations of international law and the severe risks for companies that have operations and relationships in the country.
The war’s devastating impact affects many more countries. As Ukraine is a breadbasket for grains, the war has undermined global food security. The war spiked global energy costs, exacerbating an existing energy crisis.
At the same time, the hostilities prompted new strategies for coordinating and targeting international sanctions that have been swift and significant. Even today, the U.S. and allies introduced new sanctions. As well, on this anniversary, Russia became the first country ever to be expelled from Financial Action Task Force, an intergovernmental body that sets anti-money-laundering law standards
“Threats to profits and portfolios, but most importantly to the Ukrainian people, lead to one inevitable conclusion for businesses – to end all operations and business relationships with the Russian government or risk being complicit in its crimes.”
In light of the severe risks endemic to conflict, the UN Business and Human Rights Working Group developed a tool for that due diligence, published last June: Heightened Due Diligence for Business in Conflict-Affected Contexts: A Guide. As mandatory due diligence legislation continues its advance in the European Union, alongside a growing body of international jurisprudence, investors can no longer ignore geopolitical risks associated with autocracy, military aggression, and corruption.
Sadly, those calls have gone unheeded in many quarters. New data shows that companies’ responses fall far short of what is required under international frameworks, like the UN Guiding Principles on Business and Human Rights. A new report, Unfinished Business, based on data from the Kyiv School of Economics examining 3,078 multinationals found that 56% (1,717 companies) which had ties to Russia at the start of the war continue to do business with the country. The data also showed that:
“Of the companies that had a local Russian subsidiary at the start of the full-scale invasion of Ukraine, only one in ten has completed the liquidation or sale of its Russian business.
“The remaining companies paid at least $18 billion in taxes to Russia in 2021 — enough to fund Russia’s war against Ukraine for two months.”
“This tragic anniversary challenges the remaining foreign companies still operating in Russia to leave. At the same time, will a new geopolitical corporate responsibility take shape – and take action – in time to help fortify the battered remnants of the international rules-based order?”
A year ago, CEOs of global companies offered statements against the war. On this sad anniversary, we want to call companies to prioritize actions over words. Companies like Procter & Gamble, Mondelez, Nestle, Baker Hughes, Schlumberger, and Johnson & Johnson would do well to heed the words of Benjamin Franklin: “He that lieth down with dogs shall rise up with fleas.”
Companies invest billions of dollars in political influence through lobbying, campaign contributions, and other means. Corporations are societally chartered institutions of enormous importance and value, creating jobs, producing goods and services that consumers rely upon, impact the environment we live in and pay salaries to worker who hope to lead fulfilling lives. At the same time, corporations spend vastly greater sums on lobbying than the funds available to pro-consumer, pro-environment, and pro-worker organizations. Hence, we consider this an important, basic area of corporate governance, and adequate disclosure of corporate lobbying remains a pressing shareholder proposal topic.
SGI members filed or co-filed 12 proposals related to lobbying for the 2023 proxy season. Over the last few years, resolutions have moved from beyond basic disclosure to reporting on alignment and misalignment between a company’s stated position and the lobbying efforts that a company funds indirectly via trade associations, 501(c)(4) social welfare nonprofits, and 527 political organizations, often referred to as “dark money.” Those reports are important as the reveal the risks of lobbying misalignment.
To dig deeper into these themes, we hosted Tim Smith, senior policy advisor at ICCR, and John Keenan, Corporate Governance Analyst for Capital Strategies for the American Federation of State, County and Municipal Employees (AFSCME), for a webinar on Lobbying Disclosure and Lobbying Alignment.
The webinar also points investors to valuable resources concerning lobbying:
Join us for our first webinar of 2023 on Wednesday, February 15th, at 10:00 a.m. Central. We will address efforts for increased lobbying disclosure. Similar to previous years, SGI members filed or co-filed a dozen resolutions that pertain to lobbying disclosure and lobbying alignment. Joining us will be Tim Smith, newly returning to the ICCR staff, and John Keenan, of AFSCME. Register for the webinar here.
Why is this important? Visit any company’s website. Take a look at the company’s existing disclosures and assess:
Do they currently provide you with a clear idea of how and where the company is lobbying, to what end and with what efficacy, and how those activities are aligned with your interests?
Could you cite a number that represents how much the company has spent on influencing public policy, directly or indirectly, and with what partners, and on what issues?
Beyond its activities in the US, do you have a clear understanding of how the company attempts to impact policies in non-US jurisdictions?
Corporations are societally chartered institutions of enormous importance and value, creating jobs, producing goods and services that consumers rely upon, impact the environment we live in and pay salaries to worker who hope to lead fulfilling lives. At the same time, corporations spend vastly greater sums on lobbying than the funds available to pro-consumer, pro-environment, and pro-worker organizations. Hence, we consider this an important, basic area of corporate governance, and, in this webinar, we are going to dig into these engagements and resolutions.
A number of SGI members have long histories of working amid indigenous peoples. In this webinar, we offer a modest goal: we explore how we might stand with indigenous peoples and amplify their concerns in our engagements with portfolio companies. We were joined by Kate Finn (Executive Director, First Peoples Worldwide), Keith Doxtator (Trust Enrollments Director of the Oneida Nation), and Steven Heim (Managing Director for Boston Common Asset Management).
Our very name, Seventh Generation Interfaith, is an homage to the Great Law of the Iroquois. The planet faces an existential crisis, and Indigenous people have been talking about it, planning for it, fighting against it, and organizing around it since the beginnings of colonial settlement around the world. Most non-Indigenous people don’t have this long-term perspective—nor the many-centuries-old knowledge of natural cycles, and what to do to manage these and modify human practices when needed to get back into balance with the natural world.
We see today’s webinar as a step in a conversation or connection to a much bigger story. The best way to acknowledge the place where we live and work is to know and appreciate it. We encourage our SGI members to trace and celebrate their own connections to land and water and get to know the local indigenous history of sustainable, resilient human presence in this and other places. We should know the nearby native nations and encourage work toward reconciliation where land has been taken and culture erased.
If you are not a member of the Investors & Indigenous Peoples Working Group and would like to learn more about joining IIPWG, please email [email protected]. The IIPWG invites investors to join its monthly calls. As well, the Group serves as a clearinghouse for education, news, and joint action to bridge and bring together Native and Non-Native communities on issues related to sustainable and responsible investing.
We’ll also remind you that tomorrow (November 17th) the IIPWG hosts a webinar on Indigenous Peoples, Biodiversity and Sustainable Finance. You can register for the webinar here.
We want to thank all of our members and guests for attending our webinar.
Slides are available here. The video is available here.
On October 11, 2022 Seventh Generation Interfaith Coalition for Responsible Investment (SGI-CRI) held its annual conference at Fox Point Lutheran Church, as well as with an option to attend virtually.
Good stewardship requires posing and answering difficult questions, especially concerning business activities in conflict-affected and high-risk areas where the risks are highest to people and planet and portfolios. The World Bank estimates that two-thirds of the world’s poor will live in such areas by 2030, while Russia’s invasion of Ukraine, the military coup in Myanmar, and forced labor in the XUAR of China make this an urgent and compelling topic now. It is up to investors and companies to respond to these systemic risks with systemic solutions, putting conflict-sensitive policies and practices into place. With our guests, we delved into those issues.
This year’s theme was Corporate Human Rights Due Diligence in Conflict-Affected and High-Risk Areas. Business and human rights leaderBennett Freeman opened the event with a keynote speech followed by an expert panel discussion. Chris Cox, our associate director, moderated the panel with:
The Board of Seventh Generation Interfaith coalition is pleased to announce that Frank Sherman, the executive director of SGI, has been selected to receive the 2022 Fr. Mike Crosby Award. The award will be presented in a reception at the SGI conference on October 11. The Fr. Mike Crosby Award recognizes a person who has promoted a more just and sustainable world and exemplifies the passion and commitment of our founder, Michael Crosby, O.F.M., Cap.
“We are so happy to honor Frank Sherman,” said SGI Board Chair Cindy Bohlen. “Several board members came forward to nominate Frank to receive this year’s award; once Dan Tretow’s final nomination was shared, Frank’s selection was unanimous. All who have had the privilege of working with Frank understand that he has been the person who has shepherded SGI toward fulfilling Fr. Mike Crosby’s vision. The award is the perfect way to cap off Frank’s role as the Executive Director.”
“I have had the privilege of working with Frank on multiple corporate engagements over the years, said Dan Tretow. “Everyone knows they are working with a wise, educated, pragmatic and sincere individual. And he does not work alone. In each engagement, he partners with experts from partner coalitions, ICCR program directors, Ceres and NGO’s that add credibility and strength to the conversation. He challenges the companies to do better, not for his own sake or for our coalition, but for all of society and the world.”
Frank’s background is unlike many others in our ministry; he sat on the other side of the table for 35 years. Before retiring from the corporate world at the end of 2012, Frank worked in the chemical industry, rising to serve as President of the American affiliate of AkzoNobel, a multinational paint and performance coating company. As part of his duties at AkzoNobel, he acted as a board member and, later, chair of a trade association.
While others in retirement might have hesitated, Frank made a wholehearted commitment to Fr. Mike when he was asked to help with some engagements focused on the risk of transport by rail and engagements concerning deforestation. Frank’s agreement to help resulted in his leadership in the process of creating a board of directors, re-naming SGI, and incorporating the organization. When Fr. Mike was diagnosed with cancer, Frank led the strategic planning process to envision how SGI might move from a founder-led organization to a member-led organization and was named executive director in July 2017. From the beginning, Frank has given his time freely to SGI, seeking no remuneration for his work.
Amid questions about the future of SGI following Fr. Mike’s untimely death, in his actions, Frank guaranteed growth from seeds that Fr. Mike planted.
During his tenure as the Executive Director of SGI, Frank has worked to fulfill SGI’s mission to build a more just and sustainable world for those most vulnerable by integrating social and environmental values into corporate and investor actions. Father Mike Crosby’s vision to use the shareholder voice toward a more just and sustainable world for those most vulnerable has been realized and continues to grow thanks in large part to the dedication of Frank Sherman.
Good stewardship requires posing and answering difficult questions, especially concerning business activities in conflict-affected and high-risk areas where the risks are highest to people, the planet, and portfolios. The World Bank estimates that two-thirds of the world’s poor will live in such areas by 2030. Russia’s invasion of Ukraine, the military coup in Myanmar, and forced labor in XUAR, China make this an urgent and compelling topic now. It is up to investors and companies to respond to these risks with systemic solutions, putting conflict-sensitive policies and practices into place.
In the conference, we hope to explore these questions:
Do socially responsible investors need to respond to human rights issues in their portfolio? Can they just write a screen?
What human rights issues should a responsible investor respond to and how?
How would a responsible investor ask one of their money managers to do this?
What is heightened human rights due diligence for investors and companies? How does an investor or a company go about doing it?
How do investors and companies assess human rights and geopolitical risks of emerging markets, informed by the UN Guiding Principles on Business and Human Rights (UNGPs)?
How can investors and companies respond to state-sponsored actions that undermine the rules-based order necessary to safeguard the international community and the global economy?
With 500 companies withdrawing operations from Russia, has a new standard been set for corporate responsibility and a stakeholder economy?
Conducting heightened due diligence helps companies and investors to identify and mitigate human rights risks, while simultaneously addressing the potential material risks – legal, operational, and financial – associated with areas impacted by conflict. Join us for a conversation on the difficult questions investors must ask of their portfolio companies and themselves when seeking to be rights-respecting stewards in an increasingly conflicted world.
Individual tickets for in-person attendance are $75 per person, and individual tickets for virtual participations are available at $50 per person. You can purchase individual tickets for the Conference here. The conference will be hosted at Fox Point Lutheran Church, located at 7510 N Santa Monica Blvd. in Fox Point, WI, 53217.
More information about the Conference can be found here.
Last Friday (August 25), the Securities and Exchange Commission (SEC) adopted final rules implementing the “pay versus performance” disclosure requirement, completing a 12-year journey to fulfill a provision of the 2010 Dodd-Frank Act.
Under the rule, U.S. public companies must provide a new table in their annual proxy filings that contains executive compensation and financial performance measures covering a period of up to five years. While this new rule does not mandate any action that will narrow the pay disparity between executives and workers or reduce wealth inequality in the U.S., the rule requires companies to provide data comparing executive pay to financial performance. This table and the new figures will provide investors some clearer information for the mandatory (advisory) “Say on Pay” votes in every company’s proxy.
As a result, I hope that this makes Rosanna Landis Weaver’s work for As You Sow a little easier as she annually prepares a report on “The 100 Most Overpaid CEOs.” Previously, she had to dig through the not-so-transparent data in the “Compensation Discussion and Analysis” (CD&A), a required part of a company’s annual proxy statement, to generate her figures. Theoretically, the new rule will allow for a more straightforward means of comparison. (Worth noting: Year after year, the report uncovers overpaid CEOs who underperform on “Total Shareholder Return.”)
Some will take issue with the new disclosure rule as it is all about financial performance. Rightfully, socially responsible investors may be concerned because these new required charts do not include non-financial disclosure (i.e., human rights performance or emissions reduction). However, the rule does not preclude a company from including that information.
The new rule may draw companies to better tell their story, rather than bury shareholders in legalese. At the end of the day, the rule is not just about filling out the table, but that companies devote time to develop a narrative that helps investors understand how pay and performance align.
Even after this rulemaking, the SEC has yet to finish the implementation of Dodd-Frank. Perhaps we may see the SEC finalize the long-delayed provision for a clawback rule for accounting missteps mandated by Dodd-Frank. And we may be light years from reducing pay disparity and acting on wealth inequality, but better disclosure is a small step in the right direction.
Boards and investors want CEOs who hunger for improving the company. Boards want to hire winners. But the chair serves a different role, representing the shareholders and other stakeholders. Only an exceptional leader could fill both the role of CEO and chair. Surprisingly, a combined CEO and chair position led over 40% of S&P 500 companies in 2021. Too many boards, like the residents of Lake Wobegon, seem to think their CEOs “are all above average.”
In our view, the best practice is that the chair should be an independent director. Most well-governed entities have checks and balances in place to ensure accountability and not vest excessive authority in one person or office. Throughout history, we have seen what happens when one person or institution is delegated too much power.