Earth Day

While the term “climate change” had not been invoked by April 22, 1970, awareness of human involvement changing Earth induced a fear mixed with hope. Scientists could not see the future of our planet, and newspaper headlines at the time captured concern for the environment and for peace as protests surrounding the Vietnam War were met with groups putting cars on trial

And as most of the United States currently sits in the unknown because of the COVID-19, the Earth keeps turning. 

But with EPA rollbacks during a global pandemic, the US withdrawing from the ever-important Paris Agreement, and the impacts of the BP oil spill still being felt ten years later, it can be difficult to find those positives. But they do exist.

Many improvements have been made since that first Earth Day, now 50 years ago. The current National Geographic depicts how life expectancy has increased along with food production, more people have access to clean water and electricity, and pollution levels (overall) have fallen. Even during this crisis, we see renewable energy, like solar and wind, growing in capacity.

Coupled with this uncertainty of the environment, for me comes a feeling of nostalgia: remembering the saplings handed out to us in elementary school, thinking about the recycling program my grandmother started in her town, visualizing the passion Denis Hayes had in organizing the first Earth Day. These individual acts, small notions, and world movements all exude a hope of possibility of positive change. From a young age, environmental activists like Severn Suzuki, Greta Thurnberrg, and Delaney Reynolds witness to a heartfelt passion as vibrant as Hayes’. Students are urging their universities to divest from fossil fuels. Community gardens push back against the concrete that dominates our cities.  

On the first Earth Day, 50 years ago, New York City’s Mayor Lindsay put it simply; “Beyond words like ecology, environment, and pollution there is a simple question: Do we want to live or die?”

Webinar: Human Rights Due Diligence

On Friday, April 17th, SGI’s quarterly webinar addressed due diligence in human rights required of companies. The traditional audit and codes of conduct, while necessary, are no longer sufficient. We were fortunate that ICCR’s Anita Dorett, Camille Le Pors, the lead for the Corporate Human Rights Benchmark, and Patricia Jurewicz of the Responsible Sourcing Network, joined us for this webinar. Again, we are very grateful for the presence of Anita, Camille, and Patricia  in this webinar, for their commitment to this work, and their generosity in sharing their wisdom and experience with us. As always, we welcome your feedback via a confidential evaluation found here. Slides are available here.

How did you respond to the Coronavirus pandemic?

By Frank Sherman

As some hard hit cities start to report a slowing of COVID-19 cases and express hope that we’ve indeed reached the much anticipated peak, our federal and state government leaders are struggling with the challenge of reopening the economy. The same debates on balancing public health and economic pain are playing out in corporate boardrooms and at small business owners’ kitchen tables. The slow response and lack of leadership at the federal level has not only shifted decision-making to states and local levels, they force the private sector to face the dilemma of when and how to bring back their employees, supply chains, and customers.

As faith communities, we recognize that the pandemic has put a spotlight on economic inequalities and a fragile social safety net leaving vulnerable communities to bear the economic brunt of the crisis (Human Rights Watch, March 19, 2020). In the U.S., four decades of income and wealth disparity was partly hidden by record low unemployment but is now exposed in unemployment insurance and food pantry lines. While many Americans were already knee-deep in debt pre-pandemic, half of households have no emergency savings at all (WSJ, April 15, 2020). Nearly 30 million children who count on schools for free or low-cost breakfast, lunch, snacks and sometimes dinner are now at home (NPR, March 20, 2020). Thankfully Congress has shifted most of the disaster relief to the workers and individuals this time rather than solely to companies as done in 2009.

As companies start to report their first-quarter financials, the message is clear: this recession is going to be bad! What will be the corporate response to these unprecedented times? The pandemic and impending recession have created an urgent opportunity for CEOs and corporate leaders to put the promise of purpose-driven leadership and stakeholder capitalism into practice (Just Capital).

I certainly noticed a change in the tone and focus of corporate communications, both internal and external. Instead of productivity and new product launches, companies are talking about employee and customer safety, corporate values, and community support. Examples such as Walmart’s enhanced paid sick leave, McDonald’s free meals for students and seniors, GM and Ford retooling auto assembly lines for ventilators (WAPO, April 4, 2020), Amazon prioritizing shipments of medical supplies and household staples (WSJ, March 17, 2020), and Thank You For Not Riding Uber (YouTube, April 8, 2020) appear to be empathetic. The public perception of whether these corporate responses are authentic or ‘COVID washing’ may depend on whether the company was purpose-driven before the crisis.

At the end of the day (…and there will be an end to this crisis), employees, consumers and society in general will ask these companies and their leaders one simple question: How did you respond to the Coronavirus pandemic? And when the corporate marketing machine restarts, let’s hope we have long memories.

Catholic Sisters Week

Building Relationship

This week, March 8th – 14th, we honor all Catholic Sisters – vowed women who care for the sick and in need; who educate and mentor children; who are concerned for the environment and all of creation; who advocate for the most vulnerable and act against injustices; who stand with those affected by poverty, homelessness, and migration; and who create peace.

Of Seventh Generation Interfaith’s 39 members, 26 are congregations of Catholic Sisters. Each congregation is unique in its’ charism and mission, working with the SGI coalition to manage the impact large corporations have on people, the environment, and society. They approach corporate engagements with a prophetic voice that comes from authentic hands-on experience with impacted communities and first hand knowledge of the environment, which enable them to build relationships with the corporate executives on a human level. 

SGI attempts to align our issue priorities with issues of importance to our members. Collectively our Sisters have engaged companies like C.H. Robinson and Yum Brands on Climate Change, Abbvie and Walt Disney on Lobbying, Kroger, Yum Brands, McDonald’s, and Costco on Deforestation, Ameren and Chevron on Water Impacts, Kohls, TJX, Kraft Heinz, Costco, Wendy’s, Amazon, Boeing, Core Civic, Geo Group, JPMC, and Wells Fargo on Human Rights, Pfizer, Eli Lilly, and Biogen on the Affordability of Medicine, and countless more. 

Not surprisingly, our Sisters are actively doing much more in their communities and throughout the world, on top of their work in challenging corporations on environmental, social, and governance issues. The School Sisters of Notre Dame are serving students who are single mothers, nuns, and senior citizens. The Sinsinawa Dominicans are working to confront attacks on the common good in Washington, DC. The Sisters of St. Agnes and other members of UNANIMA International, a U.N.-based coalition of Catholic congregations focused on concerns of women, children, migrants and the environment, brought international homelessness concerns to the forefront during the annual convening of the U.N.’s Commission for Social Development. The Sisters of the Good Shepherd recently joined the Interfaith Immigration Coalition’s (#Faith4Asylum) Nonviolence Campaign Stop the Inhumanity in support to those seeking safety in the U.S. The Ursuline Sisters continue to sponsor five academies across the country educating students rooted in the gospel call to mission lived in the spirit of St. Angela Merici.

These are but a few examples of the work our Sisters do day-to-day. We are thankful for all of the work they do and for their participation in our socially responsible investing work. To learn more about the charism and ministries of each of our members, visit their websites, linked below, and don’t forget to thank a Sister this week! 

To all of our members, thank you for your dedication to making this world a better place. 

Dominicans of Sinsinawa (Sinsinawa, WI)

Franciscan Sisters of Perpetual Adoration (LaCrosse, WI)

Little Falls Franciscans (Little Falls, MN)

Mercy Investment Services (Frontenac, MO)

School Sisters of Notre Dame, Central Pacific Province (Elm Grove, WI)

School Sisters of St. Francis, Generalate (Milwaukee, WI)

School Sisters of St. Francis, US Province (Milwaukee, WI)

Servants of Mary (Ladysmith, WI)

Sisters of Charity of the Blessed Virgin Mary (Dubuque, IA)

Sisters of the Good Shepherd Province of Mid-North America (St. Louis, MO)

Sisters of Mercy of the Holy Cross (Merrill, WI)

Sisters of the Most Precious Blood (O’Fallon, MO)

Sisters of the Presentation of the Blessed Virgin Mary (Aberdeen, SD)

Sisters of the Presentation of the Blessed Virgin Mary (Dubuque, IA)

Sisters of St. Dominic (Racine, WI)

Sisters of St. Agnes (Fond du Lac, WI)

Sisters of St. Francis (Rochester, MN)

Sisters of St. Francis of Assisi (Milwaukee, WI)

Sisters of St. Francis of Dubuque (Dubuque, IA)

Sisters of St. Francis of the Holy Cross (Green Bay, WI)

Sisters of St Joseph of Carondelet (St. Louis, MO)

Sisters of St. Joseph Congregational Center (St. Louis, MO)

Sisters of St. Joseph of Carondolet (St. Paul, MN)

Sisters of St Joseph –TOSF (Stevens Point, WI)

Sisters of the Sorrowful Mother (Oshkosh, WI)

Ursuline Sisters of the Central Province (St. Louis, MO)

Don’t miss these two webinars!

Each year, ICCR and Ceres offer webinars that highlight resolutions filed by members. These webinars provide excellent guidance to institutional investors and individual investors concerning shareholder proposals in the coming proxy season. We cannot recommend highly enough your participation in both webinars.

  • ICCR’s 2020 Proxy Resolutions & Voting Guide Overview. ICCR member resolutions reflect some of the most hotly-debated themes in the national discourse, from the failure of energy companies to meaningfully respond to the climate crisis threatening our planet, to the role of corporations in perpetuating civil and human rights abuses through technology products, and the unrelenting rise in the cost of U.S. healthcare. Register here. (Thu, Feb 27, 10:30 a.m. – 11:30 a.m. Central) (UPDATE: 2020 Proxy Guide is here. Slides and recording are here. )
  • Business Case to Vote For 2020 Climate-Related Shareholder Proposals. An annual webinar presenting key climate-related shareholder proposals for the 2020 proxy season, and reasons why you should vote for them. Hosted by the Ceres Investor Network on Climate Risk and Sustainability. Register here. (Thu, Mar 12, 11:00 a.m. – 12:30 p.m. Central) 

Even if you cannot attend live, registration means that you will be sent a link to the slides and recording of the webinar. In other words, even in the event that you have a schedule conflict, it can be valuable to register and watch the webinar at another time. Please, register for these webinars!

The Awakening of a Giant?

By Frank Sherman

Much has been written about socially responsible investing becoming mainstream. US SIF reported two years ago that $1 in every $4 of professionally managed assets in the U.S utilize ESG criteria or shareholder advocacy, a double digit annual increase since the mid-1990s. SRI concerns have also broadened from governance issues (e.g. proxy access, political and lobby spending, executive pay, separate chair) to corporate environmental impact (e.g. sustainability reporting, climate, water) and more recently, social impacts (e.g. human rights, labor rights, diversity).

Another trend in the investment world is the disproportionate growth of passive investing. As open-end and exchange-traded mutual funds managed by large asset managers make up a growing portion of U.S. equity holdings, they take on a growing fiduciary responsibility. When you buy these funds, you transfer your fiduciary responsibility to fund managers to engage companies and vote proxies for you. These long-term and diversified owners have no way to exit a stock, so the only way to influence shareholder value at a portfolio company is through exercising active ownership rights.

Given these trends, it is not surprising to read Morningstar’s recently released proxy voting report stating investor support for ESG resolutions reached a record high in 2019 averaging 29%. This excludes the proposals which were withdrawn based on company agreements. Average support for ESG shareholder resolutions across the 50 fund families analyzed rose from 27% in 2015 to 46% in 2019. However, they found that five of the 10 largest fund families —Vanguard, BlackRock, American Funds, T. Rowe Price, and DFA— voted against more than 88% of ESG-related shareholder resolutions. Their support would have caused 19 of 23 resolutions earning more than 40% support to pass if supported by just one of the largest two asset managers. In response, these fund managers claim to ‘engage companies privately’.

The silver lining highlighted by Morningstar is Blackrock. Recall that two years ago Larry Fink, CEO of BlackRock, the world’s largest asset manager, told CEOs that to sustain financial performance they must “understand the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth”. He went on to say that companies need to engage their stakeholders and if they wait until they receive a proxy proposal to engage, “we believe the opportunity for meaningful dialogue has often already been missed”. This year in BlackRock’s annual letter, Fink stated that climate risk is changing the fundamentals of the financial system. BlackRock would be aligning its investment approach, including how it votes proxies, with sustainability. Fink committed to using proxy voting to advance TCFD- and SASB-aligned financial disclosures and to an unprecedented standard of proxy voting transparency. They demonstrated their seriousness by joining the Climate Action 100+, a global investor initiative which SGI is a member, representing $34 trillion in managed assets, to engage the world’s largest corporate greenhouse gas emitters to take necessary action on climate change.

Morningstar predicted that BlackRock’s “willingness to vote against management would give engagements on sustainability issues more teeth…as corporate management becomes more open to engaging with shareholder proponents”. I remain hopeful…

The Ag Sector: The Nexus of Migration and Human Trafficking

Agricultural workers are some of the most vulnerable workers on the planet. In the U.S., we carve out laws that treat agricultural workers differently from all other U.S. workers. Further, it is a sector populated largely with foreign-born workers. All too often, these circumstances generate situations of horrific human exploitation.

On Friday, February 14, we were joined in our quarterly webinar by a leader in efforts to uncover human trafficking and modern slavery: Laura Germino of the Coalition of Immokalee Workers (CIW). Laura, a founding member of CIW, helped to establish the CIW’s Anti-Slavery Campaign. In 2010, she was honored by the U.S. State Department as a TIP (Trafficking in Persons) Hero. In 2015, the anti-slavery campaign received the Presidential Award for Extraordinary Efforts in Combating Modern Day Slavery. CIW has pioneered a worker-based social responsibility model, the Fair Food Program, to include workers in addressing exploitation and abuse and to eradicate modern slavery in Florida’s tomato fields. We also discussed how these lessons can be applied to our corporate engagements.

We highly recommend sharing this video with your investment committee and other essential people involved in your investment strategy.

We are very grateful for Laura’s presence in this webinar, for her long-standing commitment to eradicate modern slavery in the ag sector, and her generosity in sharing her wisdom and experience with us.

As always, we welcome your feedback via a confidential evaluation found here. Slides are available here