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.
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)
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!
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…
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.
Goldman Sachs CEO David Solomon garnered media coverage from CNBC and the New York Times for his new plan that requires I.P.O. (initial public offering) clients to have at least one “diverse” board member, if they wish to have his firm’s services. “We’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women,” Mr. Solomon told CNBC at the World Economic Forum in Davos.
I guess that my first response is it’s about time. Diverse boards are good for business. While hardly the first, Wharton told us that in 2017, Forbes drew the same conclusion in January 2018, and Harvard Business Review in March 2019. The Wall Street Journal article last week asked the question “why, when women earn the majority of college degrees and make up roughly half the workforce, do so few occupy the chief executive job?” Their analysis shows that the number of women CEOs of the country’s top 3,000 companies has more than doubled over the past decade, but it’s still under 6%.
SGI members have participated in the Midwest Diversity Initiative (MIDI), a coalition of institutional investors dedicated to increasing racial, ethnic, and gender diversity on corporate boards of companies headquartered in Midwestern states. The Coalition helps companies to:
- Adopt a policy for the search and inclusion of minority and female board candidates
- Require minority and female candidates to interview for every open board seat
- Instruct third party search firms to include such candidates in the initial pool
- Expand the candidate pool to include candidates from non-traditional sources
These efforts have seen some success: 24 Midwest companies engaged by MIDI have adopted the Rooney Rule, and 10 companies have appointed 12 diverse board members (see the press release). Nationally, we have a long way to go. On the Harvard Law School Forum on Corporate Governance website, Deloitte published a report that, as of 2018, just 34% of all Fortune 500 board seats are held by women and minorities.
On a related front, Melinda Gates found that in 2017 women founders received only 2% of venture capital funding. For lack female founders, the results are even more grim, only .0006% of venture capital has gone to them since 2009. In response, Gates invested in venture capital for women.
Women and people of color have a lot to contribute to the management and boards of successful companies. Personally, I’m glad to see that big business is slowly beginning to recognize it.
We just received word from Josh Zinner, executive director of the Interfaith Center on Corporate Responsibility that yesterday the Governing Board of ICCR elected its new Executive Committee. Our own Frank Sherman was elected as the new chair of ICCR. The new officers for ICCR are:
- Chair: Frank Sherman – SGI
- Vice Chair: Rabbi Rachel Kahn-Troster – T’ruah: The Rabbinic Call for Human Rights
- Secretary: Rob Fohr – Presbyterian Church U.S.A. (PCUSA)
- Treasurer: Jeff Perkins – Friends Fiduciary
To learn more about ICCR’s Governing Board, click here.
The outgoing officers are Fr. Seamus Finn, O.M.I. (who was the keynote for our annual event), Kathryn McCloskey (United Church Funds), Tim Brennan (Unitarian Universalist Association), and Anita Green (formerly of Wespath, who also assisted us in webinars).
Dan Tretow, chair of the SGI board, said, “I congratulate Frank on his election as Chair of the ICCR Board of Directors. His commitment to ESG issues and dedication to social justice is admirable. We value his leadership at SGI and know he will be appreciated as Chair of the Board at ICCR.”
We at SGI are grateful for Frank’s generous service to our organization and to ICCR.
By Frank Sherman
As I reflect on 2019, there was plenty of news to discourage me: wars continue in the Middle East, and nations continue the proliferation of nuclear arms; refugee and migration crisis across multiple continents; rise of nationalism and hate crimes; growing wealth and income gaps; undeniable climate crisis, water scarcity, deforestation, and biodiversity loss…not to mention the rollback of regulations and social safety nets, polarization of political discourse, and impeachment hearings in our own country. A review of the global progress on the UN Sustainable Development Goals found that, despite progress in a number of areas, progress on some Goals has been slow or even reversed. “The most vulnerable people and countries continue to suffer the most and the global response has not been ambitious enough.”
But late last night, I was sent a message that woke me up. As I looked through the Capuchin Community Services 2020 calendar, a quote caught my eye. “The difference between hope and despair is a different way of telling stories from the same facts” (Alain de Botton, The School of Life, London).
I then thought of Greta Thunberg’s (Time Person of the Year) speech at the UN Climate Action Summit in September excoriating world leaders for their inaction in the climate crisis, and the student March For Our Lives demanding more gun control. I recalled watching CNN’s annual Heroes of the Year Awards honoring the top 10 men and women who are making the world a better place by helping families affected by tragedy, cleaning up the environment, protecting neglected animals, and so much more. I read that worldwide terrorist attacks actual fell by 33% compared to 2017, to the lowest level since 2011. This year scientists learned to spot Alzheimer’s earlier and got a step closer to curing diabetes. China, the largest greenhouse gas emitter, is becoming a leader in electric vehicles.
I also find hope in the work of Seventh Generation Interfaith and ICCR. We added 10 new members with the merger with the Midwest Coalition to our coalition bringing the total to 39. This year our members engaged several companies in the food and apparel sector asking them to conduct human rights impact assessments and to develop a human rights policy. We continued our work with Midwestern electric utility companies to accelerate their decarbonization plans and ensure a just transition for employees and local communities. We leveraged the Business Roundtable’s statement on the Purpose of a Corporation to promote transparency in corporate political spending and lobbying. We challenged pharmaceutical companies to base their executive remuneration policies on innovation and patient outcomes rather than predatory pricing. We challenged companies to trace their supply chains back to the wildfires in the Amazon and asked them to meet their 2020 deforestation targets. We asked food brands and restaurants to improve their nutritional profile and follow marketing-to-children guidelines to fight obesity. We hosted our annual conference, this year on impact investing, in October. Our quarterly webinars, blog articles and weekly newsletters kept our members informed on our issues and trained on our tactics.
How will you tell your story this holiday season?
Blessing to you and your family and a hopeful New Year!
It’s hard to think about fall and winter holidays without thinking of food. Thanksgiving turkeys, Christmas roasts and cookies, and plenty of latkes and chocolate gelt are on everyone’s minds for the last two months of the year.
On December 4th, the USDA changed the Supplemental Nutritional On December 4th, the USDA approved changes to the Supplemental Nutritional Assistance Program (SNAP). Despite receiving thousands of negative comments, they proceeded with the first three proposed changes to the SNAP, all of which are expected to go into effect before the next presidential election.
Starting April 1, 2020, SNAP benefits will be cut for roughly 700,000 individuals, by reducing waivers and introducing new work requirements for able bodied adults without dependents. NPR Stated, “SNAP statutes already limit adults to three months of benefits in a three-year period unless they meet the 20 hours per week [work] requirement, but many states currently waive that requirement in high unemployment areas.” This rule change will make it more difficult to get this waiver. This initial change is expected to ‘save’ over $5 billion over the course of five years.
The other two proposed rule changes would:
- Close a “loophole that allows people with incomes up to 200 percent of the poverty level — about $50,000 for a family of four — to receive food stamps” and “prevent households with more than $2,250 in assets, or $3,500 for a household with a disabled adult, from receiving food stamps.”
- Cut close to $4.5 billion “from the program over five years, trimming monthly benefits by as much as $75 for one in five struggling families on nutrition assistance.
If all of these proposed rule changes go into effect, approximately 3.7 million fewer people and 2.1 million fewer households would have received SNAP in an average month (Urban Institute).
According to the USDA website, SNAP provides nutrition benefits to supplement the food budget of needy families so they can purchase healthy food and move towards self-sufficiency. These changes are proposed in order to ‘cut costs and help individuals achieve this idea of self-sufficiency’. However, access to SNAP allows individuals to support themselves and provide nutritious food for their families. Many believe these changes affect not only the individual’s ability to pay for other necessities, but will add stress to local food pantries and other non profits (Lohud, Dec 10, 2019). These changes will lead to an increase of food insecurity, devaluing of life, and challenge the idea that dignity belongs to every human being. “In this case, the result is more hunger and hardship for the members of low-income families who are doing their best to make sure everyone is cared for” (The Atlantic, Dec 10, 2019).
As we gather around Christmas dinner with our families, let us pause for those among us who go without.