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!

Frank Sherman, new chair of ICCR Board

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:

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.

Wake Up and Smell the Hog Waste?

It’s been nearly a month and I’m still thinking about the Food and Water Session panel I attended at ICCR’s Fall Conference. Panelists Kemp Burdette of Cape Fear River Watch, Elsie Harring of North Carolina Environmental Justice Network, and Martha Salomaa of Sipsey Heritage Commision spoke of the impacts associated with meat processing plants on local farms and how investors can affect change in this area. 

There are the same number of pigs as people in North Carolina. A fact surprising on its own, it bears more weight knowing these pigs produce roughly 10 times the amount of waste as the people. In addition to pigs, North Carolina has over 500 million chickens and turkeys producing even more waste. These factory farms or CAFOs (concentrated animal feeding operation) and their respective waste lagoons and spray fields overwhelmed nearby farms and towns, mostly communities of color, with untreated waste which seeps into rivers, streams, and drinking water causing illness. This waste contains high levels of toxic gases including methane, hydrogen-sulfide and ammonia; nutrients such as nitrogen and phosphorus; and heavy metals such as copper which seeps into waterways causing harm to the health of rivers and communities nearby. Community complaints often go unheard and regulators rarely take any action to address these adverse environmental and health impacts.

Having listened to this panel, it came as no surprise to me that, according to Ceres’ 2019 Feeding Ourselves Thirsty report, the meat industry is the worst performing sector in managing water risks. This report tracked 40 major food, agriculture, and beverage companies and their management of water risks in operations and productions. While the food sector has improved its water risk management, 27 of the 40 companies tracked scored below 50%. In addition to this, “Of the 13 companies that have yet to assess water risks in their agricultural supply chains, six are in the meat industry.” 

Often, company executives claim ignorance of the impacts of their operations on communities near their plants and CAFOs even after communities voice complaints. Faith-based investor groups like ICCR help bring the community voice to the C-suite to demand remediation. However, the problem will continue to exist without comprehensive legislation and regulation to address these impacts on communities in a holistic way.

The Amazon is on Fire

The Amazon has been a hot topic this year, which is no surprise considering deforestation, including that of the Amazon, is the second largest contributor to climate change. The IPCC recently published a report on Climate Change and Land which identifies the restoring of landscapes and forests as one of the best, most cost-effective, options available to combat the devastating impacts of changing climates. But deforestation is also a leading driver of biodiversity loss, changing rain patterns and human rights abuses.

I attended the ICCR Fall conference session on deforestation where panelists Maria Lusia Mendonca of Rede Social de Justiça e Direitos Humanos, Aditi Sen of Oxfam, and Guarav Madan of Friends of the Earth gave insight on how to address deforestation and its impacts. 

As explained in this National Geographic article on the effects of fires in the Amazon, from earlier this summer, the Amazon absorbs and stores carbon, creates its own rain, provides water for Brazil, Uruguay, Argentina, and Paraguay, and will affect climate change drastically if deforestation and these forest fires continue. The Amazon, as well as many other forests, is usually cleared for soybean growth and cattle farming to ultimately supply many of the companies that SGI members are engaging. Each year, illegal fires are set to clear land for more crops. 

This is a human rights issue as well. According to Amazon Watch: Complicity in Destruction

Brazil is the world’s deadliest country for those defending human rights and the environment, with agribusiness driving killings more than any other industry. Bolsonaro’s violent rhetoric has already been accompanied by a spike in rural violence, particularly against indigenous people and landless activists, emboldening militias controlled by powerful landowners to carry out attacks. His decree to loosen gun ownership in Brazil will almost assuredly aggravate violence, particularly in rural areas. By endorsing violence from major landowners, Bolsonaro fuels the intimidation of community leaders on the front lines of increasingly brutal land conflicts, including prominent indigenous leaders who now fear for their lives.

The New York Declaration on Forests set 2020 as the deadline for eliminating deforestation in the supply chain for agricultural commodities. While 2020 is around the corner, many companies, which have endorsed this effort as well as others, have not been following through on their commitments. Most will not meet their commitment to eliminate deforestation from their supply chains. Whereas some companies are making a concerted effort, others are greenwashing. They sign pledges without actually doing the work to achieve these goals. To show how some companies avoid honest dialogue around these issues, Frank Sherman participated in a role play at the conference with other ICCR members. This demonstrated how to engage companies on deforestation as well as the business responsibility to respect human rights.

A clear point that was made was there needs to be further action on deforestation outside along along with corporate action. There should be a call on public policy, not just on companies to address this issue.

Committed to Fr. Mike’s Legacy in Tobacco

Last week while attending ICCR’s Fall Conference, I attended the regular session on tobacco. As you likely know, Fr. Mike Crosby, O.F.M., Cap., our founder, was an early leader for his shareholder work in tobacco. Our session, in addition to our regular concerns on engagements with the tobacco industry, also included a significant conversation about vaping e-cigarettes.

By way of personal background, my grandmother smoked a pack a day of Pall Mall cigarettes. As a child, I detested the smell. At one point, I decided to leave my suitcase in our car when we would visit, as I did not want my clean clothes to smell of cigarettes. In other words, from early on, I never found smoking attractive. Consequently, I continually find myself surprised at its allure, especially to young people.

In reality, I should not be surprised. The attraction fits an old pattern. We remember the “seven dwarfs” testifying to Congress in 1994 that cigarettes are not addictive, in spite of having evidence to the contrary for decades. With Juul and e-cigarettes, we have a new addition to those archives. While regarded as proprietary information, e-cigarettes are more potent for their concentration of nicotine than cigarettes, according to Vox. In fact, a journal from Stanford University describes it as a “nicotine arms race.” In September, CNBC shared a CDC warning that Juul’s patented nicotine-salt technology allows for much more efficient delivery of nicotine directly to the brain, multiplying its highly addictive effect especially for teens. Hence, it was no surprise when Reuters reported yesterday that Juul disregarded early evidence that teens were becoming addicted. In September, Axios reported that the FDA warned Juul about its misleading advertising. In the face of mounting evidence of the damage caused, the White House planned to ban all flavored e-cigarettes, but the administration recently retreated that to banning all but menthol. Yesterday, the Journal of the American Medical Association published two studies: one on e-cigarette use among U.S. youth and another revealed the flavor preferences among U.S. youth. Simply put, the exclusion of menthol in the ban happens to coincide with the most popular flavor among American youth. Every Thursday, you can visit the website of the Center for Disease Control to see the updated statistics concerning Outbreak of Lung Injury Associated with the Use of E-Cigarette, or Vaping, Products. As of this writing, the CDC counts 1,888 cases of e-cigarette, or vaping, product use associated lung injury (EVALI) and 37 deaths.

We were fortunate to be joined in our session by Meredith Berkman, co-founder of Parents Against Vaping E-cigarettes (PAVE). Berkman and her co-founders were recently featured in the Wall Street Journal: Getting Through to Your Teen About the Dangers of Vaping. She shed some light on the allure to young people. Armed with the various devices and pods, she demonstrated how discreet the products are and how easy they are to use. The PAVE website has a lot of great information.

Simply put, Fr. Mike made advances in this work over the decades, but the fight by no means is finished. For the health of a younger generation, here and abroad, may we have some share of Fr. Mike’s zeal, courage, and wisdom in our engagement with the tobacco industry!

MCRI merges with SGI Coalition for Responsible Investing

By Barbara Jennings, CSJ

After two years of discussion about the best path forward, the St. Louis-based Midwest Coalition for Responsible Investment (MCRI) merged with Milwaukee-based Seventh Generation Interfaith (SGI) coalition to make both organizations stronger. 

MCRI began in 1977 focusing on the issue of the day:  South African apartheid. Michael Crosby, OFM Cap, the founder of SGI, visited St. Louis to explain the process of shareholder engagement and encouraged the formation of a regional socially responsible investment coalition.  Several Catholic institutions in the area decided to form MCRI. Other connections between St. Louis and Milwaukee:  beer towns, Midwest agriculture, defense industry, and racial disparity. 

MCRI joined the Interfaith Center for Corporate Responsibility shortly after it was formed. This connected us to many Catholic religious’ women and men congregations, as well as to representatives of other faith traditions.  We expanded our tactics beyond the traditional “negative screens” (e.g. no weapons, tobacco, gambling, birth control) to include corporate engagements, proxy voting and shareholder meeting attendance.

MCRI’s first resolution in 1978 asked McDonnell Douglas to build up its commercial business over military contracts which were dependent on foreign policy and regional conflicts. The proposal was presented by Sr. Mary Ann McGivern, SL. From that auspicious beginning, the work of MCRI expanded. By 1980, MCRI had thirteen institutional members. That same year, the coalition sponsored a local conference entitled “Corporate Responsibility: Why the Churches Must Be Involved.”  It was well attended by both treasurers and social justice representatives.       

Under the leadership of Susan Jordan, SSND, MCRI’s issues expanded to include nuclear waste (Union Electric, now Ameren), foreign military sales (General Dynamics, McDonnell Douglas/Boeing), and agricultural pesticides and GMO’s (Monsanto, now Bayer).  Other issues on which we engaged companies on were infant formula in Central America, AIDS medication from the pharmaceutical industry, and labor slavery in various supply chains.   

By 2007, Barbara Jennings, CSJ, who had been on MCRI’s Advisory Committee in the 1990’s, became the Executive Director of MCRI.  The issues at ICCR had grown tremendously, almost too much so that the saying at ICCR meetings was “We never met an issue we didn’t like.”  In 2015, ICCR adopted a human rights lens to all its’ work. Priority issues included climate change, human trafficking / labor rights, water stewardship and food justice.

MCRI continued to work with Ameren concerning their disposal of coal ash. A 2018 resolution received 53% vote, a rare majority for a shareholder resolution!  The coalition worked with Monsanto for several years on water issues. The company now uses low drip and recycling of water in their labs after a 2010 successful withdrawal of a resolution. After many years of engagement with Boeing, the company hired a third party auditor to delve into their supply chain for labor infringements.     

So, the work will go on….and with a more supportive business atmosphere than in 1977.   What has changed?   A greater awareness of the risks posed by climate change? Recognition of the liability posed by pollution?  Understanding that companies can outsource manufacturing but not the responsibility associated with it? The internet and social media together with increased societal expectations has placed more responsibility on corporations to account for their environmental and social impacts.

Each of the nine MCRI members (SSND, GSPMNA, CSJ, CPPS, OSU, SJ, SM, CSJ Congregational Center, and JAG Capital Management) will continue in corporate engagements as part of SGI’s coalition. I ask that you please stay active to bring the faith-based investor voice to corporate board rooms.

As for me, I have joined the SGI Board of Directors and will continue to remain active in this work. I was proud to be part of this journey and thank you for your support. 

Climate Change is now a Climate Crisis

By Frank Sherman

Recently, we took time to reflect on another eventful engagement season and to chart the strategic direction for the coming year.

Looking back at the 2019 engagement season and more than one-hundred climate engagements by ICCR members, we observe:

  • In a notable exception, the electricity generation sector is at a decarbonization tipping point driven by cheaper renewable energy, growing industrial and public demand, and changing public opinion. Securitization laws, distributed energy resources (e.g. rooftop solar) and community solar projects are growing in popularity. The “electrification of everything” shows promise of demand growth, energy savings and environmental sustainability. A growing number of utility companies (nine, according to NRDC) have followed Xcel’s lead by committing to carbon-neutral electricity production by 2050 or sooner.
  • In the face of regulatory rollbacks, natural gas production and distribution companies are committing to voluntary methane leakage reduction targets to salvage the ‘bridge-fuel’ story. With 6000 mid- and small-scale producers, the majors are now advocating for a stronger regulatory regime! Investors have been successful in tying support for meaningful regulation to reputational risk.
  • As investors shifted from demanding scenario assessments to Paris-compliant business plans, U.S. oil & gas companies continued to defend their business-as-usual business model while their European counterparts broke rank. A BP supported climate resolution obtained a 99+% vote while Shell agreed to set GHG reduction targets for their products as well as their operations. In contrast, CA100+ investors at Exxon Mobil recommended voting against the Board after the company omitted their GHG reduction target proposal.
  • With noted exceptions (Wells Fargo and Goldman), large financial companies are starting to assess climate risk in their portfolios. Mid-cap companies were slower to respond to our letter campaign, largely it seems, due to limited capacity to conduct broad risk assessment. Investors will connect them with tools they can use to do a straightforward climate footprint analysis.
  • Political spending and lobbying resolution votes, several of which emphasized climate change, increased to 31%.
  • Engagements calling for science based (GHG reduction) targets made slow progress in contrast to the scientific community call for more urgent action.

Impacting the climate science and changing political landscape, 2018 was the wettest year on record while wildfires in California resulted in the first climate change bankruptcy of Pacific Gas and Electric. Global carbon emissions reached a record, and the U.S. power sector reversed its’ multi-year decline.  The IPCC special report warned that countries’ pledges to reduce their emissions are not in line with limiting global warming to 1.5°C. Some are responding to the crisis – 80 countries are planning to increase their climate pledges ahead of schedule. The UK is the first member of the G7 to legislate net zero emissions, joining Finland and Costa Rica.

The 4th U.S. National Climate Assessment Report starkly warns of risks to the U.S. economy while the Trump administration’s environmental rollbacks are poised to increase GHG emissions significantly. Public opinion is finally shifting with over 70% of Americans saying climate change is a reality, with most believing human activity is primarily responsible. Republican millennials support a carbon tax 7-to-1 with 85% stating that the Republican position on climate change is hurting the party. The Midterm elections flipped the House of Representatives and 7 state governorships to Democrats. Twenty-one states have now joined the U.S. Climate Alliance committed to the Paris Climate Agreement. Four states (CA, WA, HI, NM) and Puerto Rico have targeted 100% clean energy by 2050 or sooner, with nine additional states (IL, MA, MI, MN, MS, NC, NY, PA, WI) proposing similar legislation. The Green New Deal resolution changed the conversation on Capitol Hill and the Climate Action Now Act put the House on record as supporting the Paris Accord.    

Financial markets are not immune to this crisis. Munich Re predicts climate change will price regions out of insurance. The broad acceptance of the TCFD guidelines increases pressure on companies to improve disclosure.

Considering the broader investor landscape and NGO campaigns, the CA100+ global initiative focused on large emitters and led by large asset managers, pension funds, and sovereign funds. Some ICCR members participate in the CA100+ teams while others continue parallel engagements to reinforce the message. Still others are shifting focus to mid-cap companies. We believe that more coordination is needed to increase effectiveness.

Efforts to make methane emissions reduction targets the norm have been limited to the oil & gas majors and larger natural gas producers. The EPA’s proposed rollback of the New Source Performance Standards regulating oil and gas emissions will further erode the regulatory floor, especially as the EPA now proposes to deregulate methane. We look forward to publication of an EDF study on methane measurement and mitigation and Union of Concerned Scientists has formed a working group to study CCS.  

Efforts towards a Just Transition have born fruit as investors and companies have a growing awareness of the unintended, negative consequences that decarbonization has on people. We made a good start with last October’s investor statement, representing $3.7 trillion in assets, and the CA100+ framework, which includes just transition questions; however, most companies lack the policies and practices to address these issues. Addressing the needs of employees, customers and local communities will accelerate transition rather than deter it.

Recalling Fr. Mike Crosby’s prophetic statement, “We are at a Kairos moment,” we look forward to developing with our allies a new strategy statement regarding future engagement of the oil & gas sector to help investors differentiate between fossil fuel companies making progress and those protecting business-as-usual models. Rollout will be stepwise with more guidance forthcoming. Finally, alongside our allies, we have reviewed a draft climate change principles which reflect an increased urgency and stepped up action.

Finally, let us turn to our 2020 engagement strategy. Given our progress in recent years within the electric utility sector, we expect to expand engagements further into mid-cap companies and push for net-zero carbon targets. We will collaborate with NGO’s and other partners to engage the state utility commissions and give input on the Green New Deal. ICCR is planning a multi-stakeholder Roundtable in December to discuss the challenges of decarbonization and promote a just transition.

Investors engaging the financial sector are promoting a shift from simply assessing climate change risk to their own operations to assessing the climate-related risk they facilitate through their lending and underwriting. Coordinating with the Climate Safe Lending Initiative, they plan to engage the top five U.S. banks and some regional banks in 2020 on climate risk. Investors will ask banks to follow the TCFD recommendations, complete a climate impact assessment, pledge no new fossil fuel investments, and ultimately, decarbonize their portfolio (Banking on Climate Change: Fossil Fuel Finance Report Card 2019). Planned for early September, an investor brief and webinar will educate interested investors. As well, we will ask smaller banks to join the Platform Carbon Accounting Framework to calculate their carbon footprint.

Our methane work will continue to promote best practices in measurement and management to minimize methane leakage. We plan to engage companies on including their “non-operated assets” (i.e. joint ventures) in their methane targets, and step up engagement of distributors and retailers to source “sustainably produced” natural gas. At the same time, we recognize that natural gas can no longer be viewed as a “bridge fuel” to clean energy and agree that no new gas power plants can be justified given the climate crisis. On the other hand, replacing industrial and residential uses of natural gas remains a challenge.

It is clear that we recognize the increased urgency and need to step-up our demands. Within ICCR, we reflect this by the change to our Program name from Climate Change to Climate Crisis. This can no longer be considered a gradual change. We are in crisis mode so we need to respond differently!