Highest Youth Tobacco Use since 2000, says CDC

This morning, the Center for Disease Control released its latest National Youth Tobacco Survey (NYTS), and the results can only be described as alarming.

The report concludes:

Findings from NYTS indicate that in 2019, approximately half of high school students (53.3%) and one in four middle school students (24.3%) had ever used a tobacco product. Furthermore, approximately three in 10 high school students (31.2%) and approximately one in eight middle school students (12.5%) had used a tobacco product during the past 30 days

National Youth Tobacco Survey, p. 10

According to reporting by Axios, this is the highest youth tobacco use report since 2000.

Alongside this news, please, remember that the NYTS follows Wednesday’s update (Dec. 4) that identifies 2,291 cases of hospitalized e-cigarette, or vaping, product use associated lung injury (EVALI) reported to CDC from all 50 states, the District of Columbia, and 2 U.S. territories (Puerto Rico and U.S. Virgin Islands). Further, another forty-eight deaths have been confirmed in 25 states and the District of Columbia.

Each day that administration debates its course forward amid concerns for public health and election and jobs impact, more young people risk getting hooked on tobacco products. Both of these CDC reports, the weekly update on EVALI and the NYTS, underscore the critical need for public health policy and action at local, state, and federal levels.

Shareholders, too have a critical role to play. Recently, we have written about SGI’s commitment to continue this work that originated decades ago with Fr. Mike Crosby, O.F.M., Cap. For instance, today is the filing deadline for two resolutions at Altria Group, Inc. One resolution concerns greater transparency regarding Altria’s lobbying efforts, and the other calls upon Altria to review corporate adherence to Altria’s principles and policies aimed at discouraging the use of their nicotine delivery products to young people and to report to shareholders. Both of these resolutions deserve broad support from shareholders.

Raise the Alarm for Xinjiang

Over the last few years, casual readers of newspapers likely had vague awareness that China had imprisoned more than a million ethnic Uighur Muslims and other minorities in camps in the country’s far-west Xinjiang province. While the Chinese government claims that the prisoners are volunteers who receive job training, human rights organizations allege that the ethnic minorities endure mass incarceration in “re-education camps” designed to indoctrinate those ethnic minorities.

In the last six months, a barrage of new events and evidence clarified the situation with striking details. In June, the Worker Rights Consortium (WRC) published a detailed, 34-page report on a factory owned by the Hetian Taida Apparel Company that supplied university logo clothing to Badger Sportswear. The WRC found:

. . . the investigation Badger commissioned of Hetian Taida, in response to allegations of forced labor, was fatally compromised by the company’s rush to exonerate itself and its supplier; the company announced findings, supposedly based on worker interviews, before [emphasis added] interviewing any workers. [p. 2]

The U.S. State Department placed China on Tier Three (the lowest category) in its annual Trafficking in Persons Report, dedicating considerable attention to Xinjiang. In early October, Time magazine reported that the U.S. Blocks Imports From 5 Countries Over Allegations of Forced Labor, when U.S. Customs and Border Protection (CBP) intervened on a Costco shipment from Hetian Taida. Days later, the WRC issued an Update on Forced Labor and Hetian Taida Apparel. Badger Sportswear only cut ties after CBP intervened on the shipment for Costco.  The American Apparel and Footwear Association, a trade group for brands and retailers, issued a disappointing and underwhelming statement in response to this report that they were “deeply concerned” and called on the Chinese government to act. Also, Georgetown University’s Center for Strategic and International Studies issued a critical report entitled Connecting the Dots in Xinjiang: Forced Labor, Forced Assimilation, and Western Supply Chains offering specific guidance for companies and investors. A rare event these days, a bipartisan letter came from members of both the U.S. House and Senate calling on the CBP to investigate and block goods coming from the Xinjiang province.  

Last week, classified documents from the Chinese government were leaked by the International Consortium of Investigative Journalists, providing policies and procedures inside the re-education camps.   The camps reportedly have watch towers, double-locked doors, and video surveillance “to prevent escapes.” The Chinese government apparently uses the camps to train its artificial intelligence programs for use in mass surveillance. The documents demonstrate that forced labor is an integral part of the Chinese government’s strategy for ideological conversion through industrialization. This is the largest incarceration of people based on an ethnic or religious identity since 1945.

A Toxic Combination for Apparel Companies and Consumers

China is the source of about 40% of all clothing sold in the U.S. The Xinjiang province grows 80% of China’s cotton, and, increasingly, the cotton is ginned there. Companies are erecting new factories in Xinjiang for additional steps in the garment-making process. Further, fabric from China is exported to Bangladesh, Cambodia, and Vietnam—all significant sources of apparel sold in the U.S

Corporations have a responsibility to respect human rights within company-owned operations and through business relationships. This obligation is delineated in the United Nations Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector. Every brand and retailer that sources from China is exposed to the risks for forced labor in their supply chains: the harvesting and ginning of cotton, the spinning of the yarn, and the business relationships with corporations collaborating with the Chinese government to build and staff these new factories. The issue is not “simply” a violation of a retailer’s code of conduct or a reputational risk; companies risk a violation of U.S. law concerning importation of garments made with forced labor.

As public scrutiny of these issues increases, it will become increasingly clear that companies’ due diligence mechanisms (audits and codes of conduct) are insufficient. We at SGI would argue that, even in the best of circumstances, audits and codes of conduct, while necessary, are insufficient to protect human rights. In the circumstance of the Xinjiang province, such efforts are rendered ineffective.

We urge companies to take this risk seriously. It is not enough to lay low and wait; companies must engage proactively. We also urge the U.S. government to take meaningful action against the Chinese government in this matter. Even our faith communities have a responsibility to act. Events in support of “religious freedom” ring hollow if it does not also include action to respect the religious freedom of ethnic minorities in Xinjiang. Finally, as consumers, we are called to solidarity with those who endure forced labor. NPR’s Scott Simon put it well: “What does it have to do with us? Look down at our shoes, our phones and our toys.”

To learn more:

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.

SEC’s Proposed New Rules Threaten Shareholder Democracy

Last December, our blog gave an update on efforts by trade associations to restrict shareholder rights .

On Tuesday, November 5, the Securities and Exchange Commission unveiled the exact nature of that threat and voted 3-2 on two separate measures to propose changes to rule 14a-8 that would severely restrict investors’ access to the corporate proxy. The changes would require that:

  • Shareholders own $2,000 worth of company stock for a minimum of three years (up from one) before they can submit a shareholder resolution. They can submit proposals earlier if they own $25,000 for one year and $15,000 for two years. Small shareholders can no longer come together to aggregate their shares to file a resolution.
  • Re-submission vote thresholds were raised from 3%, 6% and 10% for the first three years to 5%, 15% and 25%.
  • Proxy service providers (such as ISS and Glass Lewis) will be required to provide a draft of their proxy advice to companies for comment ahead of issuance. There are several other restrictions on these companies.

These proposed changes are significant threats to our voice as shareholders. They have received significant push-back in the media (Reuters, MarketWatch) and by several investor groups (ICCR, US SIF, CII). “Between the filing threshold increases and the doubling of percentages for resubmissions, it means that smaller investors are going to find it much more difficult to file resolutions,” says Josh Zinner, CEO of ICCR. “It’s a blow against shareholder democracy.”

The 60-day comment period opens once the proposed rule changes are published in the Federal Registrar. Our members are encouraged to sign on to Ceres and ICCR comment letters or, better yet, send in your own comments to the SEC. You should also consider sending letters to your Congressional representatives. Finally, consider submitting op-eds and letters to the editor to your local paper and newsletter stories and blog posts on your websites.

To learn more about the issue and concerns, you read the statements by Commissioner Robert Jackson and Allison Herren. “There is a common theme that unites the two proposals before us today”, said Commissioner Herren. “They both would operate to suppress the exercise of shareholder rights.”

With regards to a second proposed rule change, ISS (Institutional shareholder Services) has filed a lawsuit against the SEC. The final resource is a website, supported by ICCR, that is gathering evidence and sharing reports concerning the shareholder proposal process (Investor Rights Forum).

A lot more to come on these proposals. Please lift your voice in opposition!

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.

On opioids, shareholders spoke, companies begin to listen

Since 2017, SGI has participated in Investors for Opioid Accountability (IOA). This week, the IOA released a two-year progress report detailing landmark agreements with 20 opioid manufacturers, distributors and retail pharmacies implicated in the crisis. 

Between headlines about Democratic debates and Washington feuds, news about lawsuits and proposed settlements have drawn some attention this week. Steadily and purposefully, the IOA has dug down into the crisis and sought ways to address it as shareholders. Specifically, the IOA has engaged opioid manufacturers, distributors, retail pharmacies, and manufacturers of drug treatments.

A few important things to note from the report:

  • A majority (52%) of shareholder proposals led to agreements with the companies;
  • Of the shareholder resolutions filed, seven resolutions at Rite Aid, Walgreens, Mallinckrodt, Mylan, and Assertio Therapeutics received majority votes and an additional two resolutions received majority support at AmerisourceBergen from independent voters, leading to reforms;
  • Twelve companies agreed to conduct risk assessments of opioid-related business practices including governance, compliance, compensation and political lobbying and to report these findings publicly. Two of these companies (Cardinal Health and Assertio) established special board-level committees on opioids;
  • Ten companies agreed to adopt misconduct clawback policies  to recoup executive pay, including the public disclosure of the use of the clawback;
  • Three companies agreed to separate their chair and CEO positions (McKesson, Cardinal Health and AmerisourceBergen), and;
  • Two companies agreed to disclose when they adjusted metrics to exclude legal costs when calculating their executive pay awards. 

Established out of heightened concern that opioid company risks both threaten long-term shareholder value and have profound long-term implications for our economy and society, the IOA uniquely represents influential and diverse funds from across the investing universe including faith-based, sustainability, public, and labor funds as well as comptrollers, treasurers and asset managers that are taking swift and decisive actions to hold manufacturers, distributors, and retail pharmacies’ boards accountable for their role in the opioid crisis. The IOA consists of 54 investors with over $4 trillion in assets under management and is co-led by Mercy Investment Services, Inc. and the UAW Retiree Medical Benefits Trust.

If you wonder what difference shareholders can make, this report spells out in particular detail how attentive and deliberate engagement can achieve results. We are proud of our participation in the IOA. We’d urge our members to examine this report. As you do, keep in heart and mind those who have died in this opioid epidemic, those who struggle with addiction today, families devastated by losses, and communities overwhelmed with the human and material cost of this crisis. If you hold shares in companies outlined in the report, we’d welcome the opportunity to facilitate your support of these engagements. Please, contact our staff for more information.

Additional posts concerning the opioid epidemic and SGI’s efforts are found here:

SGI 2019 Conference Will Make An Impact!

As fall begins to make an appearance, we start looking to the weeks and months ahead. While not everyone likes to leave the summer behind, fall brings the excitement of cool air, crisp leaves, spices wafting through the air, and the annual SGI conference, this year on Impact Investing: Social Return on Investment on October 7th.  This transition from summer into fall is the perfect time to evaluate the different impacts our institutions and we personally have on relationships, community, and society. How do we nurture what needs caring for? How do we help ourselves and others continue to grow and thrive? And, can our financial investments reap the same benefits while including this sense of intentionality?

We’re excited about the opportunity to listen to our keynote speaker, Seamus Finn, Missionary Oblate’s Director of Justice, Peace & Integrity of Creation and ICCR Board Chair, and our expert panelists, who I’m sure will bring their opinion on the change of seasons, but more importantly will share their unique experiences and stories on impact investing.

The Global Impact Investing Network (GIIN) defines Impact Investing as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” Imagine a world where our investments have an impact outside of solely generating a profit, creating positive change. Amit Bouri of GIIN, in an article geared toward faith based investors, explains:

Simply put, impact investing is investing to achieve both a financial return and positive, measurable social or environmental impact. It differs both from traditional philanthropy, which aims for impact but is unconcerned with financial returns, and from other forms of values-driven investment which aim at the avoidance of harm, but not necessarily the creation of additional, measurable positive benefits.

GIIN’s 2019 survey found that the impact investing industry is diverse, including many types of institutions investing in all asset classes. It continues to grow and mature with over $500 billion invested assets. Over 90% of impact investors report that returns meet or exceed their expectations. GIIN’s Impact Investing Guide provides an excellent background for our members.

We’re lucky to be welcoming George Hinton, Greg Lane, Salli Martyniak, and Ken Vander Weele to the panel, alongside moderator, Sr. Dorothy Pagosa to help us explore this topic. Our speakers and panelists will walk us through the purpose and focus of impact investing and all that it can hold. We’ll learn about their mission, motivations, takeaways, and advice in the growing market.

Born and raised in Milwaukee, George Hinton, CEO of the Social Development Commission (SDC) coordinates programs for Milwaukee County’s low-income residents. The SDC’s mission is to “empower people with the resources to move beyond poverty,” which they have been doing since 1963. Greg Lane, CFO of the Missionary Sisters of the Sacred Heart, helps the sisters utilize their resources for the benefit of the common good. He has helped developed a mission-aligned impact investment portfolio and repurpose real estate according to need. Salli Martyniak, president of Forward Community Investments support “organizations, initiatives, and coalitions throughout Wisconsin.” They make it a priority to offer their loans and grants at an affordable cost to assist both the small and mid-sized projects and organizations. Co-founder and partner in Creation Investments Capital Management, Ken Vander Weele, will show us the global side of impact investing. Ken has worked in India, South-east Asia, Eastern Europe, and the United States investing in emerging market financial services companies that serve poor clients. His local and global work will show us the social return of impact investing around the planet. Finally, Sr. Dorothy Pagosa, Director for Social Justice for the Sisters of St. Joseph – Third Order of St. Francis and a member of SGI, will moderate the panel. Sr. Dorothy has first hand experience in identifying and managing impact investments in the midwest.

The event will be preceded by a member meeting and followed by a reception. We hope all of our members and friends will attend what is shaping up to be a very exciting conference.