The Sisters of St. Francis of Philadelphia

 Annual Summary of Shareholder Engagement
2010-2011

"Executives have amassed untold wealth while a billion people suffer from poverty and food insecurity.” These words spoken by Sr. Nora at the Goldman Sachs annual meeting on May 6, 2011, echoed in many lands. We’ll never know the impact of the message but we’ve taken the risk to speak to the issue and stand with those who cannot speak for themselves. The pay disparity resolution received an unusual amount of publicity because Goldman Sachs and many of the other S&P 500 companies have increased their executive pay while average family income has decreased. Goldman Sachs claims that its only asset is in human resources and it is necessary to pay their executives these exorbitant salaries and bonuses.  We received a very small percent of the vote 4.7% but can take the same resolution back next year.

Another high profile action for this year was our resolution with McDonald’s asking them to assess their policy responses regarding fast food links to negative impacts on children’s health, including childhood obesity and diet-related diseases. Although the company has recently diversified its menu, questions about the default choices for certain children’s meals as well as the healthiness of some so-called healthy items remain. Tom McCaney, primary filer, is “encouraged by the initiatives that the company has undertaken regarding nutrition” but believes that “McDonald’s must continue to expand its healthy options.”

You already know that we have been at the forefront of hydraulic fracturing for over three years and are still very concerned that our national energy policy and the gas industry have taken precedence over community health, human rights, and our environment. Though the EPA is making attempts to address the issue, attempts are impeded by EPA’s own advisory board because several of the members of the Natural Gas Subcommittee currently enjoy financial ties to the natural gas industry, www.ewg.org. Contact the EPA to let them know that residents from communities impacted by the fracking life-cycle must be represented and allowed to have a voice. Renee Stone, U.S. Department of Energy, 1000 Independence Avenue, SW, WashingtonD.C.20585, or by email to shalegas@hq.doe.gov.

Hydraulic fracturing involves many life cycle issues related to the use of toxic chemicals: water; run-off; underground water contamination; management of wastewater and chemical disposal; impact on all creatures and the natural environment; and damage to forests, roads, and property. Because the process requires millions of gallons of water to fracture the shale, there are water issues brewing, especially in drought-prone areas of Texas. We’ve spent many hours at meetings with companies, politicians, and citizens that have been affected by the human and environmental concerns. As shareholders we contacted Marathon Oil, Chesapeake Energy, and Conoco Phillips and have filed resolutions with ExxonMobil, Anadarko, and Chevron. Our resolution with Chevron received 41% of the vote and will require Chevron to take serious steps toward better practices.

These are brief examples of our activities over the past year. Once again, as Sisters of St. Francis of Philadelphia, we have taken the “necessary risks” to add our prophetic voice to corporate engagements and work to transform corporate policies and practices. The following action summaries give insight into our shareholder engagement for 2010-2011.

HUMAN RIGHTS

Over the past five years, John Ruggie, a special representative of the Secretary General of the United Nations has been working on a framework to enable large corporations to examine and develop their human rights policies. The framework includes three core principles as guidelines: protect, respect, and remedy. The work of John Ruggie and others have been invaluable in our dialogues with many major corporations on adapting and implementing their human rights policies. The framework is now being used by many of the large corporations and financial institutions such as Goldman Sachs, Philip Morris, Boeing, Wal-Mart, Coca-Cola, and Procter and Gamble.

DuPont: We are still addressing the issue of genetically modified organisms. Our resolution this year asked DuPont to amend its human rights policy to include respect for and adherence to seed-saving rights of traditional agricultural communities. We received 6.09% vote which means we can refile next year. Our subsequent dialogue on April 27, addressed issues related to DuPont’s human rights policy and the problems with seed-saving.

Kroger Company: We filed a resolution on farm worker rights on behalf of the Interfaith Action of SW Florida and the Coalition of Immokalee Workers. The goal is to have the company sign onto the CIW’s Fair Food Agreement which endorses an extra penny per pound of tomatoes harvested by workers and established an enforceable code of conduct for the suppliers/farm companies.
  

TRAFFICKING

Our resolution with Delta Airlines was withdrawn when the company agreed to sign on to the ECPAT Code. 
 

Campbell’s Soup: We have dialogued with the company on water use and the sustainability of their factories. They’ve initiated many water and energy-saving projects. Campbell’s no longer owns farms. Other issues discussed are health (diabetes and obesity), packaging, and the human right to water.

Coca Cola: Coke entered into a coalition with WRI, G.E., and Goldman Sachs on the “Aqueduct” project, joined the CEO Water Mandate, and published its “Water Stewardship & Replenishment Report.” They have done great work on managing water and are considered a leader on the subject.

Heinz: We have taken the lead with this company on its water use. They have responded to many questions via letter, listing their impressive water and energy-saving initiatives. However, their responses are anecdotal and lack context. Heinz has thus far resisted our requests for dialogue.

Massey Energy: We cofiled a resolution on the effects that Massey’s practice of mountaintop removal mining has on water pollution in their operating areas. The proposal was withdrawn when it was reported that the company was being sold. There was great uncertainty as to whether our contacts within the company would be retained.

Peabody Energy: Although the company is willing to engage with ICCR shareholders, many questions remain regarding potential water contamination from sediment ponds and washing of the coal after it is mined. They report a low use of water in their operations—a claim at odds with our learning from dialogues with another coal company, Massey Energy.