While many of the human rights proposals implicitly address problematic corporate behavior in dicey situations experiencing civil unrest, just four in 2019 now directly take on these challenges.Read More
The intense public debate over immigration and how best to address security along the long U.S. border with Mexico— which prompted the longest government shutdown in U.S. history early this year—is making itself known in proxy season with five proposals. Two have been withdrawn after agreements and challenges to the other three proposals are still pending at the SEC.
Lending to prison companies: The SEIU Master Trust has withdrawn a proposal at Bank of America and Wells Fargo that asked for a report by year’s end
on how BAC is identifying and addressing human rights risks to BAC related to the Trump Administration’s aggressive immigration enforcement policy, which aims to prosecute all persons who enter or attempt to enter the United States (U.S.), including the detention without parole of asylum-seekers and the separation of minor children from their parents who are accused of entering the U.S. illegally.
The proposal noted both banks lend to private prison companies, which are involved in immigrant detention. This is a new proposal in 2019. SEIU withdrew after Wells Fargo agreed to add language about private prisons to its Business Standards Report. Bank of America also reached an agreement with SEIU but the details are not yet available.
Family separation: Inmate rights advocate Alex Friedman also is raising concerns about the detention of immigrant families. He has a detailed proposal asking CoreCivic and GEO Group to
adopt the following policy, to be implemented no later than December 31, 2019:
[The company] shall adopt a policy of not accepting immigrant detainee children (persons under the age of 18), who have been separated from their parent or parents by any U.S. government entity, for housing at any facility owned or operated by the Company.
[The company] shall adopt a policy of not accepting adult immigrant detainees (persons over the age of 18), who have been separated from their child or children by any U.S. government entity, for housing at any
facility owned or operated by the Company.
If [the company] houses at any of its facilities any immigrant detainee children or adults described in sections 1 or 2 above at the time the policies set forth in sections 1 and 2 are implemented, the Company shall: a) immediately move to modify all such contracts to comply with the above policies or, if such modification is not possible within a six- month period, seek to withdraw from or terminate such contracts as soon as possible, including invoking any early termination options or clauses in such contracts, and b) diligently work to make arrangements to safely house such immigrant detainees that do not involve housing them at any of the Company’s facilities.
Both companies have lodged challenges at the SEC. CoreCivic argues it can be excluded because it concerns ordinary business by dint of micromanagement and since it does not address a significant policy issue. The company also says that it cannot implement the proposal, that it is too vague and that it is moot. GEO Group is making the same arguments. The proposal is the first of its kind, but Friedman has filed a number of proposals in the past on prisoner concerns at both companies.
Inmate and detainee rights: The Jesuit Conference has a second proposal at GEO, which notes serious allegations from October 2018 at a California migrant detainee facility run by GEO. It asks for an annual report starting in September
on how it implements the portion of the Policy that addresses “Respect for Our Inmates and Detainees,” including:
How GEO ensures that its employees are aware of, and know how to apply, the company’s commitment to inmate/detainee human rights;
Metrics used to assess human rights performance, including any process for independent outside verification of such metrics; and
How GEO remedies shortcomings in human rights performance.
The company has challenged the proposal, saying its implementation would violate the law, that it is too vague and that it concerns ordinary business by seeking to micromanage the company.
COMPANIES ENGAGED IN IMMIGRATION DETENTION AND FAMILY SEPARATION FACE HUMAN RIGHTS RISKS
Senior Program Director, Interfaith Center on Corporate Responsibility (ICCR)
The current “zero-tolerance” U.S. immigration policy has become one of the most high-profile and contentious human rights issues we face. The Trump Administration’s more aggressive approach to immigration restrictions pushed arrests by Immigration and Customs Enforcement (ICE) up by 11 percent in 2018. The resulting indefinite detention, especially the separation of minor immigrant children from their parents, has violated human and civil rights.
Biometrics: At Northrop Grumman, the Sisters of St. Dominic of Caldwell, N.J., ask for a report on its management systems and processes to implement its human rights policy. The proposal expresses concern about a new Department of Homeland Security contract for which the company will develop biometric identification information. The proponents are worried about potential racial bias and privacy issues as well as adverse impacts on immigrant communities. The company has challenged the resolution at the SEC, arguing it concerns ordinary business, seeks to micromanage its business, and is moot given the company’s human rights policy. (Also see p. 60 for Amazon.com proposal about facial recognition software.)
Reporting: NorthStar Asset Management has expanded an effort begun last year, asking four companies (up from two last year) to report about products that may be made with prison labor. Last year the proposal was to adopt a policy and it earned 4.8 percent at Costco, which later in the year adopted a policy. That proposal also earned 7.8 percent at TJX.
This year, NorthStar asked Costco “to produce an annual report to shareholders...regarding information known to the company regarding supplier compliance with the company’s Global Policy on Prison Labor.” It earned 28.7 percent in January. A resolution to Home Depot and IBM asks that the report summarize “the extent of known usage of prison labor in the company’s supply chain,” while at TJX, it asks that the report assess “the effectiveness of current company policies for preventing instances of prison labor in the company’s supply chain. NorthStar contends Home Depot does not ban all forms of prison labor and points to a lawsuit filed against it regarding some products made by prisoners.
After IBM described its existing procedures to monitor for prison labor in its supply chain, NorthStar withdrew. IBM also agreed to further collaboration on the issue in 2019.
Adopt policy: At Walmart, the Nathan Cummings Foundation also raises a new concern about the provisions of legally permissible prison labor. The foundation asks the company to
adopt a policy on the use of prison and unpaid diversion program labor by suppliers, including a policy that commits the Company to:
Develop and apply additional criteria or guidelines for suppliers regarding the use of prison and diversion program labor; and
Report to shareholders, at reasonable cost and omitting proprietary information, on Walmart’s progress in implementing the policy.
THE GROWING REGULATORY RISK OF MODERN SLAVERY IN GLOBAL SUPPLY CHAINS
Program Officer, The Freedom Fund
Globally, it is estimated that over 40 million people live in situations of modern slavery. Approximately 16 million people are in forced labor in the private economy, in mines, factories and fields harvesting raw materials and manufacturing products for global supply chains. Over the past few years, revelations of modern slavery conditions have been traced to the supply chains of major corporations, from smartphones produced with forced child labor in the DRC, to seafood caught by trafficked migrant workers in Thailand.
Christian Brothers Investment Services (CBIS) has proposed that three companies report on online child sexual exploitation. It withdrew after discussions at Apple, having sought
a report, including a risk evaluation...by February 2020, assessing whether Apple’s products, services, policies and practices are sufficient to prevent material impacts to the company’s finances, brand reputation, or product demand, in light of strong public concern regarding the growing risk to children of sexual exploitation online.
CBIS, Proxy Impact, and faith-based investor have pending resolutions at Sprint and Verizon Communications that are seeking
a report on the potential sexual exploitation of children through the company’s products and services, including a risk evaluation...by March 2020, assessing whether the company’s oversight, policies and practices are sufficient to prevent material impacts to the company’s brand reputation, product demand or social license.
These resolutions are the beginning of a new campaign that will engage a wide variety of IT companies involved with data storage, social media and telecommunications, as well as at device producers. Seventy-five percent of children trafficked or sold for sex are advertised online. Mobile devices have led to a dramatic increase in online child sex imagery—at least 50,000 new images are posted each year online and more than half of these are of children 10 years old or younger.
CHILD SEXUAL EXPLOITATION ONLINE—A GROWING RISK FOR THE TECHNOLOGY SECTOR
Tracey C. Rembert
Director of Catholic Responsible Investing, Christian Brothers Investment Services, Inc. (CBIS)
While Information and Communications Technology (ICT) companies are now widely-held components of many investor portfolios, they are also at the center of an escalating trend in children being sexually exploited and abused online. The technology used in sex crimes against children is ubiquitous, from smartphones to gaming consoles, and through various apps, text messaging, social media sites, cloud storage, and more. And yet, ICT companies rarely disclose how they are combating these growing risks, from identifying and blocking child sex images, to investing in new solutions to stay ahead of the abusers.
Trucking: The Presbyterian Church (USA) has withdrawn a proposal to Hub Group that asks it to report “on the implementation of a program to address human trafficking internally and in its supply chain.” The withdrawal came after discussions with the company and Truckers Against Trafficking. The supporting statement suggested the report include a policy statement, overview of company education and training efforts, plans for customer communications, information for trucker contacts at its destinations and publish an annual report.
Sugarcane supply chain: As You Sow has resubmitted a resolution to Monster Beverage, asking it to issue a report by November “containing the criteria and analytical methodology used to determine its conclusion of ‘minimal risk’ of slavery and human trafficking in its sugarcane supply chain.” The resolution earned 19.9 percent in 2018.
NorthStar Asset Management has withdrawn a resubmitted proposal at American Water Works given a technical problem. It asked for a report, “tracking our Company’s impacts and responses on the human right to water and sanitation.” It raised general questions but also a specific concern about its operations in West Virginia and California. A similar proposal earned 13.7 percent in 2018.
At Chevron, the Sisters of St. Francis of Philadelphia is asking for a report “on the company’s due diligence process to identify and address risks related to the Human Right to Water throughout its operations.” It says the report should:
Outline the human right to water impacts of Chevron’s business activities, including company-owned operations and value chain;
Explain the types and extent of stakeholder consultation; and
Address Chevron’s plans to track effectiveness of measures to assess, prevent, mitigate, and remedy adverse impacts on the human right to water.
At Amazon.com, the Nathan Cummings Foundation wants a
report on its efforts to address hate speech and the sale of offensive products throughout its businesses. The report should...discuss Amazon’s process to develop policies to address hate speech and offensive products, the experts and stakeholders it consulted while developing these policies and the enforcement mechanisms it has put in place, or intends to put in place, to ensure compliance.
In the resolution, Nathan Cummings points out an increase in hate crimes and observes, “some have suggested that online hate speech, which Merriam-Webster defines as speech expressing hatred of a particular group of people, can help weaken inhibitions against harmful acts.” The company’s policy is not to offer products that “promote, incite or glorify hatred, violence, racial, sexual or religious intolerance or promote organizations with such views,” but the resolution asserts it is inconsistently applied and that a July 2018 report found “racist, lslamophobic, homophobic and anti-Semitic items on Amazon’s platforms.” It concludes the company may damage its reputation and “relationships with key stakeholders including customers, regulators and employees.”
(Additional resolutions related to hate speech are in Media section, below.)
Investors continue to file shareholder resolutions that mirror the public debate about the negative influence of electronic media on public and private discourse and behavior—and the related risks to companies. As in 2018, resolutions concern hate speech and the Internet as well as privacy and cybersecurity.
Content management: Arjuna Capital has returned to the three big social media companies— Alphabet, Facebook and Twitter—with a resolution similar to last year’s on problematic content, issues it raised first two years ago. It has been joined in its critiques of the media firms by leading pension fund NYSCRF and the Illinois Treasurer’s Office, as well as Harrington Investments.
At Alphabet, the proposal is a resubmitted request for a report “on major global content management controversies (including election interference)... reviewing the efficacy of governance, oversight and policies on content disseminated on its platform and assessing the magnitude of any risks posed to the company’s finances, operations, and reputation.” The resolution earned 12.8 percent in 2018, a high vote where the founders control a large swathe of the stock.
The resolution notes concerns about Russian interference in U.S. elections and concludes the company’s response has been “insufficient” and puts long-term value at risk. The proposal reiterates the concept of the company as an “information fiduciary” and says Alphabet must “demonstrate how it responsibly manages content on its platform.” The proposal suggests the scrutiny in Congress and elsewhere may prompt the regulation of tech companies as public utilities.
At Facebook, the resolved clause is the same. Last year it earned 10.3 percent, after a much lower vote of 0.8 percent in 2017. It points out a $100 billion decline in Facebook’s market capitalization after news broke in March 2018 that personal data had been used by Cambridge Analytica, followed by another $100 billion decline after its July quarterly earnings call reported growing costs and declining revenue growth. Arjuna concludes these risks are being priced into the market but that the company’s “approach to content governance has proven ad hoc, ineffectual, and poses continued risk to shareholder value.” More than 40 percent of young Americans deleted the company’s app and even more now use it less frequently, it says.
The Facebook proposal urges consideration of the Santa Clara Principles about content moderation and transparency, which call for release of the following metrics:
Numbers (posts removed, accounts suspended)
Notices (of content removals, account suspensions)
Appeals (for users impacted by removals, suspensions)
FACEBOOK INVESTORS PRESS FOR CONTENT GOVERNANCE
Managing Partner, Arjuna Capital
News of Cambridge Analytica’s misappropriation of millions of Facebook users’ data preceded a decline in Facebook’s stock market capitalization of over $100 billion in March 2018. Another 100 billion plus decline in market value—a record-setting drop—came in July 2018 after Facebook’s quarterly earnings report reflected increasing costs and decreasing revenue growth.
Recent efforts to address these concerns are insufficient, in Arjuna’s view, and continue to raise fundamental concerns about “democracy, human rights, and freedom of expression”—involving violence against the Rohingya and refugees in Germany, as well as racist or sexist posts.
A slightly different list of concerns is in the Twitter proposal, which last year earned 35.7 percent support. The resolution seeks a report “reviewing the efficacy of its enforcement of its terms of service related to content policies and assessing the risks posed by content management controversies (including election interference, fake news, hate speech and sexual harassment) to the company’s finances, operations and reputation.” The Twitter proposal presents concerns similar to those in the other two proposals, about management of the platform and Russian interference in U.S. elections and misinformation, as well as “hate speech that can threaten marginalized groups and undermine our democracy.” The resolution criticizes Twitter’s reported use in 2017 of racist and sexist words for ad targeting, and expresses concern about fake user accounts and tweets from bots. The supporting statement says the requested report should “include assessment of the scope of platform abuses, impacts on free speech, and address related ethical concerns.”
Network access: Harrington Investments filed and then withdrew a proposal to Verizon Communications about alleged “throttling” of its network during the 2018 California wildfires. The proposal sought a report
with a summary analysis on whether our Company “throttled” service during the 2018 Mendocino Complex Fire and other similar 2018 fire events, the Company’s assessment of whether any such throttling interfered with fire safety personnel’s ability to function effectively in emergency firefighting activities, and any measures the Company is taking to prevent similar actions in the future to reduce the risk to our Company’s reputation and corporate responsibility profile.
Harrington noted in its withdrawal the company’s review of its services during the wildfires. Verizon also had challenged the proposal at the SEC, arguing it related to ordinary business since it addressed products and pricing and customer relations. The challenge described a board review of company service during the fires and the company’s plan to prevent future similar problems.
Privacy: One more new resolution takes up additional concerns about privacy at Amazon.com. The Sisters of St. Joseph of Brentwood want the company to “prohibit sales of facial recognition technology to government agencies unless the Board concludes, after an evaluation using independent evidence, that the technology does not cause or contribute to actual or potential violations of civil and human rights.” The proposal says privacy and civil liberties risks associated with the company’s Rekognition facial analysis application justify the report. The company has challenged it at the SEC, arguing it is not significantly related to its business and is ordinary business. Critics contend that the Rekognition program can enable surveillance that may violate human rights and target minority groups. The proponents point out that Amazon Web Services provide cloud computing services to the U.S. Immigration and Customs Enforcement agency and may be marketing Rekognition to ICE, “despite concerns Rekognition could facilitate immigrant surveillance and racial profiling.” The supporting statement says the company should assess:
The extent to which such technology may endanger or violate privacy or civil rights, and disproportionately impact people of color, immigrants, and activists, and how Amazon would mitigate these risks.
The extent to which such technologies may be marketed and sold to repressive governments, identified by the United States Department of State Country Reports on Human Rights Practices.
(Also see p. 53 for proposal at Northrop Grumman on its human rights policy and biometric identification.)