Shareholders Join Together to Fight Opioid Crisis
In 2016, drug overdoses killed more Americans than guns or car accidents and are doing so faster than HIV at the peak of its epidemic. Overdoses are merely the most visible and easily counted symptom of the opioid problem affecting more than two million Americans. More than 97 million people took prescription painkillers in 2015; of these, 12 million did so without being directed by a doctor. Opioid abuse is taxing families, communities and healthcare facilities throughout the United States.
Recognizing the increased impact of the opioid epidemic on individuals, communities and businesses, shareholders are taking action with the companies they own. To amplify the power of shareholders’ voices, Mercy Investment Services and UAW Retirees Medical Benefits Trust established Investors for Opioid Accountability (IOA) in July 2017. The IOA is meant to address heightened concerns that business risks from opioid abuse that may threaten shareholder value and have profound long-term implications for the economy and society. The IOA, which includes a broad collaboration of state treasurers, asset managers, faith-based investors, public and labor funds, has grown to 44 investors with more than $2.2 trillion in assets under management. Members have filed 21 shareholder proposals on board oversight of business risks related to opioids in three sectors:
Opioid manufacturers about their corporate policies on the marketing of drugs that lead to addiction and how the company should take responsibility for these practices.
Opioid distributors about taking responsibility for their distribution of opioids and drugs that lead to addiction.
Antidote or treatment manufacturers to press them to offer affordable pricing of their products as they lobby for expanded access to these drugs.
The IOA is asking the companies’ boards of directors to investigate their response to increasing business and reputational risks related to opioids. The IOA believes that companies must implement good corporate governance practices that traditionally have served as risk mitigators, and that strengthened independent board leadership and compensation policies will increase board accountability and deter misconduct.
Already, the IOA has made a difference. The first resolution to go to vote asked Cardinal Health to create an independent chair, since the IOA believes this will foster better oversight of company practices related to opioid risks. The resolution earned 36 percent shareholder support and the company announced it will separate the chair and CEO positions.
The Securities and Exchange Commission has rejected company challenges to two resolutions so far this year—one filed at opioid distributor AmerisourceBergen calling for a board report on risks related to their distribution business and one filed at Johnson & Johnson calling on the company to stop excluding legal and compliance costs from calculations used to determine executive pay awards.
As the opioid epidemic continues to affect families and communities, business must actively work to reduce their role in this crisis. Members of the IOA remain committed to using their voices as shareholders in companies and as stakeholders in affected communities to advocate that businesses must do their part to stem the growing tide of opioid use.
Donna Meyer, Ph.D.
Director, Shareholder Advocacy, Mercy Investment Services