Northwest Coalition for Responsible Investment Annual Report 2021

ANNUAL REPORT 2021

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NWCRI - A PROGRAM OF THE INTERCOMMUNITY PEACE & JUSTICE CENTER

Northwest Coalition for Responsible Investment

NWCRI Members brought 12 justice issues to the boardrooms of 48 corporations, filed 31 shareholder resolutions and participated in over 50 dialogues.  On

11 February 1990 Mandela made his first public speech, after 27 years in jail, to a crowd of 100,000. Photo: southafrica-info.com

“Never doubt that a small group of thoughtful, committed, citizens can change the world.

Indeed, it is the only thing that ever has.”

FIFTY YEARS AGO a few faithbased investors believed that they could end apartheid, a system of institutionalized racial segregation, in South Africa. They began by drafting and filing a shareholder proposal on behalf of the Episcopal Church at General Motors requesting the Company to withdraw its business from South Africa. By 1990 more than 200 US companies had left the country, and on May 9, 1994 Nelson Mandela, the anti-apartheid activist imprisoned for 27 years, was elected the president of South Africa. Thus was born the Interfaith Center on Corporate Responsibility (ICCR) and the shareholder advocacy movement.1 This year the Northwest Coalition for Responsible Investment, a member of ICCR for 27 years, in collaboration with over 300 faith-and 1

www.iccr.org/about-iccr/history-iccr

—MARGARET MEAD

values-based investors called on fossil fuel companies and banks to address the climate crisis. While applauding the promise of vaccines to end the COVID-19 pandemic, we advocated with pharmaceutical companies to account for the public investment in their vaccines and therapies. We joined the World Health Organization in warning of the risk of “vaccine apartheid”—global inequities in COVID-19 vaccine production and distribution.

From the beginning, human rights has been the North Star of ICCR members. In this shareholder season we went to corporate boardrooms with issues of worker pay and safety, the impact of company policies and practices on racial equity, and the responsibility of firearm manufacturers to address the potential adverse human rights impacts of their products.

In its twenty-seventh year Northwest Coalition for Responsible Investment (NWCRI) members brought 12 justice issues to the boardrooms of 48 corporations, filed 31 shareholder resolutions and participated in over 50 dialogues. This 2021 Annual Report gives an account of how we have called for corporate action on issues of social and environmental justice.

As we pause to reflect on the impact of the shareholder advocacy movement over fifty years, we consider how we have been “Inspired

by Faith, Committed to Action” to change the world. We invite you to join us in celebrating 50 Years of ICCR 2 Member Impact .

“ To leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition; To know even one life has breathed easier because you have lived; This is to have succeeded.”

—RALPH WALDO EMERSON 2

https://www.iccr.org/

Environment How Will We Impact the Future of Our Climate?

THIS SUMMER the Intergovernmental Panel on Climate Change (IPCC), the international body for assessing the science related to climate change, released the first part of the Sixth Assessment Report, Climate Change 2021: The Physical Science Basis. The sobering news is undisputed: Earth’s climate is changing and almost 100% of scientists say that humans are responsible for global warming when we burn fossil fuels, raise livestock, and cut down forests, all of which increase the amount of heat-trapping gases in the atmosphere.

The encouraging news in the Sixth Assessment Report is that since CO2 is the main driver of climate change, human actions have the potential to impact the future of our climate. Panmao Zhai of the IPCC Working Group said, “Stabilizing the climate will require strong, rapid, and sustained reductions in greenhouse gas emissions, and 1 reaching net zero CO2 emissions.”

 Climate March, 29 April 2017 Photo © Edward Kimmel from Takoma Park, MD

to limiting global warming to 1.5 degrees. It is urgent, therefore, that decision makers act like 2021 to 2030 is our last chance to recognize climate change as the single greatest threat to our future and do the work necessary to save our planet.

Letter to World Leaders

COP26: World’s Last Best Chance to Address Climate Change?

IN GLASGOW from October 31 to November 12, over 190 world leaders will meet for the 26th UN Climate Change Conference of the Parties (COP26) in what may be the world’s last best chance to effectively address climate change. For nearly three decades the UN has been holding global climate summits and as we anticipate COP26 we look back at the commitments made at COP21 in 2015 where the Paris Agreement was born: every country agreed to work together to limit global warming to well below 2 degrees Celsius and aim for 1.5 degrees; to adapt to the impacts of a changing climate; to make money available to deliver on these goals; and to come back every five years with an updated plan.

When countries update their plans for reducing emissions (delayed for a year by the pandemic), we will learn that the commitments laid out in Paris do not come close

NWCRI IS A SIGNATORY to the 2021 Global Investor Statement to Governments on the Climate Crisis. Ahead of COP26, the Statement, which was supported by 587 investors managing over US$46 trillion in assets, was delivered to heads of state. Acknowledging that investors and governments each have a responsibility to act swiftly and boldly, the 5-point ask begins with calling on governments to:

“Strengthen their NDCs (nationally determined contributions) for 2030 before COP26 to align with limiting warming to 1.5 degrees Celsius, and ensuring a planned transition to net-zero emissions by 2050 or sooner.” 2

2 1

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https://www.bbc.com/news/science-environment-58130705

NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

https://theinvestoragenda.org/wp-content/uploads/2021/09/2021-GlobalInvestor-Statement-to-Governments-on-the-Climate-Crisis.pdf

Shareholders Take Action ON MARCH 24, 1989 the Exxon Valdez spilled 11 million gallons of crude oil into the Prince William Sound in Alaska. This second largest oil spill in US waters, which is considered the worst oil spill in the world in terms of damage to the environment, led to shareholders pressuring ExxonMobil to name an environmentalist to the Company’s board.

Then, after 189 shareholder resolutions from ICCR members over the years, at the Exxon Annual Meeting on May 26,  Woman working in the farms which are being irrigated by using Solar Powered Irrigation System 2021, a little hedge fund, Engine No.1, gave in India. Photo © Ayush Manik, March 27, 2019 investors the opportunity to tell the Company that we have run out of patience with the critical pathway. We underscore that a net-zero commitCompany’s resistance to climate solutions. Shareholders ment is only the beginning of this important process. We shocked Exxon by electing three new members of the will be looking to Wells Fargo to fill in the details of its Company’s 12-member Board. The agenda of these direcclimate plans by setting interim targets and transparently tors is to transition this oil and gas company to an energy reporting progress toward those goals.” company which includes setting a net-zero emissions strategy by 2050, investments in clean energy systems and Regenerative Agriculture to transparency, and disclosure of its lobbying on climate Sustain Food System & Address change.

Climate Change NWCRI members co-filed a resolution requesting Exxon to issue a report describing how the Company’s lobbying AS ONE OF THE TOP THREE CONTRIBUTORS activities align with the goal of limiting average global to greenhouse gas emissions globally, agriculture has a warming to well below 2 degrees Celsius (Paris Agreement vital role to play in addressing the climate crisis.1 Food and goal), and to address the risks presented by misaligned beverage companies are making significant investments to lobbying and plans to mitigate these risks. A majority of support and accelerate the transition to regenerative agrishareholders—63.8%—supported the proposal. culture across their supply chains. This system of farming, which protects natural resources and restores farmland, increases the capacity of the soil to capture carbon, thus Climate Risks in reducing greenhouse gas emissions.

Financing Activities

AFTER DIALOGUE, shareholders withdrew our shareholder proposal requesting that Wells Fargo issue a report outlining if and how Wells Fargo intends to reduce the greenhouse gas emissions associated with its financing activities in alignment with the Paris Agreement’s 1.5-degree goal, requiring net zero emissions by 2050.

Six of the largest US banks—Wells Fargo, Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase and Morgan Stanley—have now made a commitment to achieve net-zero greenhouse gas emissions for their financing activities.

Danielle Fugere, president of As You Sow and lead filer of the resolution which NWCRI co-filed said, “We look forward to seeing Wells Fargo take the next steps on this

ggNestlé announced a $1.29 billion investment over five

years to work with its network of more than 500,000 farmers and 150,000 suppliers to accelerate the transition to regenerative agriculture.

ggGeneral Mills committed to using regenerative

agriculture methods on one million acres of farmland growing oats, wheat, corn, dairy feed and sugar beets by 2030.

ggPepsiCo, the soda and snacks giant, will restore about

seven million acres of farmland—the equivalent of how much land it uses to grow ingredients for its products—through regenerative agriculture by 2030.

https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data

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ANNUAL REPORT III

Human Rights  “Thoughts

Smith & Wesson: Hear the Cries for Solutions to Gun Violence IN HIS BOOK, It’s How We Play The Game: Build a Business, Take a Stand. Make a Difference, Dick’s Sporting Goods CEO Ed Stack tells the story of his family business and why Dick’s took a public stance and action on gun sales. He recounts how he responded to the news of the school shooting in Parkland, FL on Valentine’s Day 2018 by thinking, “Not again.” Then, he began taking action to eventually stop selling firearms, focusing on sporting goods and supporting stricter gun control measures.

Five years ago NWCRI organized a Gun Safety Working Group at ICCR to move retailers and manufacturers of firearms to take a public stance and act to reduce gun violence. We engaged Dick’s prior to Parkland and encouraged the CEO in the steps the company was already taking with regard to gun sales.

Our work with firearm manufacturers continues. After majority votes at Smith & Wesson (formerly American Outdoor Brands) and Sturm Ruger in 2018, the companies produced the requested reports on gun safety and actions they were taking. The reports were disappointing and indicated that the companies were not willing to take accountability for how their products are misused or willing to engage with shareholders.

In 2019 and subsequent years we filed resolutions requesting Smith and Wesson to adopt a human rights policy which includes a due diligence process to assess, prevent and mitigate actual and potential human rights impacts of firearms sold to civilians. For example, the company could equip its firearms with technology that prevents IV NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

and Prayers Don't Save Lives”, student lie-in at the White House to protest gun laws. The demonstration was organized by Teens For Gun Reform, an organization created by students in the Washington DC area, in the wake of Wednesday’s shooting at Marjory Stoneman Douglas High School in Parkland, Florida. Photo © Lorie Shaull

unauthorized users from firing the weapon. Thirty-six percent of shareholders supported the resolution in 2019.

Last year we withdrew our resolution after Smith & Wesson agreed to dialogue. Disappointingly, we could not agree to the company’s conditions for dialogue.

Led by NWCRI and 14 co-filers, the resolution was refiled in 2021. At the annual meeting, we said to shareholders:

“As a leading firearms manufacturer we genuinely believe Smith & Wesson has the knowledge and the expertise to engineer the solutions we need to reduce gun violence and save lives… A human rights policy would help Smith & Wesson demonstrate that it is neither tone deaf or callous to the cries for change and for the solutions to gun violence we so desperately need.”

Forty-four percent of investors agreed with us!

Align Racial Justice Commitments with Starting Pay OVER THE PAST THIRTY YEARS ICCR shareholders have filed 71 resolutions with Walmart and participated in 100s of dialogues designed to make the Company’s slogan, “Save Money. Live Better,” a reality for its associates as well as its customers and the planet. An assessment of our engagement leads us to conclude that we have encouraged Walmart to be a responsible retailer with dialogue as “a means for building consensus and agreement while seeking the goal of a just, responsive 1 and inclusive society,” as Pope Francis calls us to do.

When dialogue did not result in an agreement on a starting wage between Walmart and shareholders, ICCR and NWCRI members filed a shareholder resolution requesting a report on whether and how the Company’s racial justice goals and commitments align with starting pay for all classifications of associates. We are asking the Company to increase its starting wage now to $15/hour for all associates in the U.S. with a timeline to increase to $20/hour.

Our rationale includes ggWalmart’s success as the top U.S. retailer by revenue

from 2017-2020

ggWealth disparity in the midst of COVID-19 and

racial injustice

ggCatholic Social Teaching on the dignity of work and

the rights of workers

ggAs the country’s largest private employer with

around 1.6 million U.S. workers, Walmart is navigating a tight labor market and its peers have implemented a minimum $15/hour starting wage

We commend Walmart for the wage increases that were implemented in 2020 and early 2021 to bring half of U.S. hourly associates to an average starting wage of at least $15/ hour and bonuses that have been given throughout the 2 pandemic. However, an average wage does not guarantee a starting wage and wages, unlike bonuses, are predictable.

The Starting Wage & Racial Equity shareholder proposal received 12.5% of the vote, which is about 32% of the independent vote. For shareholders, raising starting wages for associates is one of the most effective ways to address racial and economic inequities.

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Evangelii Gaudium, 239 https://corporate.walmart.com/esgreport/media-library/document/ walmart-2021-esg-annual-summary/_proxyDocument?id=0000017a82c5-d7dc-ad7a-bac574130000

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Photo: Amazon warehouse © Scott Lewis

‘Earth’s Most Equal Company’ AMAZON IS THE “NEW KID ON THE BLOCK” when it comes to shareholder engagement. One of the first shareholder resolutions filed with the company was in 2012 and addressed the impact of climate change by the company. Fast forward to 2021, the company has received over 50 shareholder proposals on environmental, social and governance issues. The Company’s appetite for dialogue is growing but not yet keeping up with shareholders’ preferred engagement strategy.

This year NWCRI co-filed a shareholder resolution with the New York State Common Retirement Fund requesting the Company to commission a Civil Rights, Equity, Diversity and Inclusion Audit. The Company challenged the resolution at the Securities and Exchange Commission who decided in favor of shareholders.

The resolution was moved at the Company’s Annual Meeting by a worker who lived through Amazon’s anti-union campaign at the Worker Fulfillment Center in Bessemer, Alabama. He called on Amazon to conduct an independent assessment led by auditors who are experienced in rooting out biases and discrimination and to report the findings to investors and stakeholders. He concluded with his hope for the Company: “In the ethos of Mr. Bezos, Amazon should strive to be the ‘Earth’s Most Equal Company,’ and ensure an equitable and nondiscriminatory experience for all of its employees, customers and stakeholders.”

Forty-four percent of shareholders supported the resolution. A similar resolution filed with Johnson & Johnson received a vote of 34%.

ANNUAL REPORT

V

Health Equity Call for a People’s Vaccine for COVID-19 Prior to the May 2020 meeting of the World Health Assembly, the decision-making body of the World Health Organization, more than 140 world leaders, experts and elders, made an unprecedented call for guarantees that COVID-19 vaccines, diagnostics, tests and treatments will be provided free of charge to everyone, everywhere.1 This became the agenda of investors during the 2021 shareholder season as we engaged pharmaceutical companies with letters, shareholder resolutions and in dialogue.

Investor Letter to President Biden

NWCRI AND ICCR MEMBERS were signatories to a letter to President Biden from hundreds of faith-based, labor, consumer, and civil society groups urging him to support an emergency COVID-19 waiver of World Trade Organization intellectual property rules, so that vaccines, treatments, and diagnostic tests can be produced in as many places as possible as quickly as possible.  Hailed as a miracle worker, Salk never patented the polio We wrote that we have a vaccine or earned any money from his discovery, preferring moral obligation to share with it be distributed as widely as possible.

Photo: loonylabs.org/2014/08/21/salk-polio-return/ the global community the Shareholders Press technology behind the vaccines that US. taxpayers and Pharma Companies to Prioritize Access citizens of other countries have invested in, to hasten the AS PART OF A BROAD, long-term initiative to promote day of global immunity to COVID-19. improved access and affordability of COVID-19 products, The unprecedented drive for vaccine development, faith based shareholders sent letters to 17 pharmaceutical through large subsidies for research and development to companies calling on companies to be accountable and drug companies and pre-orders of vaccines, led to the ensure that they exercise prudence in price-setting for these development and distribution of COVID-19 vaccines in an life-saving medicines. unparalleled short timeframe in rich countries. However, we In 2021, shareholders filed proposals at six pharmaceuare experiencing inequities of COVID-19 vaccine productical companies requesting reports detailing “whether and tion and distribution in low-and middle-income countries. how [the company’s] receipt of public financial support for Less than 1% of people in low-income countries are fully the development and manufacture of preventives and/or vaccinated, 10% in lower-middle-income countries, and therapeutics for COVID-19 is being, or will be, taken into more than half in high-income countries.2 account when making decisions that affect access to such products, such as setting prices.”

Shareholders continue to call for:

NWCRI members filed five resolutions Johnson & Johnson vote 32% Merck vote 33% Pfizer vote 28% Gilead Sciences withdrawn for agreement of increased disclosure Eli Lilly—Securities and Exchange Commission ruled resolution could be omitted 1

https://www.unaids.org/en/resources/presscentre/ pressreleaseandstatementarchive/2020/may/20200514_covid19-vaccine

VI NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

ggA mandatory worldwide pooling of patents and

sharing of all COVID-19-related technologies.

ggAn equitable global manufacturing and distribution

plan for all vaccines, treatments and tests, including increasing manufacturing capacity to produce the vaccines and training millions of health workers to distribute them.

ggA guarantee that COVID-19 vaccines, treatments,

and tests are provided free of charge to everyone, everywhere.

2

https://www.nature.com/articles/d41586-021-02383-z

2020-2021 NWCRI Shareholder Activities

NWCRI members brought 12 justice issues to the boardrooms of 48 corporations, filed 31 shareholder resolutions and participated in over 50 dialogues.

C O M PA N Y

ISSUE

AC T I O N

AbbVie AbbVie Alphabet Alphabet Altria Group* Amazon Amazon* Bank of America Bristol-Myers Squibb Bristol-Myers Squibb Campbell Soup Caterpillar Chevron Coca-Cola Comcast* CoreCivic CVS Health* Dine Brands Global* Disney Dollar General Dollar Tree Duke Energy* Eli Lilly Eli Lilly ExxonMobil Facebook Facebook FedEx Freeport McMoRan General Mills GEO Group Gilead Sciences Hershey Johnson & Johnson Johnson & Johnson Johnson & Johnson JP Morgan Chase* Kraft Heinz Kroger Lockheed Martin* Mastercard McDonald’s* Merck Merck Newmont Mining Northrop Grumman* PepsiCo Pfizer Pfizer Phillips 66 Sanofi Smith & Wesson Tyson Foods UPS Visa Walgreens Boots Alliance* Walmart Walmart Walmart Wells Fargo

Executive Compensation & Drug Pricing Risks Global Health Child Sexual Exploitation Online Government-Mandated Removal Requests Discourage Nicotine Use Among Youth Civil Rights, Equity, Diversity & Inclusion Audit Facial Recognition Software-Customer Due Diligence Funding Drilling in Arctic National Wildlife Refuge Independent Board Chair Global Health Food Equity & Racial Justice/Water Business in Conflict-Affected Areas Environmental Justice & Racial Equity Analysis Food Equity & Racial Justice Lobbying Expenditures Disclosure Human Rights Due Diligence Paid Sick Leave Benefit Food Waste Lobbying Expenditures Disclosure – Climate Change Gun Violence Reduction Gun Violence Reduction Paris-Aligned Climate Lobbying Access to COVIC-19 Products Global Health Paris-Aligned Climate Lobbying Child Sexual Exploitation Online Independent Board Chair Shipping Ghost Guns Human Rights Food Equity & Racial Justice Human Rights Due Diligence Access to COVID-19 Products Child Labor Civil Rights Audit Access to COVIC-19 Products Global Health Measure & Disclose Financed GHG Emissions Human Rights Impact Assessment Human Rights Due Diligence Human Rights Due Diligence Financing Ghost Guns Paid Sick Leave Benefit Access to COVIC-19 Products Global Health Human Rights Supplier Standards Human Rights Impact Assessment Food Equity & Racial Justice/Pesticides Access to COVID-19 Products Global Health Paris-Aligned Climate Lobbying Public Investment in COVID-19 Products Develop a Human Rights Policy Human Rights Due Diligence Shipping Ghost Guns Financing Ghost Guns Health Risks of Tobacco Sales Starting Pay & Racial Equity Wages & Benefits for Employees Human Rights Due Diligence in Supply Chain Financing Activities Aligned with Paris Agreement

Resolution - Agreement Dialogue Dialogue Resolution 13% Resolution 36% Resolution 44% Resolution 35% Resolution - Agreement Resolution 44% Dialogue Dialogue Letter Omitted by SEC Letter Resolution - Agreement Dialogue Resolution Omitted Resolution - Agreement Resolution 33% Dialogue Dialogue Resolution Agreement Resolution Omitted Dialogue Resolution 64% Dialogue Resolution 16% Dialogue Dialogue Dialogue Dialogue Resolution Agreement Dialogue Resolution 34% Resolution 32% Dialogue Resolution Agreement Resolution Agreement Resolution Agreement Resolution 32% Dialogue Omitted @ SEC Resolution 33% Dialogue Dialogue Resolution 22% Dialogue Resolution 28% Dialogue Resolution 62% Letter Resolution 44% Resolution 18% Dialogue Dialogue Resolution 12% Resolution 13% Dialogue Dialogue Resolution Agreement

*Resolutions filed by the Sisters of St. Francis of Philadelphia

ANNUAL REPORT VII

“An economic system that is fair, trustworthy, and capable of addressing the most profound challenges facing humanity and our planet is urgently needed.”

—POPE FRANCIS

The Impact Continues ggDuring the 2021 Proxy Season, ICCR members filed 297 resolutions at

200 companies on a range of issues, with 113 withdrawn for agreement.

The majority of these agreements focused on climate (37) followed by racial justice (21) issues, which comprised the largest number of member filings this year.

ggBank of America, at the urging of shareholders, became the last large

U.S. bank to announce that it would not provide financing for petroleum exploration or production activities in the Arctic.

ggAfter 98% of General Electric shareholders supported a resolution

requesting GE’s plans on how it will achieve net zero greenhouse gas emissions across its operations and product lines by 2050, GE announced a major commitment to do just that. The resolution was supported by GE’s board.

ggFor 23 years, shareholders have held votes on whether Home Depot

should disclose its Equal Employment Opportunity (EEO) data. Led by the Benedictine Sisters of Boerne, TX, Home Depot finally released its first EEO-1 Report in 2021.

ggAt the urging of NWCRI and over 300 organizations, Pfizer ceased its

involvement with the American Legislative Exchange Council (ALEC) over its role in drafting voter suppression bills in multiple states this year. At least 120 corporations have severed ties with ALEC in the last decade over its backing of controversial “Stand Your Ground” and voter ID laws, ties to extremists, and its radical climate denial stance.

Members Adrian Dominican Sisters Benedictine Sisters Cottonwood, Idaho Benedictine Sisters of Mt. Angel Congrégation des Soeurs des Saints, Noms de Jésus et de Marie Congregation of the Sisters of St. Joseph of Peace Jesuits West Northwest Women Religious Investment Trust PeaceHealth Providence St. Joseph Health Sisters of Providence, Mother Joseph Province Sisters of St. Francis of Philadelphia Sisters of St. Mary of Oregon Sisters of the Holy Names of Jesus & Mary, U.S.-Ontario Province Tacoma Dominicans

NWCRI A program of the Intercommunity Peace & Justice Center, NWCRI is a member of the Interfaith Center on Corporate Responsibility, a national coalition of over 300 faith-based investors who are Inspired

by Faith, Committed to Action.

These highlights summarize the work that NWCRI has done in collaboration with ICCR during the past year.

Judy Byron, OP Director, NWCRI

ggICCR members wrote 21 food and beverage, restaurant, and retail

brands seeking information on how their policies and practices may reinforce systemic racism through the development and marketing of their product offerings. Companies included Campbell’s Soup, CocaCola, General Mills, Kraft Heinz and Kroger.

ggIn June 2021, ICCR and its allies filed a lawsuit in federal district court

challenging the Securities and Exchange Commission rule changes that would significantly curb the filing of shareholder proposals.

Investors hope that the issue will be resolved in the spring of 2022.

Intercommunity Peace & Justice Center

1216 NE 65th St, Seattle, WA 98115 206.223.1138 | ipjc@ipjc.org | ipjc.org