Northwest Coalition for Responsible Investment Annual Report 2023

Northwest Coalition for Responsible Investment Annual Report 2023 | NWCRI - A program of the Intercommunity Peace & Justice Center

We Still Have A Dream

Over 50 years ago, a small group of faith-based investors dreamed that they could end apartheid in South Africa. In 1971 they filed the first religious shareholder proposal which requested General Motors to stop doing business in South Africa until apartheid was ended. Thus began a multi-year anti-apartheid campaign that resulted in over 200 U.S. companies withdrawing from South Africa, damaging the country’s economy significantly. In the 1994 elections, citizens of all races elected President Nelson Mandela.

Today Northwest Coalition for Responsible Investment (NWCRI) members and our colleagues at the Interfaith Center on Corporate Responsibility (ICCR), beneficiaries of over 50 years of impactful shareholder advocacy, continue to dream and work to achieve: ❖ An equitable transition to clean energy ❖ Justice for workers, including the right to a living

wage, to organize, and to have a voice in corporate decision-making

❖ Safe communities free from gun violence ❖ Accessible and affordable health care for all ❖ Technology and artificial intelligence used for the

common good of all of Creation

Today we are facing challenging and dire circumstances.

Anti-ESG forces are questioning and attacking our motives and shareholder advocacy work. In addition, the world has experienced the hottest summer on record; the National Center for Missing and Exploited Children’s Cyber Tipline received over 31 million reports regarding child sexual exploitation or online harm to children; and pharma companies filed lawsuits to block the U.S. government from negotiating fair drug prices for seniors. ©unseen histories, upsplash

SIXTY YEARS AGO Dr. Martin Luther King, Jr. stood before a crowd of more than 250,000 gathered at the Lincoln Memorial for the March on Washington for Jobs and Freedom and shared his dream, “that one day this nation will rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident, that all men [sic] are created equal.’”

When reflecting on where we made a difference in the 2023 proxy season, I recall an important lesson I learned from Allison. In 1991, five of our women’s religious communities founded Mercy Housing Northwest with the dream that we could end homelessness. Fast forward to 2017 when we were dedicating Othello Mercy Plaza, a property with 108 units of affordable housing and over 2000 applicants. We held a lottery to select residents. In my remarks that day I recalled how we dreamed that we could end homelessness, and sadly the number of people who were homeless in our communities was escalating.

When Allison, who had secured an apartment, stood at the podium to speak she looked at me and said, “You did end homelessness, you ended it for me!”

In this 29th Annual Report, we share how our NWCRI members and ICCR colleagues have made a difference this year for the Allisons of the world. With Dr. King we affirm that “even though we face the difficulties of today and tomorrow, [we] still have a dream.”

INSPIRED BY FAITH, COMMITTED TO ACTION NWCRI is a member of ICCR, a coalition of faith-and values-based investors who are “inspired by faith, committed to action” to build a just and sustainable world. Each year we engage hundreds of corporations with letters, dialogues, and shareholder proposals to bring important environmental, social, and governance (ESG) issues to the attention of management, boards, and shareholders.

BY THE NUMBERS ICCR 2023 Proxy Season

123 Climate Change

53 24 19

Legislation directed at investors who have made climate commitments has been introduced in 37 states and bills have been introduced in Congress to curtail social and environmental investment and the regulatory powers of the Securities and Exchange Commission (SEC) to allow for greater disclosure of ESG information.2 In response ICCR has formed a coalition of investors who share our commitment to clean energy, human rights, and health equity to counter these anti-ESG efforts. We plan to continue doing what we have done for decades, letting our faith inspire us to work for a world where all can thrive.

84 Human & Worker Rights Human Rights & W

39

Lobbying/ Political Spending Environment

ICCR Board Chair, Rob Fohr of The Presbyterian Health Human 50 Rights & Worker Justice Church U.S.A., says of our impact, “After years Food ICCR remains the foremost moral voice within the investor community…A sign of our growing Finance success—both as ICCR and as a movement—is that 0 30 we have ‘awoken the sleeping giant.’” 1 While investors and companies consider management of ESG risks as fundamental to the long-term sustainability of our economy, societies and planet, an anti-ESG movement of some politicians and state treasurers are campaigning against what they call “woke capitalism.”

6 6

99 Equity & Inclusion

Corporate Governance

Health Equity & Inclusion Climate Change

60

90

120

150 Environment

NUMBER OF RESOLUTIONS

NWCRI 2023 Proxy Season Environment

22 Human &Worker Rights

12

Climate Change

6

Equity & Inclusion

10 Health NUMBER OF RESOLUTIONS

HIGHLIGHTS ❖ Number of proposals filed in 2023—454 proposals ❖ Agreements with companies—122 proposals;

majority on climate issues (37) and racial justice/ diversity, equity, and inclusion (40)

NWCRI Members Supported 45 Investor Statements & Letters Health

❖ Shareholders won a majority of SEC challenges with

9

only 11 omissions

❖ 7 resolutions won majority support ❖ Dollar General resolution received the

highest-ever vote for a Workplace Health Safety audit—67.7%

❖ Lower support for proposals partly due to

anti-ESG backlash

1 2

II

https://shorturl.at/tGQU9 https://shorturl.at/cDLNY NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

Human & Worker Rights

20 16 Climate & Environment

NUMBER OF STATEMENTS & LETTERS

HEALTH EQUITY Moment of Hope: Sustainable Development Goals (SDGs)

The 2030 Agenda for Sustainable Development, adopted by all UN Member States in 2015, is a call to action to end poverty and inequality, protect the planet, and ensure that all people enjoy health, justice, and prosperity. Halfway to the deadline for the 2030 Agenda, António Guterres, Secretary-General of the UN, warns that we are at risk of leaving half of the world behind. Progress on the SDGs is being impacted by this “age of polycrisis,” conflict, climate change, the COVID-19 pandemic, and other global challenges, says the “The Sustainable Development Goals Report 2023.” Anticipating the SDG Summit in September, Guterres said, “We are at a moment of truth and reckoning.

But together, we can make this a moment of hope.” 1

SDG 3: Good Health and Well-Being

NWCRI and ICCR members believe that health is a fundamental human right.

Universal Health Coverage (SDG Target 3.8), which includes access to quality essential health-care services and access to safe, effective, quality, and affordable essential medicines and vaccines for all, is critical for achieving that right.

Further, we believe that pharmaceutical companies have a responsibility to both address and prevent health inequities globally. We advocate for corporate and systemic reforms that will improve access and affordability of health care for all, especially for populations that are marginalized and disenfranchised.

Patent System Impacts Drug Prices

A 2019 poll by an independent source for health policy research, polling, and news, found that nearly 1 in 4 Americans report that it is difficult to afford their prescriptions. Among proposals for lowering drug costs, 88% said that it should be easier for generic drugs to come to market.2 What prevents affordable generic drugs from coming to market? “One reason,” says our colleague Lydia Kuykendal of Mercy Investment Services, “is the patenting practices of drug makers who seek not to innovate, but to monopolize the market to maximize profits.”

This year NWCRI and ICCR shareholders filed proposals with nine pharmaceutical companies requesting disclosure on the process they use to consider access and affordability when applying for additional patents on a product. Over one-third of AbbVie, Pfizer, and Johnson & Johnson shareholders supported the resolutions.

Sustainable Development Goals, United Nations

CASE STUDY

How a Drugmaker Profited by Slow-Walking a Promising HIV Therapy

The New York Times3 reported that in 2004, Gilead Sciences stopped pursuing a new HIV drug citing that it was not sufficiently different from the existing treatment. The rest of the story is found in internal documents made public in litigation, where it was revealed that Gilead decided to delay the new drug’s release to maximize profits, even though executives believed it might be safer for patients.

“There’s something profoundly wrong that happened here,” said Mr. Morten, an expert in pharmaceutical patent law at Columbia University. “The patent system actually encouraged Gilead to delay the development and launch of a new product.”

1

https://shorturl.at/txGZ2 https://shorturl.at/ilEGL 3 https://shorturl.at/eoRSZ 2

NWCRI ANNUAL REPORT 2023 III

ADVANCING WORKER JUSTICE Dollar General “Severe Violator” It might surprise you to learn that there are over 37,000 Dollar General and Dollar Tree stores in the U.S., which is more than McDonald’s, Starbucks and Walmart combined, and they plan to grow that number to 51,000 stores in future years. While this low-cost retail model supplies access to affordable products across the U.S., shareholders are concerned that it operates at the expense of its workforce.

...to win good jobs and a fair economy for all.

Investors engaged both companies in dialogue and filed shareholder resolutions calling for a third-party audit on worker health and safety.

The resolution at Dollar Tree was withdrawn when the Company committed to participating in meetings with proponents and to share their workplace violence and safety programs as they are developed and implemented. Investors will continue to encourage a third-party assessment, once the program is firmly in place.

The resolution at Dollar General survived the Company’s challenge at the SEC and passed with support from a majority of shareholders—68%! Mary Beth Gallagher, our colleague at Domini Impact Investors, responded to the vote saying, “We recognize from the majority vote that this is a high priority area for other investors, and they recognize that a company has a responsibility to keep its workers safe, provide a living wage, and respect other fundamental principles related to rights at work, such as freedom of association and collective bargaining.”1 After accumulating over $21 million in Occupational Safety and Health Administration (OSHA) fines since 2017, Dollar General was designated a “Severe Violator” in 2022. Violations included, “unsafe conditions that expose workers to the possibility of being struck by falling boxes of merchandise or trapped or unable to exit the store safely in an emergency in more than 180 inspections at Dollar General stores nationwide.”2 Shareholders expect Dollar General to conduct an independent audit of worker health and safety and include adequate engagement of workers and relevant stakeholders in the process.

1 2

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https://shorturl.at/bdh06 https://shorturl.at/bfkr2 NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

▲ Step Up Louisiana got commitments from Mayor Cantrell and the New Orleans City Council to adopt their Economic Justice 3-Point Platform. © Step Up Louisiana with permission

Step Up Louisiana

Investors are collaborating with Step Up Louisiana in our engagements with the dollar stores. Its mission is to “organize in workplaces and in neighborhoods to build the political power our families need to win good jobs and a fair economy for all.” With almost a thousand Dollar Stores in the State, their members provided us with stories and information directly from workers about understaffed stores, exceedingly low wages, and threats of violence. The Louisiana Dollar Store Workers United Safety Demands include designing stores with worker input on safety and full staffing.

EQUITABLE SUPPLY CHAINS Child Labor in the USA

Twenty-five years ago, NWCRI published, Sweatshops: If A Label Could Talk, a packet of education and action, to motivate people of faith to become involved in the issue of forced labor. At the time the focus was on the meager wages paid to apparel workers around the world by brand name companies. In the ensuing years we held companies responsible for the conditions in their global supply chains. Forced labor happened “over there” where children labored on cocoa farms, workers toiled in unsafe factories, individuals were enslaved to mine precious metals, and women were trafficked for sex.

This year, when The New York Times (NYT)1 and Reuters 2 reporting revealed that migrant children were spending the night packaging Cheerios, baking dinner rolls for Walmart, processing milk for Ben & Jerry’s ice cream, and making parts for Hyundai-Kia, we were faced with the reality that “over there” was also “here” in the USA. Last year 130,000 unaccompanied minors migrated to the U.S. The NYT reporter talked with 100 children in 20 states who attended school during the day and worked 12-hour shifts at night. The federal government knows they are here, and the Department of Health and Human Services is assigned to find sponsors for them and protect them from exploitation. The children are under pressure to send money back home and pay their debts and living expenses.

It is estimated that about two-thirds of the children end up working full time. NWCRI and ICCR members continue to hold companies accountable for forced and child labor.

Equitable Supply Chains Call for Human Rights Due Diligence

The companies implicated in the migrant child labor violations have human rights due diligence processes in place to prevent and detect such abuses but obviously they failed the children. In the case of Walmart and Sister Schubert’s Homemade Rolls, we learned that this is a national brand whose rolls are sold in nearly every grocery store. Both Walmart and the Company said they were unaware that children were working in the production of the rolls and that they would investigate.

Supply chains in the twenty-first century are extremely complex, stretching from the retailer to the factory or farm where the product originates and to any of their suppliers or subcontractors, which could include sanitation services or hiring agencies. A company’s due diligence must audit the entire supply chain.

1

https://shorturl.at/chCHX https://shorturl.at/kHR68 3 https://shorturl.at/FORX8 2

Photos (L to R) © John Matuchuk; Creative Commons; Irene Kredenets

...the reality that “over there” was also “here” NWCRI and ICCR members filed a shareholder resolution with Walmart requesting a report on the Company’s human rights due diligence (HRDD) in its domestic and global operations and supply chains. We believe that conducting and reporting on HRDD reduces a company’s risk of human rights violations and protects basic human rights. Currently, Walmart judges that its due diligence processes are adequate and effective and that a report is unnecessary. Shareholders think that the emergence of migrant child labor in the U.S. indicates the need for increased due diligence on the Company’s part.

Responsible for Migrant Child Labor?

Rather than being alarmed and ending the exploitation of these children, a report by the Economic Policy Institute “identifies bills weakening child labor standards in 10 states that have been introduced or passed in the past two years alone.”3 In 2023, a bill in Arkansas repealing restrictions on work for 14- and 15-year-olds has now been signed into law.

McDonald’s: Adopt a Zero-Tolerance Policy on Child Labor

In June, NWCRI joined investors in a letter voicing our deep concern regarding child labor law violations at McDonald’s restaurants. Recently the Department of Labor (DOL) fined three McDonald’s franchisees, operating 62 restaurants across Kentucky, Indiana, Maryland, and Ohio, $212,000 for employing 305 children, for violations related to wages, hours, and age requirements for dangerous tasks. Investors called on the Board to adopt a zero-tolerance policy towards child labor law violations in all McDonald’s restaurants, including franchises.

NWCRI ANNUAL REPORT 2023 V

GUN SAFETY During 2022, a groundbreaking study, “U.S. Youth Attitudes on Guns,” polled more than 4,100 young people across the U.S. on their attitudes on guns and gun violence. This research, conducted by Everytown for Gun Safety, the Southern Poverty Law Center, and the Polarization & Extremism Research & Innovation Lab at American University, supports what we know, that gun violence is impacting our children’s physical and mental well-being.

FINDINGS INCLUDE 1 ❖ 74% of youth and young adults ages 14 to 30

agree that gun violence is a problem

❖ 60% believe gun safety laws should be

stricter

❖ 42% report having at least somewhat easy

access to guns

❖ Youth who are more committed to a gun

culture also have higher scores on racial resentment and male supremacy.

❖ School safety is a major concern for youth and

worry about school shootings is associated with a host of negative mental health outcomes

Those of us who are committed to giving our children a future free of gun violence are encouraged to read the Study to learn how young people feel about and use firearms and actions that we might take to safeguard guard them.

60% believe gun safety laws should be stricter 1

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https://shorturl.at/aiCNQ NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

Who Decides “In the Best Interest of the Company?”

For seven years faith-based investors in Sturm Ruger and Smith & Wesson have literally begged these firearm manufacturers to take responsibility for their role in gun violence in the U.S., and we are not alone. In 2022, sixty-eight percent of Sturm Ruger shareholders supported a resolution urging the Company to commission a third-party Human Rights Impact Assessment (HRIA) to produce recommendations for improving the human rights impacts of its business and products.

Sturm Ruger spent a year considering whether to implement the proposal and reported in the 2023 Proxy “that the Board believes it is not in the best interest of the Company and would be inconsistent with its obligation to safeguard and enhance shareholder value,” even though the majority of Sturm Ruger shareholders said that the HRIA was in the best interest of the Company, shareholders, and our communities.

Strong Support for Human Rights at Over twenty-six percent of shareholders supported our HRIA proposal at the Company’s annual meeting. Faith-based investors plan to continue to press the firearm manufacturers to take responsibility for their role in gun violence.

Investors to Credit Card Companies Prioritize Safety

Research indicates that many mass shooters use credit or debit cards to purchase guns and ammunition. For example, the Las Vegas shooter purchased 33 weapons in the months leading up to the incident. Therefore, advocates for gun safety were pleased in September 2022 when a Merchant Category Code (MCC) for firearm retailers was approved. We believed that the new MCC would enable credit card companies to flag suspicious activity and reduce gun violence.

In March, we learned that American Express, Mastercard, and Visa were pausing the implementation of the MCC because seven states had passed legislation restricting the use of the firearm retailer code. In letters and dialogues with the companies, investors stressed that the Companies have a responsibility to help identify and mitigate potential gun-related crimes facilitated through their networks. By implementing the MCC, they would fulfill this obligation and prioritize the safety of their customers and communities.

2022-2023 NWCRI SHAREHOLDER ACTIVITIES

NWCRI members brought 14 justice issues to the boardrooms of 42 corporations, filed 32 shareholder resolutions, and participated in over 50 dialogues.

COMPANY

ISSUE

ACTION

AbbVie

Patents & Access

Resolution 29.60%

Alphabet

Child Safety Online

Dialogue

Alphabet

Improve Disclosure of Algorithmic Systems

Resolution 17%

Alphabet

Racial Equity Audit

Agreement

Altria Group*

Civil Rights Audit

Resolution 30.76%

Amazon

Transparency Reporting

Resolution 10.50%

American Express

Merchant Code for Guns & Ammunition

Dialogue

AT&T

Child Safety Online

Letter

Bristol-Myers Squibb

Patents & Access

Agreement

Campbell Soup

Water Risk Assessment

Dialogue

Caterpillar

Business in Conflict & High-Risk Areas

Resolution 14.10%

Chevron

Racial Equity Audit

Resolution 9.70%

Citigroup*

Respect for Rights of Indigenous Peoples

Resolution 31%

Coca-Cola

Racial Equity

Dialogue

CoreCivic

Human Rights Due Diligence

Dialogue

Dollar General

Workplace Health & Safety

Resolution 67.70%

Dollar Tree

Cost of Compensation Practices to Economy

Dialogue

Eli Lilly

Patents & Access

Resolution 10.40%

Essential Utilities*

PFAS in Water

Agreement

ExxonMobil

Direct Methane Measurement

Resolution 36%

FedEx*

Paid Sick Leave Policy

Resolution 10.60%

Freeport McMoRan

Human Rights

Dialogue

GEO Group

Human Rights Due Diligence

Dialogue

Gilead Sciences

Patents & Access

Resolution 16.70%

Hershey

End Child Labor in Cocoa

Resolution 3.60%

Johnson & Johnson

Racial Equity Audit

Agreement

JPMorgan Chase

Phase Out of New Fossil Fuel Financing

Resolution 8%

Kroger

Public Health Cost of Sale of Tobacco

Resolution 13%

Lockheed Martin*

Human Rights Impact Assessment

Resolution 14%

Mastercard

Merchant Code for Guns & Ammunition

Dialogue

McDonald’s

Phase Out Antibiotic Use by 2023

Resolution 16.60%

Meta Platforms

Child Safety Online

Resolution 16.27%

Moderna

Covid Vaccine Tech Transfer

Resolution 7.40%

Pfizer

Patents & Access

Resolution 30.20%

Philip Morris International

Disclose & Reduce Nicotine Levels

Resolution 3.20%

Sanofi

US & Global Health

Dialogue

Smith & Wesson

Human Rights Impact Assessment

Resolution 26.74%

Southern Company*

Environmental Justice Report

Agreement

Sturm Ruger

Marketing Risks

Resolution 26.50%

Target

Human Rights Due Diligence

Dialogue

Tyson Foods

Racial Equity Audit

Dialogue

United Health Group

Racial Equity Audit

Dialogue

Visa

Merchant Code for Guns & Ammunition

Dialogue

Visa

Policies to Protect Children

Dialogue

Walgreens Boots Alliance*

Public Health Costs of Tobacco Sales

Resolution 10.30%

Walmart

Human Rights Due Diligence

Resolution 5.70%

Walmart

Racial Equity Audit

Resolution 18.10%

Walmart

Worker Pay in Executive Compensation

Resolution 4.30%

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

NWCRI ANNUAL REPORT 2023 VII

“Out of a mountain of despair, a stone of hope.”

—MARTIN LUTHER KING JR.

MEMBERS

❖ CNN Champions for Change: Survivors Empowered

After their daughter Jessi was killed in a mass shooting at a theater in Aurora, CO in 2012, Sandy and Lonnie Phillips turned their pain into purpose by founding Survivors Empowered1 to assist survivors of gun violence in moving forward with their lives. Sandy and Lonnie joined their first Rapid Response Team, a resource of Survivors Empowered, at Sandy Hook which occurred just five short months after Jessi’s death. ICCR was honored to host and learn from Sandy and Lonnie in March 2020.

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

❖ Healthy Women, Healthy Families, Healthy World

On March 13, 2006, I joined First Lady Laura Bush in honoring mothers2mothers,2 an international organization whose mission is to end mother-to-child transition of HIV by providing support to pregnant women and new mothers with HIV. mothers2mothers works in ten countries in sub-Saharan Africa and employs over 1800 women living with HIV. They have achieved virtual elimination of mother-to-child transmission of HIV for their clients for eight consecutive years.

Jesuits West Northwest Women Religious Investment Trust PeaceHealth Providence St. Joseph Health Sisters of Providence, Mother Joseph Province

❖ Reducing Plastic Pollution One Mailer at a Time

Sisters of St. Francis of Philadelphia

After increasing shareholder support for Amazon to reduce plastic packaging, the Company announced that in 2022 it used 12% less single use-plastic to ship orders and has plans to phase out plastic mailers. In June, Walmart announced that it will stop using plastic mailers, which will eliminate 2000 tons of plastic by the end of its fiscal year, January 31, 2024.

Sisters of St. Mary of Oregon Sisters of the Holy Names of Jesus & Mary, U.S.-Ontario Province Tacoma Dominicans

NWCRI

❖ Right to a Healthy Environment

Sixteen plaintiffs, ranging in age from 5 to 22, filed a lawsuit claiming that Montana’s greenhouse gas emissions were harming their mental and physical health. Further they said, “that state agencies were violating their constitutional right to a clean and healthful environment by permitting fossil fuel development without considering its effect on the climate.” The judge sided with the youth and noted that renewable power is “technically feasible and economically beneficial.”3

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.

Kasserian Ingera, which translates to “And how are the children?” is the traditional greeting among the Masai tribe in Africa. “All the children are well,” is always the answer, which confirms the high value they place on caring for their young. As I conclude my years with NWCRI, I have hope that we will continue to strive for a world where we can say, “All the children are well.”

1

https://www.survivorsempowered.org/ https://m2m.org/ 3 https://shorturl.at/aEG24 2

VIII NORTHWEST COALITION FOR RESPONSIBLE INVESTMENT

Photo © Raffaele Nicolussi, unsplash

❖ “All the Children Are Well”

Judy Byron, OP Director, NWCRI

Intercommunity Peace & Justice Center

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