Conflict Zones

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.

Genocide: A Chevron, Azzad Asset Management has returned for the third year in a row with a resolution that earned 7.2 percent in 2018 and 5.7 percent in 2017 (it must receive 10 percent or more to qualify for resubmission this year). The resolution notes the plight of the Rohingya people in Burma and the company’s business there as well as in other countries with serious human rights violations. It asks for a report within six months of the annual meeting, “evaluating the feasibility of adopting a policy of not doing business with governments that are complicit in genocide and/or crimes against humanity.” Chevron challenged the proposal last year at the SEC, arguing it was too vague because shareholders would not be able to determine where genocide or crimes against humanity occur, but the SEC disagreed.

This year, investors at Franklin Resources again were faced with a proposal from William Rosenfeld, who works with Investors Against Genocide. The proposal asks “that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.” A similar resolution in 2013 and 2014 received 9.3 percent and 5.9 percent support, respectively—missing the 6 percent threshold required for another resubmission until three years pass. From 2011 to 2015, Investors Against Genocide filed nine similar proposals at JPMorgan Chase, Franklin Resources, BlackRock and Voya Financial, with support levels ranging from 3.4 percent (BlackRock in 2015) to 10.7 percent (JPMorgan Chase in 2012). This proposal at Franklin Resources marks the first such filing since 2015 and the vote on Feb. 12 was 9.9 percent.

Three proposals seek disclosure about conflict zones. The Episcopal Church says Caterpillar should “assess and report to shareholders...on the company’s approach to mitigating the risks associated with business activities in conflict-affected areas other than areas already addressed through its conflict minerals policy. The company has long faced controversy about the use by various governments of specially armored construction equipment—including in Palestinian territory but also in Sudan.

The Church notes TripAdvisor carries listings for the Democratic Republic of Congo, Iraq, Myanmar and the Occupied Territories of the Palestinians. The proposal is new and in its resolved clause asks the company to “assess and report to shareholders, at reasonable expense and excluding proprietary information, on the company’s policies and procedures to address the human rights-related risks associated with business activities in conflict-affected areas, including occupied territories.” It says the report should explain how the company makes risk decisions about operations in such zones, how it monitors enforcement of its human rights policy and if its policy should be expanded.

Wespath Investment Management has filed a proposal at Booking Holdings (formerly Priceline) nearly identical to the one at TripAdvisor. The resolved clause is the same and it notes that TripAdvisor has listings for the Democratic Republic of Congo, Iraq, Myanmar, and the Occupied Territories of the Palestinians.