Catholic ethical and social teaching form the basis for all of our work at CBIS. In particular, our Catholic Responsible Investing (CRI) approach centers on three key principles: human dignity, economic justice and environmental stewardship.

See below for updates on the active ownership activities we are undertaking to address the principles at the core of our CRI program and the real-world issues associated with each one.

The moral measure of any economy is how the weakest are faring; a fundamental concern for investors and corporate executives must be the impact of their actions on the well being of people, particularly the poor and vulnerable.

Issue: Access to Health & Nutrition

The poor continue to suffer from lack of access to critical medications and malnutrition, affecting the lives of hundreds of millions. CBIS encourages companies to reduce pricing of and expand access to critical medications, including antiretroviral medications most needed by children impacted by AIDS. CBIS asks companies to develop thoughtful, long term strategic approaches to help end hunger using their expertise, influence and distribution systems.

CBIS Portfolio Company:
Papa John’s
Date:
03/31/2017
CRI Update:

Over 800 million people worldwide are undernourished, while one-third of all food produced for human consumption (~1 B tons) is lost or wasted between the farm and table each year. Retail food chains such as Papa John’s are doing little to recognize or address the problem, yet cost savings are enormous to the company and a boon for communities once waste is identified, measured and cut.

Papa John’s International operates in all 50 states and 39 countries, but lacks basic sustainability reporting and does not acknowledge that food waste is a major problem within the company. Our goal is to encourage Papa John’s to develop processes to better measure, report and combat food waste and address global hunger, including:

  • Implement and report on systems to identify the sources of and measure food waste,
  • Improve operational  practices to reduce waste, and
  • Develop waste reduction programs, repurpose ingredients, and develop local relationships for food donation.

CBIS reached out to Papa John’s twice at the end of 2016, to discuss the issue and press the company for better reporting. We are drafting a letter now with the improvements we’d like to see in management practice and reporting for 2017, and have been partnering with key food waste advocates on strategy.

CBIS Portfolio Company:
Gilead Sciences
Date:
03/31/2017
CRI Update:

CBIS began its engagement with Gilead Sciences on the issue of access to health for the world’s poor in 2016. CBIS has already met with the access to Medicine Foundation to discuss ways Gilead and the pharmaceutical industry can help the world’s poorest people access the medicine they need. Pharmaceutical companies have an important role to play by responding with concrete, effective action to combat diseases that disproportionately affect the poor and vulnerable. Expanding the supply of life-saving medications can help meet an urgent public health need in low-income countries. Gilead produces and has improved access to medications in developing countries for HIV, hepatitis, and disease caused by parasites. CBIS will work with Gilead to ensure the company is evaluating reduced pricing options to expand coverage for patients, coordinating and supporting education for medical and clinical workers, and expanding innovative patent agreements to hepatitis therapies.

In the first quarter of 2017, CBIS and other shareholders had a call in April to discuss Gilead’s new focus:

  • Market expansion: To tackle the Hepatitis C crisis, Gilead will build new manufacturing plants in China where 10 million people are infected. Gilead hopes to replace outdated medications with poor cure rates.
  • Pilot projects: Gilead donated drugs to the government of Georgia, the country with the world’s third highest prevalence of hepatitis C. The goal is a 90% reduction in prevalence by 2020.
  • Global frameworks: The company committed to meet the UN Sustainable Development Goal of ensuring healthy lives and well-being worldwide by 2030, a positive step.
CBIS Portfolio Company:
AbbVie
Date:
12/31/2015
CRI Update:

In light of AbbVie’s embryonic stem cell research, CBIS has discontinued its engagement with AbbVie. The engagement yielded substantial advances, including increasing access to and decreasing the cost of HIV medicines for people living in developing countries.

AbbVie signed a licensing agreement for generic production of key HIV drugs (Lopinavir and Ritonavir), the preferred treatment for children less than three years old. CBIS engaged AbbVie (formerly Abbott Labs) between 2002-2015. The licensing agreement signed in 2014 was the first time the company had granted a license for generic production of its HIV drugs. Bristol Myers, Viiv Healthcare, and Gilead Sciences had previously licensed their pediatric formulations. Despite donation programs, international accords, and public/private initiatives, the poorest nations continue to suffer from a lack of access to critical medicines. This license will enable other companies and organizations to reformulate and manufacture treatments appropriate for pediatric use in low- and middle-income countries where 99% of children with HIV in the developing world live.

CBIS Portfolio Company:
NESTLE
Date:
06/30/2016
CRI Update:

CBIS discussed with Nestle its leading work to reduce vitamin and nutrient deficiency around the globe. The company continues to expand fortified food access to low-income consumers in 55 high risk countries with the greatest micronutrient deficiencies.

Investors had a conference call with Nestlé in February 2015 on malnutrition, which occurs when a person is not getting enough food or the food they eat does not provide the proper amounts of vitamins and minerals to meet daily nutritional requirements. It can lead to serious health problems and increase susceptibility to chronic diseases. Nestle is the world’s largest manufacturer of fortified products, including cereals, soya, and beans fortified with micronutrients such as iron, vitamin A, iodine and zinc, which are essential for growth and development. They cost relatively little and have the potential to rapidly reach large numbers of people. Nestle recently announced an important milestone:it has provided 167 billion servings of fortified foods and beverages, including products used to prepare meals, dairy products, powdered beverages or cereals for children. In 2016, the company met its goal to reach 200 billion micronutrient fortified servings annually.

Issue: Advancement of Women & People of Color

By considering candidates from a diverse set of backgrounds and experiences, companies may access vast reservoirs of untapped talent and independent voices who can bring a fresh perspective to the boardroom. CBIS encourages companies to strive to appoint boards of directors whose makeup is reflective of the diversity of the population at large. CBIS advocates that companies act responsibly in hiring a diverse workforce and making opportunities available to them.

CBIS Portfolio Company:
Walmart
Date:
03/31/2015
CRI Update:

Walmart, the largest private sector employer in the U.S., announced in February comprehensive changes to hiring, training, compensation, and scheduling programs, creating more opportunities for employees. It is a meaningful advance that represents important progress in the company’s commitment to opportunity. Walmart will raise the pay of all current associates to at least $9/hour by April, which is $1.75 more than the current federal minimum wage, and provide an increase to associates currently at the maximum pay level. The announcement means that approximately 500,000 associates will receive an additional raise in the first half of 2015. In addition, there will be greater access to healthcare, retirement benefits, bonuses and discounts. Walmart said it believes that the key to improving customer satisfaction is investing in staff.

In 2006, after years of shareholder resolutions, Walmart agreed to publish annual reports on the advancement of women and people of color throughout the firm, a groundbreaking step. The ability of workers to succeed regardless of their gender, race, religion, or national origin is an important condition to maintaining respect and dignity for all workers. While there were many factors that prompted Walmart’s decision, the voice of Interfaith Center on Corporate Responsibility (ICCR) members including CBIS, who have engaged the company for nearly 20 years on a wide range of issues, was certainly an important input. The perseverance and persistence of ICCR members has yielded great dividends for workers, for the environment and for communities.

Issue: Responsible Lending

CBIS works with financial institutions to develop policies for lending and underwriting, and related oversight mechanisms, to ensure that loans are consistent with the principles of fair lending, help increase economic growth and have a positive impact on sustainability and biodiversity in ecologically sensitive areas.

CBIS Portfolio Company:
Deutsche Bank
Date:
03/31/2017
CRI Update:

Globally, nearly 21 million refugees have been forced from home due to war, conflict and persecution and require bank accounts to integrate into new communities. Refugees often lack standard documentation to open accounts, and without access to funds, they may go into debt, rely on handouts, or be forced into homelessness.

Deutsche Bank, Germany’s largest bank and a global leader with a strong position in Europe, can use its size and influence to help the more than 1.5 million refugees in Germany in need of financial service. Our goal for the engagement is to encourage Deutsche Bank to work to ensure there are adequate resources in place to provide refugees with accessible, affordable, and useful financial products and services, including:

  • Hire multilingual employees,
  • Train staff on account opening requirements,
  • Streamline the account opening process, and
  • Create technology that allows beneficiaries with no banking relationship to more easily access funds.

 

 

CBIS Portfolio Company:
Citigroup
Date:
12/31/2015
CRI Update:

After 15 years, CBIS has concluded its engagement with Citigroup, having met the goals of the engagement. Over the past 15 ears, Citigroup has strengthened guidelines to prevent predatory lending and to guard against environmental degradation.

In 2014, Citigroup updated its Statement on Human Rights, a longtime request by CBIS. This is a strong positive result that the bank has policies and processes to prevent its services from being used for improper purposes such as money laundering, which can be associated with fundamental human rights abuses such as human trafficking. CBIS updated the bankers on new anti-trafficking laws in the U.S. and U.K. that will have global impacts on corporations, recommended due diligence on the seafood supply chain in Thailand, trafficking in the construction sector in Qatar in advance of the World Cup in 2022, and highlighted new labor conventions that protect worker rights as issues to be aware of.

CBIS Portfolio Company:
JP Morgan Chase
Date:
06/30/2014
CRI Update:

JP Morgan Chase published a policy that prohibits financing projects that have involvement in human trafficking, forced labor, or child labor. Thanks to the trust generated through our ongoing dialogue that spans more than 10 years, CBIS was among the groups that helped to inform the Bank’s policy on environment and human rights, released in June 2014. The framework outlines such things as the bank’s approach to climate change, biodiversity protection, and human trafficking. The policy is one of the most progressive in the industry – it identifies sensitive activities where JPMorgan Chase has committed to conduct a thorough analysis before financing, such as hydraulic fracturing, palm oil, projects that impact Indigenous Peoples, mountain-top removal mining, and high carbon-emitting projects, recognizing the environmental and social challenges faced by these activities.

Issue: Tobacco

Due to devastating health impacts, CBIS does not invest in companies involved in the production of tobacco products, including manufacturers of cigarettes, cigars, pipe tobacco, or smokeless tobacco products, and companies which process or trade tobacco or distribute wholesale raw tobacco for manufacturing.

Issue: Worker Rights

CBIS fights for the basic rights of workers, including the right to productive work and fair wages. We also discuss with companies safe working conditions and the elimination of sweatshops. We start from the premise that financial results should not be deemed more important than workers rights.

CBIS Portfolio Company:
Sanderson Farms
Date:
03/31/2017
CRI Update:

Chicken is the most popular meat in America, and while profits in the poultry industry have risen rapidly, improvements in working conditions on processing lines have not kept pace with growth. Due to high turnover and challenging conditions, plants often employ economically vulnerable populations who are afraid to speak about conditions and risk their employment.

Sanderson Farms is the third largest poultry producer in the US and has the ability to implement changes that would improve the conditions and safety for poultry workers across the country. Our goal for the engagement is to encourage Sanderson Farms to improve working conditions on poultry processing lines to combat injury and illness and provide adequate breaks for employees, including:

  • Reporting on worker safety figures, workforce make-up, worker turnover, and workforce satisfaction,
  • Implementing employee cross-training to alleviate repetitive motion risks, and
  • Hiring floating workers to allow for rest breaks for employees and breaks to sharpen tools.

To date, CBIS has interviewed NGO, union, and occupational safety experts in the industry to develop strong background on key issues and potential solutions.

CBIS Portfolio Company:
Macy’s
Date:
06/30/2014
CRI Update:

Macy’s is a founding member of The Alliance for Bangladesh Worker Safety which aims to improve labor conditions in factories. It includes 26 U.S. and Canadian companies that cover 700 factories and comprises commitments to improve worker safety, to inspect factories within one year, and to provide low-cost loans for factory improvements. The tragic fire at the Tazreen factory and the Rana Plaza building collapse in Bangladesh in 2012 killed at least 1,451 workers. These events called global attention to atrocious labor conditions for workers in Bangladesh, the second-largest apparel producer after China. In 2013 and 2014 CBIS joined investor statements to encourage urgent action, including calling on companies to address in a timely manner all aspects of fire and building safety, including independent safety inspections and mandatory repairs and renovations.

We are stewards of God’s creation; it is our responsibility to nurture, respect, preserve, and protect the planet as a resource for all, including future generations.

Issue: Climate Change

Concerns about climate change center on the increase in greenhouse gases resulting from human activities. Climate change could cause major damage to life on Earth and would have a disproportionate impact on the poor due to their dependence on local natural resources and lack of access to financial and institutional support. CBIS asks companies to take steps to reduce their greenhouse gas emissions in order to mitigate the effects of climate change, to develop or use renewable energy, to set targets for energy efficiency, and to report on their emissions, policies, and programs.

CBIS Portfolio Company:
CNOOC
Date:
01/31/2016
CRI Update:

In 2016, CBIS will begin to engage China National Offshore Oil Corporation (CNOOC) on the issue of climate change. CNOOC is China’s largest oil & gas company and can play a critical role in the transition to a low-carbon economy. China is the world’s largest consumer of energy and biggest greenhouse gas emitter, but it has set out a global action plan to limit global warming in accordance with the Paris climate accord. CNOOC has taken steps to address climate change, including developing technology to capture and store carbon, reducing energy consumption and improving energy ef¬ficiency in the production process, but it does not disclose emissions and provides only limited information regarding its renewable energy and carbon sequestration efforts. CBIS will work with CNOOC to ensure the company is creating targets to measure and reduce emissions and developing reporting to disclose its emissions, reduction goals, and progress.

CBIS Portfolio Company:
Ford
Date:
09/30/2016
CRI Update:

CBIS was invited to join a strategic planning session with several teams of Ford Motor Co.  to discuss strategies out to 2030, including autonomous vehicles, electrified fleets, utility partnerships on infrastructure, vehicle design, and public policy. CBIS raised questions about cyber security concerns for self-driving (autonomous) vehicles and targeting segments of the market like the elderly and disabled for such vehicles, to the need for adapting car design to accommodate extreme weather from climate change. CBIS also discussed new partnerships to build out fueling/recharging infrastructure, the necessity of self-driving cars to move beyond fossil fuels (cars of the future are expected to be high tech in more than one way), and the trend in highly customizable cars and the opportunities that might produce—as well as the environmental risks inherent in parts and technologies that might quickly become obsolete.

Ford recently outlined ways it is building consumer acceptance of and demand for fuel-efficient vehicles. The company is investing an additional $4.5 billion in electrified vehicle solutions by 2020, and it expects that by the end of the decade, more than 40% of Ford’s nameplates globally will be electrified. CBIS has discussed with the company for nearly 15 years ways that it could improve the energy efficiency and increase the miles/gallon of its fleet. Electric vehicles are cleaner than petroleum-fueled vehicles and seen as a partial solution for bettering the environment.

CBIS Portfolio Company:
Royal Dutch Shell
Date:
12/31/2015
CRI Update:

In April 2015, CBIS attended Royal Dutch Shell’s SRI day in London. CBIS and 40 SRI colleagues from investment firms across Europe met with CEO Ben Van Beurden and Chad Holladay, Chair of the Corporate and Social Responsibility Committee. Discussions included the company’s strategy on climate change, renewable energy, and deepwater drilling, cleanup operations in Nigeria, and exploration in the challenging Arctic region. It is an example of best practice in corporate engagement with stakeholders.

A resolution co-sponsored by CBIS for Royal Dutch Shell asking for greater disclosure about their climate impact received 99% support at the May 2015 annual meeting. The results demonstrate the strength of shareholder interest in assessing climate impact along with company performance.

On November 4, 2015, Van Beurden had a meeting in New York to update analysts on the company’s performance. CBIS pressed senior executives about contributing to a fund to clean up oil spills in the Niger Delta. We praised the company on its decision to withdraw from drilling in the Arctic, an area that presents high risk due to its remote location and dangerous conditions. We also encouraged the company to provide robust reporting on steps it is taking to combat climate change, in line with the company’s commitment to improve reporting following the May 2015 resolution.

CBIS Portfolio Company:
BP
Date:
03/31/2017
CRI Update:

In April 2017, CBIS led a meeting of BP executives and the Chair of the Board’s Remuneration Committee in March (with another follow up meeting in April 2017), and invited a coalition of investors from three countries, representing over $6 trillion AUM, to join us to:

  • Discuss executive remuneration incentives for the transition to a lower-carbon business model,
  • Request an analysis of the risks/opportunities under a 2° C and 1.5 ° C business environment,
  • Encourage the company to add board members that had more “new economy” experience like technological disruption, venture capital, and innovation development, in order to be successful in a shift in business model, and
  • Raise concerns about recent strategies, incentives and energy models that do not align with the Paris Agreement goals.

We joined an SRI presentation in December 2016 via video and asked executives to discuss carbon pricing, whether it is realistic for nations to hit a two degree emissions target, stemming from the Paris Agreement, and BP’s outlook on the issue. CBIS has also been focused on collaborating with EU and UK investors to press the company on executive remuneration incentives that are aligned with a two-degree transition pathway, and plan to dialogue more in the spring on our vote against the compensation plan if such issues are not addressed.

In April 2015, a resolution that CBIS co-filed at BP asking the company to outline steps it is taking in the transition to a low carbon economy received a near unanimous vote of 98% in favor, in addition to support from the company. The results demonstrate the strength of shareholder interest in assessing climate impact along with company performance.

On November 13, 2015 BP held an investor webinar to share its progress implementing the resolution. CBIS asked the company to set company-wide greenhouse gas emissions reduction goals. Without external targets, it is difficult for investors to understand how the company is reducing risk and preparing for a carbon-constrained future. We also encouraged the company to share more information on steps it is taking with respect to research and development of low carbon alternatives.

CBIS Portfolio Company:
ExxonMobil
Date:
03/31/2017
CRI Update:

In February 2017, CBIS hosted a meeting of over 75 investors in Washington, DC, in late February, featuring many of the top 100 holders of the company, to discuss where Exxon and its peers stand on key investor asks related to the energy transition.

In 4Q 2016, CBIS began to spearhead a new strategy to bring the weight of faith based investors behind a proposal asking for an assessment of the company’s reserves and resiliency under a two degree policy scenario (aka, the Paris Agreement). CBIS also met with the company in December, and pressed the company on its Energy Outlook assumptions, public policy, legal firestorms, and positioning the company for more rapid industry transition. We subsequently filed the Two Degree Assessment proposal after the dialogue took place, seeing no major changes in commitment or strategy from the company during that meeting. There are now over 50 co-filers to the proposal, representing over $4 trillion in assets under management. The proposal is consistent with requests for enhanced climate change disclosure that CBIS has requested of BP and Royal Dutch Shell.

CBIS co-filed a shareholder resolution in 4Q 2015 asking the company to support the goal of limiting global average temperature increases to 2°C above pre-industrial levels, in line with the goals of the recent Paris Climate Accord. On December 17, 2015, CBIS participated in a call with Exxon Mobil to discuss the resolution. Shareholders encouraged the company to establish goals for its climate change program, as many of their oil and gas peers have done. Simply reducing emissions by any amount over any time frame is not an effective way for investors to measure success. The company attempted to block our resolution from appearing on the ballot, as it disagrees with setting goals and instead feels its performance should be assessed based on solutions they put forward. However, it was unsuccessful, and a vote was held at the annual shareholder meeting in May 2016. CBIS attended the meeting and addressed the board, speaking on behalf of vulnerable communities and addressing the need for a new business model that takes into account the impacts on those communities while still providing energy to those who need it. The resolution received a vote of 18.5% in favor, a positive result for a first time resolution.

We believe that millions who live in poverty may face climate impacts and will depend on high emitting sectors to take action. The Pope’s 2015 encyclical, Laudato Si’, made a new moral call for attending to our common home. While Exxon Mobile provides vital energy services to the global economy, as the largest publicly traded oil company in the world and one of the largest greenhouse gas emitters globally, the company can play an important role in addressing climate change and providing leadership for the transition to a low-carbon economy. We are hopeful further conversation will change Exxon Mobil’s stance.

CBIS had previously filed a greenhouse gas (GHG) emissions reduction resolution at Exxon Mobil in advance of the company’s May 2015 annual meeting. Despite CBIS’ efforts to organize a Declare Your Vote initiative, the final vote was 9.6% in favor, in part due to changes at the largest proxy voting agency.

CBIS Portfolio Company:
Citigroup
Date:
12/31/2015
CRI Update:

After 15 years, CBIS has concluded its engagement with Citigroup, having met the goals of the engagement. Over the past 15 ears, Citigroup has strengthened guidelines to prevent predatory lending and to guard against environmental degradation.

In February 2015, CBIS attended a meeting with investors and environmental organizations where the bank discussed a new commitment to dedicate $100bn to fund environmental projects over the next decade. CBIS has engaged Citigroup for more than 10 years on the environment and human rights guidelines for its loans and investments. Climate change has been an aspect of the dialogue and shareholders have encouraged the bank to fund renewable energy and reduce greenhouse gas emissions at its facilities around the world. The funding surpasses recent Bank of America ($50bn) and Goldman Sachs ($40bn) commitments. The bank intends to reduce water use, greenhouse gas emissions, and to finance clean energy projects. The financial services industry can play an important role providing funding for the transition to a low carbon economy and we applaud Citi’s leadership.

Issue: Environmental Justice

CBIS expects companies to work with local communities to address concerns about the cultural, economic, and environmental impacts of corporate behavior, especially with disadvantaged communities. In working with companies, CBIS expects them to minimize any harmful impacts of their operations.

CBIS Portfolio Company:
Anglo American
Date:
03/31/2016
CRI Update:

In March 2016, CBIS organized and spoke on a webinar for SRI investment analysts about new tools to advance corporate efforts towards responsible mining. Anglo American, the world’s fifth largest mining company, participated to share new tools to advance responsible mining. The company discussed its membership in The Initiative for Responsible Mining Assurance (IRMA), an innovative multi-stakeholder group that is working to develop best practice for mine sites, including standards for environmental and social issues, labor rights, indigenous peoples and cultural heritage, and pollution control. The coalition includes businesses purchasing minerals and metals, public interest groups, community organizations as well as trade unions and a handful of other mining companies.

Anglo American is a top producer of platinum, coal, copper, and diamonds. In the past year, four mines have experienced labor strikes due to health and safety concerns, job cuts, and wages. Improvements to the sites have been registered but progress has been inconsistent. CBIS is working with Anglo American to strengthen labor standards, create a process to log grievances and implement corrective actions, and improve environmental practices to address air and water concerns.

CBIS Portfolio Company:
Newmont
Date:
06/30/2016
CRI Update:

Newmont Mining, the world’s second largest gold miner, shared its decision to abandon the $5bn Minas Conga copper and gold project in Peru after years of social conflict and opposition in communities affected by extractive industries. Minas Conga was intended to be an expansion of nearby Yanacocha mine, the largest gold mine in Latin America. The mines are located in the poorest province of Peru.

Senior executives from Newmont Peru visited CBIS’ New York office in April 2015 to discuss concerns raised by communities living near the proposed Minas Conga mine. They updated us on an ongoing legal dispute between the company and a family of subsistence farmers who sold land to the company 15 years ago. The family claims it had not been consulted about the sale, and Newmont’s attempts to remove the family have been unsuccessful. Civil society organizations have put together protests and letter writing campaigns on behalf of the family. CBIS also visited Peru in 2012 after 5 people were killed at the hands of police following protests over Minas Conga.

Issue: Hydraulic Fracturing

Hydraulic fracturing, a method of extracting oil and natural gas from shale rock formations, has become an issue for shareholders concerned about lack of transparency, environmental impacts, and effects on local communities. CBIS works with companies to address the impact of fracturing operations and encourages them to adopt best practices with respect to community engagement, environmental risk management, waste disposal, and disclosure.

CBIS Portfolio Company:
Anadarko
Date:
01/31/2017
CRI Update:

In January 2017, CBIS and investors engaged in a productive dialogue concerning the company’s methane emissions reduction, water management, and community engagement. CBIS provided input regarding the inclusion of the human right to water and sanitation in their human rights policy, citing that the company has made an adequate start by mapping stakeholder concerns with their operations. In response, Anadarko is willing to receive more feedback and resources to help to further develop an implementation of a human rights-based approach to water assessments.

In early 2015, Anadarko launched this update to the corporate social responsibility section of its website. Advocating for better corporate disclosure and transparency is one of the means shareholders use to hold companies accountable and to push for improvements. The new website includes enhanced sections on air quality, greenhouse gas emissions, water management, and stakeholder engagement, all issues that we have discussed with the company. CBIS and other investors also provided feedback to Anadarko on its recently adopted Approach to Human Rights (also on the new website) which explains how Anadarko considers human rights in relation to its operations. We pushed Anadarko to move beyond a compliance approach (e.g. complying with local human rights regulations) and seeking to avoid human rights violations, and instead explore ways to promote and protect human rights among its stakeholders.

Issue: Water Stewardship

CBIS asks companies to identify and manage risks due to expected future water scarcity, set targets for water reduction, recycle water used for manufacturing, and replenish water in communities and nature. Shareholder efforts have focused on requesting companies to report this information since there is presently little disclosure.

CBIS Portfolio Company:
Conagra Brands
Date:
03/31/2017
CRI Update:

Building on its history of working on water stewardship in agricultural supply chains, CBIS is setting its sights on the international arena, engaging some of the largest meat production companies globally on their critical role in water stewardship. Brazil and China are experiencing serious drought and water stress from pollution, respectively, which strengthens the case for performing systematic water risk assessments that are inclusive of the human right to water. The Human Right to Water and Sanitation clarifies that it is the responsibility of companies to ensure their operations do not infringe upon the right of individuals to sufficient, safe, acceptable and physically accessible and affordable water. This human right is further buttressed by the UN’s Sustainable Development Goal number 6, which includes a target for improving water quality by reducing pollution and minimizing the release of hazardous chemicals.

Conagra Brands is a large consumer packaged goods company. With iconic ready-to-eat and frozen meals brands, Conagra Foods has the opportunity ensure food sourcing is not negatively affecting local water supplies. In the first quarter of 2017, CBIS organized Interfaith Center on Corporate Responsibility and United Nations-supported Principles for Responsible Investment members concerned with how the company is assessing and managing water risks in its supply chains and directed a letter to Conagra asking the company to assess water risks within its supply chain. Signatories with a total of $76 billion in AUM joined in the letter.

CBIS Portfolio Company:
WH Group
Date:
03/31/2017
CRI Update:

Building on its history of working on water stewardship in agricultural supply chains, CBIS is setting its sights on the international arena, engaging some of the largest meat production companies globally on their critical role in water stewardship. Brazil and China are experiencing serious drought and water stress from pollution, respectively, which strengthens the case for performing systematic water risk assessments that are inclusive of the human right to water. The Human Right to Water and Sanitation clarifies that it is the responsibility of companies to ensure their operations do not infringe upon the right of individuals to sufficient, safe, acceptable and physically accessible and affordable water. This human right is further buttressed by the UN’s Sustainable Development Goal number 6, which includes a target for improving water quality by reducing pollution and minimizing the release of hazardous chemicals.

WH Group, based in China, is the largest pork company in the world and new owner of Smithfield Foods, the largest US-based pork producer. Our goal for the engagement is to encourage better management of water impacts from meat production that will help to conserve water and protect community access to water.

In 2016, CBIS spearheaded a letter backed by 40 investors managing $6.6 billion in assets calling on WH Group to address key water pollution concerns. The company responded to our letter in the first quarter of 2017, seeking dialogue on its impacts to water.  Our dialogue will begin once the company releases its annual sustainability reports in the Spring.

CBIS Portfolio Company:
JBS SA
Date:
03/31/2017
CRI Update:

Building on its history of working on water stewardship in agricultural supply chains, CBIS is setting its sights on the international arena, engaging some of the largest meat production companies globally on their critical role in water stewardship. Brazil and China are experiencing serious drought and water stress from pollution, respectively, which strengthens the case for performing systematic water risk assessments that are inclusive of the human right to water. The Human Right to Water and Sanitation clarifies that it is the responsibility of companies to ensure their operations do not infringe upon the right of individuals to sufficient, safe, acceptable and physically accessible and affordable water. This human right is further buttressed by the UN’s Sustainable Development Goal number 6, which includes a target for improving water quality by reducing pollution and minimizing the release of hazardous chemicals.

Brazil-based JBS SA is a leading processor of beef, pork and lamb in the US and the largest cattle feeder in the world. Our goal for the engagement is to encourage better management of water impacts from meat production that will help to conserve water and protect community access to water.

In 2016, CBIS spearheaded a letter backed by 45 investors managing $1.2 trillion in assets calling on JBS SA to address key water pollution concerns. The company responded to our letter in the first quarter of 2017, seeking dialogue on its impacts to water.  Our dialogue will begin once the company releases its annual sustainability reports in the Spring.

 

 

CBIS Portfolio Company:
Coca-Cola
Date:
03/31/2016
CRI Update:

On February 1, CBIS participated in an engagement with Coca-Cola’s Senior director of global water stewardship and the director of corporate governance. The company discussed its “rights-based” approach to water, which focuses on communities that are most marginalized, excluded or discriminated against. The company has an expressed goal that the company’s use of water can’t affect quality, quantity, accessibility and affordability of water to these communities. To accomplish this, Coke requires operations to assess vulnerabilities to community water sources, determine potential impacts from water uses and discharges of treated wastewater, and then address potential issues in a Source Water Protection Plan that sites are required to develop. Shortly, business units will be provided with guidance on how to implement “the human right to water and sanitation,” a United Nations resolution that recognizes that clean drinking water and sanitation are “essential to the realization of all human rights.” The company stated its commitment to and shared that it had a hand in development of “Goal 6: Clean water and sanitation” of the Sustainable Development Goals (SDGs). The 17 SDG’s were adopted by world leaders in 2015 and focus on poverty, child education, child mortality and access to improved water sources.

CBIS Portfolio Company:
Mondelez
Date:
03/31/2016
CRI Update:

CBIS met with the global sustainability team from Mondelēz in February 2016. The company shared its 2020 global sustainability goals and focus areas. Water use for agricultural purposes is the largest part of the company’s footprint and will receive much attention. The company established a 15% reduction goal in water use compared to 2013, which is aggressive considering the stresses on water for agricultural use. Mondelēz is using a progressive tool, the highly regarded Aqueduct Tool, to measure and map water risk. The company has also set a water reduction goal for its manufacturing sites. By 2020, the company intends to use 10% less water on an absolute basis compared to 2013. By 2020, the company expects to save 380m liters of water per year. The company has identified 32 key factories globally that represent 25% of total water use by the company that are prioritized for water reduction – most are located in water stressed regions or can improve efficiency according to key metrics.

CBIS Portfolio Company:
Kraft
Date:
06/30/2015
CRI Update:

In May 2015, a sustainability report resolution that CBIS co-filed at Kraft received 30% support from shareholders. This is the first year the resolution was filed at Kraft, and the results are very good for a new resolution. Kraft’s lack of progress over the past two years regarding corporate sustainability concerns, including water issues, prompted the filing of the shareholder proposal. However, Kraft appointed a new CEO in December 2014, which was followed by several senior level personnel changes. In March, Kraft and Heinz announced plans to merge, which will be completed in the second half of 2015. The flux caused by these transitions makes it unlikely that shareholders will be able to meet with Kraft in the near future to discuss concerns. We intend to continue our engagement as we are hopeful different leadership may create a better opportunity to move the newly combined company forward.

CBIS Portfolio Company:
Archer Daniels Midland (ADM)
Date:
06/30/2016
CRI Update:

In the first quarter of 2016, CBIS participated in a call with ADM to discuss water stewardship, and ADM announced that it will publicly report corporate water information using a common framework that we expect will offer valuable insights. The company is now making consistent progress on sustainable agricultural practices and human trafficking in the supply chain, including identifying facilities and locations facing the greatest water risks.

It is positive news that the company will begin to report to the CDP on water and forests, in addition to climate change. CDP provides frameworks to measure, disclose, manage and share vital environmental information that are used by over 5000 of the largest companies in the world. CBIS is a signatory to CDP and not only plays a role in encourage greater transparency from companies, but also gains access to the world’s largest database of climate change, water and forest risk commodity information on thousands of disclosing companies. When companies use a common framework that is robust and comprehensive, it allows investors to compare performance and identify leaders and laggards. The company shared that it will now start to strengthen the process of gathering water usage and quality information throughout global operations. To effectively manage risk, good data is necessary; collecting and managing water use data throughout the company’s supply chain can be particularly daunting and will take focus and effort. As the leading food ingredient provider, ADM has 33,000 employees, serving 140 countries, with 460 crop procurement locations and 300 ingredient plants. The company expects to conduct water risk assessments in areas that are water stressed and at locations that use and treat the most water, among other high risk areas. It is clear that water insecurity has the potential to impact the company’s bottom line and shareholder value. Investors are requesting the company to adopt the Human Right to Water (see text on Coca-Cola) and to map water stressed regions (see text on Mondelēz). The company is continuing to work towards a 15% targeted reduction goal from its 2008 baseline level in water intensity by 2018.

CBIS has been engaging ADM on the issue of water stewardship for several years. Although that is our primary focus, sustainable agriculture requires not only environmental stewardship but also healthy, safe, and fairly-paid laborers. The sustainable agriculture resolution that CBIS co-filed in November 2013 and withdrew in March 2014 also included social criteria addressing worker rights. In 2014, ADM published policies addressing fair wages, safe working conditions, and ethical recruitment practices that expressly prohibit workers paying recruitment fees.

Human beings are created in God’s image; human life is sacred, and the dignity of all must be protected.

Issue: Human Rights in Conflict Areas

Companies that do business in certain countries may help support oppressive regimes through tax payments, and joint ventures with government-owned firms, and other economic support. CBIS presses companies with operations in conflict areas to take direct steps to ensure that the rights of local communities are respected and that local people derive reasonable benefit from the resources drawn from their land.

CBIS Portfolio Company:
Siemens
Date:
01/31/2017
CRI Update:

In January 2017, CBIS engaged in a robust conversation with the Siemens Head Of Regulatory Compliance for Conflict Minerals regarding the company’s due diligence and monitoring on its conflict minerals sourcing from smelters and refiners. Siemens reported that it is very active with the Conflict Free Sourcing Initiative, which is working to expand its audit protocols to assure compliance will met to the new EU law. While Siemens demonstrated that it is closely working with the leading industry initiative on the sustainable sourcing of minerals, the company falls behind peers on its transparency through disclosure of performance. CBIS encouraged Siemens to increase its disclosure of progress on ensuring its supply chain is free from conflict minerals.

In July 2016, CBIS requested a meeting with Siemens, which supplies products, systems and solutions on energy management, and building and manufacturing technologies, to better understand how its intends to comply with a new EU conflict minerals rule. The rule calls on companies to report on their mineral sourcing practices based on a new set of performance indicators under development.

The mining of certain minerals (including tin, tantalum, tungsten and gold) have been linked with funding multiple human rights abuses in the Democratic Republic of Congo and other conflict zones.  These minerals can enter multinational companies’ supply chains as they manufacture products such as jewelry, laptops, mobile phones and cars.

The implementation of the Dodd-Frank Wall Street Reform Act (Section 1502) in 2010 ushered in significant progress in the development of traceability and certification mechanisms to distinguish “conflict-free” mines from those that continue to finance armed groups and promote violence. While increased traceability and transparency have led to a reduction in the number of tin, tantalum, tungsten, and gold (3TG) conflict mines in eastern Congo, the Democratic Republic of Congo (DRC) and neighboring regions remain in a state of armed conflict.

In June 2016 the European Parliament provisionally agreed to a reporting mechanism that would be mandatory for those that import the minerals and metals as raw materials into the EU, and request voluntary disclosure from other companies, like those whose finished products may contain conflict minerals (i.e. Siemens.) The regulation would cover all conflict regions worldwide, unlike Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires declarations of conflict minerals only from the Democratic Republic of Congo and adjacent countries.

CBIS Portfolio Company:
Schlumberger
Date:
12/31/2015
CRI Update:

Due to a change in corporate operations, CBIS has discontinued its engagement with Schlumberger on human rights performance in Sudan and South Sudan. In March 2015, a subsidiary of Schlumberger agreed to pay $232.7 million for violating U.S. sanctions in Iran and Sudan. As part of the plea agreement, the company has ceased oilfield operations in Sudan.

Schlumberger had developed strong humanitarian programs in Sudan in the past but its recent efforts are not as robust as other major companies in the region. While it has programs for its staff, such as training and health programs for locally hired workers, other companies have created more substantive programs to help communities affected by the ongoing conflicts. In addition, we worked with Schlumberger to expand programs to South Sudan, which became independent of Sudan in 2011.

Issue: Human Trafficking

Human trafficking is the modern term for slavery. There are several forms including forced labor, child labor, involuntary servitude among migrant laborers, and children exploited for commercial sex. It is a crime that represents a grave offense against the dignity of the person and a violation of human rights. CBIS’ efforts focus on hotels and child sex tourism, retailers and brands, child labor, and evaluating supply chains in relation to forced labor.

CBIS Portfolio Company:
Coca-Cola
Date:
06/30/2014
CRI Update:

In the second quarter of 2014, Coca-Cola published its Human and Workplace Rights Issue Guidance for its suppliers and bottlers that seeks to protect human rights in its supply chain. Although CBIS’ focus with Coca-Cola is on water stewardship, the guidance document is an important step for a major corporation in recognizing worker rights and establishing clear expectations for its partner companies. A particular focus of the guidance is on the ethical recruitment of workers including no worker-paid recruitment fees, employer-paid transportation to host countries, and full payment of earnings to workers (no automatic debiting of payments to cover expenses).

CBIS Portfolio Company:
United
Date:
03/31/2017
CRI Update:

In January 2017, CBIS met with management to discuss human trafficking initiatives and establish a rapport with the company. In response to a shareholder proposal filed with United Continental, the company has substantially strengthened its human rights policy. It applies to all 85,000 employees of which 23,000 are flight attendants. CBIS and investors will continue to provide input and resources toward effective implementation of the human rights policy that includes further training to monitor and act on human trafficking activity. Specifically, we are encouraging United to train its flight attendants to identify signs of human trafficking and to disclose the effectiveness of such programs, continue to improve its human rights policies to include stricter requirements on forced labor and child exploitation, and to sign The Code of Conduct for the Protection of Children from Sexual Exploitation.

In 2016, CBIS began to engage United on the issue of human trafficking in the airline sector. Airport personnel are in a unique position to discern possible trafficking situations. As the fourth largest airline in the world, United has the potential to play a vital role in identifying and assisting trafficking victims. While other companies are taking action, United’s reporting does not indicate if the company has developed effective internal controls. United published a human rights policy statement last year that repudiates forced labor, child labor and sexual exploitation and a commitment to cooperate with law enforcement. CBIS will work with United to ensure the company is demonstrating implementation by training flight attendants, developing programs with law enforcement, raising awareness and reporting annually on progress and challenges.

CBIS Portfolio Company:
Thai Union
Date:
09/30/2016
CRI Update:

In 2016, CBIS began to engage Thai Union on the issue of human trafficking in the seafood section. Human trafficking abuses in the shrimp supply chain in Thailand have been well documented. As the largest seafood company globally by sales, Thai Union has the ability to have far-reaching impacts in the sector to improve labor standards. CBIS will work with Thai Union to ensure the company is assessing its immediate and extended seafood supply chain for human trafficking.

Thai Union came to CBIS’ office in the third quarter of 2016 to outline its progress to eliminate slave labor from the seafood supply chain in Thailand. The company has taken a number of steps since widely circulated investigations uncovered abusive working conditions at a number of Thai Union suppliers. This external attention has pushed Thai Union to make significant changes in its business operations, including hiring workers directly rather than rely on labor brokers, some of whom charge workers exorbitant fees, promise jobs that never materialize, confiscate identity documents so workers are unable to leave, and often withhold pay. Thai Union is working with a variety of NGOs to provide grievance mechanisms for workers in factories and at sea and is now auditing its shrimp supply chain from vessels to fishmeal plants and farms to ensure suppliers comply with its code against forced labor. Violators of human rights stipulations are immediately terminated.  Thai Union is taking an active role in the Shrimp Sustainable Supply Chain Task Force (which actually covers the whole of seafood, in spite of the name). In addition to corporate representation, government representatives are included and NGOs act as an external advisory body to provide oversight. The Task Force is creating a code of conduct, auditable standards, and a model for monitoring that they will all agree to adhere to. The company also hired a Director of Sustainability who has been given free reign by senior management to implement changes. The company is now one of the leaders in the industry. Since much of its program is in its infancy, CBIS will follow the company’s implementation closely.

CBIS Portfolio Company:
Target
Date:
03/31/2017
CRI Update:

In a call with Target in February 2017, CBIS encouraged the company to release details of audits of its Thai seafood suppliers in light of egregious forced labor violations over the past 3 years, and share information about its participation in The Seafood Task Force, an influential, diverse coalition tackling human rights in Thailand, which Target joined at CBIS’ urging.

In October 2016, CBIS participated in a call with Target regarding Target’s new Responsible Sourcing and Sustainable Design 2020 goals. The company shared its key areas of focus: improving worker well-being, achieving net-positive manufacturing, and deriving key raw materials from ethical and sustainable sources. We have asked for additional detail on each of these areas of focus. The company made clear that it is committed to collaboration and transparency, including to the Seafood Supply Chain Task Force, a key area of interest for CBIS given our ongoing concerns regarding slave labor in the seafood supply chain in Thailand. The company is making headway to make sure that workers do not pay a fee for jobs, as is the case with unscrupulous labor brokers. In related news, we were pleased that Target is now having its fresh and frozen shrimp certified by Marine Bay Aquarium Project, and the company is also looking to certify tuna. The company also shared its recently published factory matrix that outlines the nearly 500 factories, by country, it is using to produce its goods. Shareholders welcome transparency of this kind since it can help to identify leading and lagging factories in terms of worker safety, environmental performance and human rights standards.

We are pleased to announce that Target joined the Shrimp Sustainable Supply Chain Task Force in September 2016, a longtime ask of CBIS. Key goals of the Task Force include: Creating a standard code of conduct model for Thai ports, brokers and vessels; conducting audits of vessels; and tracking and tracing systems from vessel to feed mill. The multi-stakeholder alliance includes European and American retailers, their suppliers, NGOs and the major Thai shrimp processors and feed companies. Members include Costco, Walmart, World Wildlife Fund and our own Thai Union. We believe Target’s advances can help to reduce reputational risk, protect at-risk workers, and ultimately make its seafood supply chain more resilient. We continue to urge Target to publicly report on its progress and to join additional programs that help migrant workers choose good employers, find safe work and living conditions, and avoid exploitative labor brokers. Target mentioned that it is now looking to take additional steps to trace its tuna supply chain.

In early 2016, Target hired a labor and human rights experts to be onsite in Bangkok to assess the seafood supply chain in Thailand. This is one of many steps Target has detailed to address human trafficking in the seafood supply chain in Thailand, including furthering knowledge of abuses in the shrimp supply chain through in-country meetings with the Thai government, the International Labor Organization, and key vendors; working with other retailers to communicate the need to address this issue with the Thai government; and implementing a process to trace the supply chain from ocean to table. Target audits its seafood processing facilities but does not currently make audit findings public.

After an investigation in January 2016 revealed that poor migrant workers and children were sold to factories in Thailand and forced to peel shrimp that ended up in global supply chains (Slave-peeled shrimp tied to major retailers, restaurants — 12/14/2015) CBIS contacted Target. Target is aware of the investigation and the need for even more productive multi-sector collaboration on this critical issue. As part of its traceability commitment, Target has been vigilant in evaluating its own supply from Southeast Asia and is working with a wide range of stakeholders (industry, NGOs, government, etc.) to address human rights violations. Target is currently assessing the opportunity to engage more formally with the Shrimp Sustainable Supply Chain Task Force – a group of retailers, manufacturers, government, and human rights organizations working to create procedures for ports, and to trace the seafood supply chain from vessel to feed mill – and its collaborative plan to achieve more oversight.

CBIS Portfolio Company:
Nucor
Date:
06/30/2016
CRI Update:

In May 2016, CBIS attended the Nucor annual shareholders’ meeting to question executives on initiatives to prevent slave labor in the company’s Brazilian supply chain, and its disclosure to shareholders of its progress.

In the fourth quarter of 2014, Nucor issued an update of steps it is taking to combat human trafficking in Brazil. In 2007, investigations revealed the prevalence of forced labor and armed surveillance by charcoal producers in Northern Brazil. Because charcoal is an input in Nucor’s steel production, the company has taken steps to eradicate slave labor from its supply chain. A new update from Nucor reported that between May 2010 and June 2014, 822 random, unannounced audits of charcoal facilities supplying its member pig iron manufacturers were conducted, covering ~25,000 laborers, and the ICC found no instances of forced labor or armed surveillance by employers or hired guards.

CBIS Portfolio Company:
Wyndham
Date:
12/31/2014
CRI Update:

Wyndham will team with highly regarded anti-trafficking organization Polaris to train staff at 7,600 hotels in 70 countries on human trafficking. Wyndham also donated 1 million rewards points for free hotel rooms and supplies for survivors. Given its size, Wyndham’s commitment has the potential to have a great impact worldwide. CBIS has engaged Wyndham since 2009.

Issue: Life Ethics

CBIS prohibits companies whose activities violate the Church’s teachings on life ethics from being owned in our Funds. Screened companies include those with direct participation in abortion-related products and services, those that manufacture contraceptives, and those involved in human embryonic stem cell research.

Issue: Pornography

The Church condemns pornography as an assault on the dignity of those who produce it and those who consume it. CBIS’ screen restricts investments in companies that produce pornographic products or provide pornographic services.

CBIS Portfolio Company:
Apple
Date:
03/31/2017
CRI Update:

In 2016, CBIS began to engage Apple on the issue of distribution of pornography. As a leader in the digital world, Apple has a responsibility to ensure that users of their digital store, content sharing, and communication products are property protected. Apple lags industry competitors such as Microsoft, Google, and Facebook, which have championed preventative software to report exploitative images and implemented zero tolerance policies in their code of ethics. CBIS will work with Apple to ensure the company is creating policies designed to protect children online, promoting positive use of information and communication technologies, creating new tools to improve the detection and removal of exploitative content, and reporting annually on progress and challenges.

With little disclosure on the topic, Apple has been a difficult company to assess in terms of its policies, programs or commitment to combating illegal porn and child sexual exploitation. The company currently has no disclosure of policies on the issue, nor partnerships with key anti-exploitation or trafficking groups.

After writing the company and having initial discussions with corporate staff, and we were told we are the first investor to raise such issues with the company to date. Microsoft, Facebook, Kik, and Google (Alphabet) are doing far more. We are seeking deeper discussions with topical experts internally within the company now.

CBIS Portfolio Company:
AT&T, Sprint, T-Mobile, Verizon
Date:
03/31/2017
CRI Update:

The internet and devices to access it have transformed pornography and child victimization into an on-demand market. The ability to tag, analyze, block and filter illegal content is crucial, in order to identify victims, assist child protection groups, and educate law enforcement on trends. Even more troubling are the rising numbers of children forced into commercial sex acts online, through popular apps and websites. Tech and telecom companies are at the center of the debate, with the ability to block images, educate kids and parents, and save victims from abuse.

CBIS is engaging with AT&T, Spring, T-Mobile, and Verizon to encourage the companies to develop solutions to combat child sex trafficking and exploitation online and foster effective content filtering strategies on devices. CBIS had previously sent letters to each company in 4Q 2014, inquiring about their content filtering options available on mobile devices. We are currently building a coalition of Catholic investors to join us in engaging each of our telecom companies.

Issue: Violence

Catholic social teaching recognizes the need for national security and defense. At the same time, it objects both to aggressive war-making and to the proliferation of those weapons that target civilians. The use of force is acceptable only to defend human life and only as a last resort. CBIS restricts the stocks of the armament industry’s largest producers.