Food Safety and Sustainability
Access to an adequate supply of healthy food is a basic human right, yet as a result of unfair trade, production, and distribution, today’s food system fails to provide equitable access to nutrition for nearly one in seven people. According to the Food and Agriculture Organization of the United Nations, the world’s population is expected to reach 9.1 billion by 2050. If such projections are correct, food production (net of food used for biofuels) must be increased by 70 percent.
There are more than 450 million waged agricultural workers globally, composing 40 percent of the agricultural workforce. Fundamental rights at work are frequently violated in the agricultural sector. Less than 20 percent of agricultural workers have access to basic social protection and about 70 percent of child labor in the world is in agriculture, representing approximately 132 million girls and boys aged 5 to 14.
The industrialization of our global food system has led to a host of unintended consequences, including the overuse of fertilizers, pesticides, and antibiotics that poison our environment and compromise our health. It has also led to the mistreatment of animals and human rights violations in the food and agriculture sectors and a rise in obesity and undernutrition. Globally one in three people are now undernourished, overweight or obese. Over the last 35 years, obesity has more than doubled and has now reached epidemic proportions. Obesity and diet-related chronic diseases, including heart disease, stroke, diabetes and certain cancers have become global pandemics.
To address issues of food safety and sustainability, SRIC in association with ICCR, have developed the following focus areas: Access to Nutrition, Antibiotics in Meat Production, Labor in Food Supply Chains, Food Waste, and Sustainable Agriculture.
SRIC engages with the following companies on their policies and practices pertaining to food safety and sustainability: General Mills Inc., Nestlé S.A., McDonald’s, Wendy’s, Archer-Daniels-Midland Company, Philip Morris, International, Cracker Barrel, and Texas Roadhouse Inc.
Water Stewardship and Sustainability
More than one in six people worldwide – 894 million – do not have access to improved water sources, and 2.5 billion people, including almost one billion children, live without even basic sanitation. Every 20 seconds, a child dies as a result of poor sanitation: 1.5 million preventable deaths each year. By 2025, 1,800 million people will be living in countries or regions with absolute water scarcity, and two-thirds of the world’s population could be living under water stress conditions. The total usable freshwater supply for ecosystems and humans is less than 1 percent of all freshwater resources.
Manufacturing and extraction by chemical, textile, mining, electric goods, construction, food and beverage industries are particularly water intensive and contributors to water pollution, threatening communities’ access to water. Industrial water users can directly harm the ability of individuals in the local area to access adequate water for personal and domestic use, and where it harms the ability of subsistence farmers to access adequate water for food production, it can indirectly violate their right to food.
Already water scarcity and pollution are constraining social development and economic growth, and are damaging important ecosystems around the world. The global demand for freshwater has doubled every twenty years which is twice as fast as population growth.
To address issues of water stewardship and sustainability, SRIC in association with ICCR, have developed the following focus areas: Corporate Water Impacts, and Human Right to Water.
SRIC engages with the following companies on their policies and practices pertaining to water stewardship and sustainability: Campbell Soup Company, Coca-Cola Company, Danone, Monsanto, Procter & Gamble Company, and Southern Company.
The exploitation of persons—for labor or sexual purposes—is the third largest illegal “business” after drug and arms trafficking. In 2012 the International Labor Organization conservatively estimated that some 21 million persons globally, including in the US, remain enslaved. 14.2 million people are victims of forced labor and another 4.5 million are victims of forced sexual exploitation.
More companies are becoming aware of the potential for human rights abuses in their global operations and supply chains and what they can do to prevent these egregious crimes. Given the complexity of company supply chains and the multitude of contractors, recruiters, and suppliers used throughout a production process, there can be great risks to companies from human trafficking, including lawsuits, negative publicity and consumer boycotts, business interruptions and strikes–all of which can have a deleterious impact on shareholder value.
Increasingly corporate supply chain reporting on human rights issues is being legislated. Two recent examples are: a) the Conflict Minerals Special Disclosures provision of the Dodd-Frank Financial Reform Act which requires US listed companies from the electronics industry and other sectors to trace and disclose its use of ‘conflict minerals’ from the Congo and surrounding region; and b) the California Transparency in Supply Chain Act of 2010 requiring companies doing business in California with annual world-wide gross receipts that exceed $100 million to report on what they are doing in their product supply chains to evaluate and address risks of trafficking and slavery, through audits, certification, internal accountability procedures and the training of supply chain personnel on trafficking and slavery.
To address issues of human rights, SRIC in association with ICCR, have developed the following focus areas: Human Trafficking and Modern Day Slavery, Fair Chance Hiring, Protecting Worker Rights: Garment Workers and The “No Fees” Initiative.
SRIC engages with the following companies on their policies and practices pertaining to human rights: Caterpillar, Motorola, Hyatt Hotels Corporation, Starwood Hotel & Resorts Worldwide Inc., Boeing, Target Corp., Coach, Ralph Lauren Corporation, Verizon, Dean Foods Company, Costco, and Kroger.
As of today, millions of people continue to lack access to affordable health care coverage. Over 20 states have yet to expand Medicaid coverage for those persons who are most vulnerable. The costs of health care for individuals, businesses and the nation are significantly higher and continue to escalate at a greater rate than in other developed countries. As a corporate responsible organization, we advocate for corporate and systemic reforms that will improve access and affordability of health care for all, especially for those persons who are most vulnerable. We believe corporations have an important role to play in responding to the health care disparities in our country.
Global health business models must promote access to health for all, and be equitable and affordable, regardless of one’s country or resources. Companies must develop new models that address critical global health needs, including non-communicable diseases (heart disease, strokes, and cancer), HIV/TB/malaria and neglected tropical diseases that impact the most vulnerable.
According to the article “Closing the Gaps in Global Health Care” by ICCR, heart disease, strokes, and cancer, are the leading cause of death in the world, killing more than 36 million people each year. Similarly, an estimated 34 million people are currently living with HIV. According to the World Health Organization (WHO), of the 3.4 million children living with HIV, only 562,000 currently have access to affordable medicines to treat the disease since many of the available adult formulations aren’t safe for pediatric use.
In the face of these enormous global health challenges, the pharmaceutical industry has a responsibility to respond with new mechanisms, structures, and strategies to help answer the need and close the gaps. Companies must develop, implement, and monitor a global code of conduct that incorporates responsible marketing practices; anti-bribery corruption measures; fair clinical trials; and robust oversight of supply chain management programs. Companies must increase collaboration within the pharmaceutical industry and with other stakeholders to share knowledge and resources to develop and implement access to health initiatives.
Advocating for corporate and systemic reforms will improve access and affordability of health care for all, especially for those persons who are most vulnerable. An effective health care system assures each individual, regardless of health, race, ethnicity, immigration or socioeconomic status, a set of portable and comprehensive core benefits sufficient for physical and mental health. Corporations have an important role to play in responding to the health care disparities in our country.
Americans pay more for their medicine than anyone else in the world—prices for the world’s top-selling 20 drugs are three times higher in the U.S. than in England, and two times higher than in Canada. According to the National Patient Advocate Foundation, one in five American families will struggle to pay a medical debt this year. Americans paid $310 billion (after taxes and rebates) for drugs in 2015, an 8.5% increase over 2014, while the Cost of Living Adjustment and the Consumer Price Index were both relatively flat at roughly 1.7 % for this same period.
Pharmaceutical companies, health insurers, and medical device manufacturers lobby heavily on issues related to health care, donating significant and often undisclosed sums to political candidates, parties and action committees that in turn, promote public policy and legislation that protects their interests. In 2015, pharmaceutical companies spent over $231 million in lobbying activities—more than any other industry. In 2009, Pharmaceutical Research and Manufacturers of America (PhRMA) and its member companies spent an astounding $40 million lobbying Congress to prevent the passage of the Affordable Care Act—more than $3 million each month.
To address issues of global and domestic health, SRIC in association with ICCR, have developed the following focus areas: Access and Affordability of Medicines, Global Health Challenges, and U.S. Health Care Policy.
SRIC engages with the following companies on their policies and practices pertaining to global and domestic health: AbbVie, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck, Pfizer, Roche, Sanofi, Reynolds American, and Walgreen Company.
The severity and urgency of the climate crisis has been underestimated by too many for far too long. Strong global policy and regulation that drastically reduce carbon emissions are needed if we are to avoid irreversible impacts on the environment, economies and the health and well-being of our planet’s inhabitants; fossil fuels have significant geopolitical importance and impact. There are many companies across a variety of sectors that are moving to advance sustainable solutions and are setting standards that exceed government regulations. But the majority of the energy sector remains mired in its old model and demonstrates through its actions that it is in apparent denial of the terrible price future generations will pay for its resistance to reform and/or conform to measures that can produce change. In the absence of a more stringent GHG policy to enforce reductions, it is our responsibility as concerned investors to use our leverage to intervene wherever and whenever we can. There is no doubt that bolder, more creative strategies are required. There is no doubt that increased energy, persistence and resourcefulness will be needed. Many innovative strategies will and should be implemented because we face dire circumstances and a range of tactics will be required to achieve the needed solutions. As advocates—with many ICCR members representing faith institutions—we understand that where there is disagreement, we must be in discussion to hope for resolution. For that reason, as shareholders, we remain engaged with the companies we hope to change.
Natural gas production (hydraulic fracturing) from shale formations in the United States has grown dramatically since the early 2000s. Global interest in drawing gas from shales has also been growing rapidly, with companies assessing shales on nearly every continent.
Hydraulic fracturing, or “fracking,” involves the injection of more than a million gallons of water, sand and chemicals at high pressure down and across into horizontally drilled wells as far as 10,000 feet below the surface. The pressurized mixture caused the rock layer, in this case, the Marcellus Shale, to crack. These fissures are held open by the sand particles so that natural gas from the shale can flow up the well.
These operations often use toxic chemicals and high volumes of water, release significant levels of greenhouse gases and other pollutants, and have the potential to adversely impact local communities when not properly managed. These issues, in turn, can translate into the financial risk to companies and shareholders in the form of fines, regulations, lawsuits, and threats to companies’ social license to operate.
Methane, the key constituent of natural gas, is a potent greenhouse gas (GHG) with a global warming potential more than 25 times greater than that of carbon dioxide. Methane is the second most prevalent GHG emitted in the United States from human activities, and nearly one-third of those emissions comes from oil production and the production, transmission, and distribution of natural gas.
Reducing GHG emissions protects our climate and our communities. Companies that set science-based targets to build long-term business value and safeguard their future profitability in four important ways:
- Drive innovation: The transition to a low-carbon economy will catalyze the development of new technologies and operational practices. The companies that set ambitious targets now will lead innovation and transformation tomorrow.
- Save money and increase competitiveness: Setting ambitious targets now ensures a lean, efficient, and durable company in a future where resources become increasingly more expensive – particularly resources derived from fossil fuels. Rising prices of raw materials can mean the difference between profit and loss.
- Build credibility and reputation: Companies taking a leadership position on climate bolster their credibility and reputation among stakeholders, including investors, customers, employees, policymakers and environmental groups. Approximately half of consumers worldwide believe climate change will have a negative effect on their own lives, and 65 percent of consumers agree that human activity is responsible for climate change. Meanwhile, companies increasingly want to do business with suppliers that are taking climate change seriously so that they can reduce GHG exposure in their value chain.
- Influence & prepare for shifting public policy: Taking ambitious action now helps companies stay ahead of future policies and regulations to limit GHG emissions. Companies that are seen as leaders are better able to influence policymakers and help shape developing legislation.
Power plants account for 30 percent of U.S. carbon dioxide emissions—the largest share of any sector of the economy. But by all accounts, the electric utility industry has begun a fundamental transformation, perhaps the greatest in its history. A combination of cost-competitive renewable energy sources, dropping costs of storage technology, decentralization of production, regulation, and slower demand growth is changing the industry landscape. According to Bloomberg New Energy Finance, the economic reality is that “renewables are now among the cheapest sources of electricity. Wind and solar were the biggest sources of power added to U.S. grids three years running, becoming key sources of jobs in rural America.”
- Renewable Energy: The cost of solar panels and solar energy has dropped precipitously in the past several years, with more declines on the horizon. Many analysts predict that solar power will continue to drop in price until it is the cheapest form of power in many national markets.
- Decentralized Production: Distributed generation refers to power generation at the point of consumption. Generating power on-site, rather than centrally, eliminates the cost, complexity, interdependencies, and inefficiencies associated with long-distance transmission and distribution. Like distributed computing (i.e. the PC) and distributed telephony (i.e. the mobile phone), distributed generation shifts control to the consumer. Solar has become a popular distributed generation option, and with panel prices continuing to drop and battery storage improving, more people are looking to produce their own power.
- Regulation: In the US, the Clean Power Plan, mandated in 2015, the reduction of carbon emissions nationally. Although it has been revoked by the Trump Administration, the basis for the regulation, the Supreme Court decision deeming CO2 a pollutant to be regulated by the EPA under the Clean Air Act, is still in place. The impact of this is yet to be seen. But what remains true is that the falling costs of renewables and the low cost of natural gas has made a return to coal-fired power plants a non-starter. In addition, with the Paris Agreement in place internationally, we can expect to see more regulation of GHG emissions, making investments in carbon-heavy and polluting electricity sources more difficult to justify.
- Demand: While more people around the world are using electricity, and powering more items than ever, there have been major advances in energy efficiency, and global electricity demand has remained relatively flat in the past few years. Projections are for that trend to continue – far lower than the historic growth patterns that utilities have traditionally counted on for planning. In addition, large corporations are increasingly shifting to electricity powered by renewable energy, and intensifying efforts to reduce overall demand, sending important signals to electric utilities, which have traditionally supplied corporate energy.
To address issues of climate change, SRIC in association with ICCR, have developed the following focus areas: Electric Utilities: Planning for a 2 Degree Future, Methane Emission Reduction, and Transitioning to a Clean Energy Economy.
SRIC engages with the following companies on their policies and practices pertaining to climate change: AMEREN, Anadarko Petroleum Corp., Apache Corp., Boeing Company, Delta Airlines Inc., Devon Energy, Duke Energy Corp., Emerson, EOG Resources Inc., ExxonMobil Corporation, Ford Motor Company, General Electric Company, General Motors Company, Marathon Petroleum, and Valero Energy Corporation.
New estimates show that just eight men own the same wealth as the poorest half of the world. As growth benefits the richest, the rest of society—especially the poorest—suffers. Our economy must stop excessively rewarding those at the top and start working for all people. Accountable and visionary governments, businesses that work in the interests of workers and producers, a valued environment, women’s rights and a strong system of fair taxation, are central to this more human economy.
Since 2015, the richest 1% has owned more wealth than the rest of the planet. Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs—a sum larger than the GDP of India, a country of 1.3 billion people. The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much. An FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh. In Vietnam, the country’s richest man earns more in a day than the poorest person earns in 10 years.
As investors and fiduciaries, we seek to encourage governance practices that will improve both investor and public relations through greater transparency and accountability and thereby reduce reputational and legal risks.
To address issues of corporate governance, SRIC in association with ICCR, have developed the following focus areas: Executive Compensation, Independent Chair, and CEO and Lobbying & Political Contributions.
SRIC engages with the following companies on their policies and practices pertaining to corporate governance: AT&T, Facebook, IBM, Citigroup, Goldman Sachs Group Inc., Wells Fargo & Company, Freeport-McMoRan Copper & Gold Inc., and Walmart Inc.
Financial Practices and Risk
Safeguarding and promoting opportunities for the people across the world to participate in economic activity and to access the benefits that flow from credit and other financial services must be a top priority for any financial system that hopes to promote sustainable development and serve the well-being of people across the world.
As we continue our commitment to engage some of the biggest and most powerful institutions in the sector, we want to present an outline of our priorities going forward. This engagement presumes that political leaders and government authorities will direct economic activity towards the common good and that regulatory agencies will ensure the soundness and safety of the system.
- An open, transparent, and well-regulated global financial system is vital to serve the needs of all stakeholders, especially the world’s poor, who are even more vulnerable during times of financial crisis.
- Transparent and secure markets are essential to price discovery and to the reliable conduct of financial transactions between market participants.
- An adequate resourced global network of integrated regulatory agencies at appropriate levels, with fairly compensated professional staffing, is essential in a globally integrated financial system. This requires enhanced cooperation between sovereign governments. International financial institutions and regional associations.
- The revolving door between regulators, companies and industry associations must be closely monitored if the public confidence in the system, the regulatory framework, and the regulatory agencies is to be restored and maintained.
- The risk management structure of financial institutions must be fully integrated into their business models and across all operations of their business. It must be transparent, adequately staffed and accountable directly to senior management and the board of directors.
- Innovative tools and mechanisms, as well as boutique services that are employed in business operations between lenders, borrowers, dealers, underwriters, and investors in both individual institutions and across the industry, must be tested monitored and strenuously evaluated for soundness, suitability, integrity, and safety. The application of the precautionary principle is especially appropriate in this regard.
If the concepts expressed in these priorities are implemented, we believe that we will be on our way to building a financial system that promotes sustainable development and protects and promotes the common good.
To address issues of financial practices and risk, SRIC in association with ICCR, have developed the following focus areas: Responsible Lending, and Risk Management.
SRIC engages with the following companies on their policies and practices pertaining to financial practices and risk: Bank of America, Citigroup, J.P. Morgan Chase, PNC Financial Services, and Bank of New York Mellon.
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