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April 29, 2004
First-Year Resolution on HIV/AIDS Garners Significant Support at Pharmaceuticals
    by William Baue

The HIV/AIDS pandemic threatens human life and shareowner value, according to a shareowner resolution filed at companies in the pharmaceutical, oil, and beverage sectors.


"There are more than 42 million people worldwide currently living with HIV/AIDS, over 95 percent of whom live in the developing world. Effective treatments for HIV/AIDS exist, but only 4 percent of those who need treatment have access to it. According to UNAIDS, the HIV/AIDS pandemic is 'creating or aggravating poverty among millions of people, eroding human capital, weakening government institutions, and threatening business activities and investment.' The World Bank reports that in southern Africa and other affected regions 'a complete economic collapse will occur' unless there is a response to the HIV/AIDS pandemic. Even 'a delay in responding to the outbreak of the epidemic, however, can lead to collapse.'"

These sobering facts and opinions are taken from a shareowner resolution filed at four major pharmaceutical companies asking them to report on the effects of the pandemic on their businesses, focusing on emerging markets. The resolution also asks them to disclose what measures they are taking to mitigate the risks and take advantage of opportunities presented by the HIV/AIDS as well as the tuberculosis and malaria pandemics. The resolution targets these major pharmaceutical companies because they have been faulted for not doing enough to make HIV/AIDS medications more readily available to the most needy in developing regions, people who can least afford them.

Within the past week, the resolution, which is being filed for the first time at these companies, received 13.9 percent support from Merck (ticker: MRK) shareowners, 9.8 percent at Pfizer (PFE), and 8 percent at Abbott Laboratories (ABT). Bristol-Myers Squibb (BMY) shareowners will vote on the resolution at its May 4 annual meeting.

These results significantly surpass the US Securities and Exchange (SEC) threshold that requires first-year resolutions to receive support from more than 3 percent of voting shareowners in order to be refiled the next year. The resolutions are part of a larger campaign coordinated by the Interfaith Center on Corporate Responsibility (ICCR), a coalition of 275 faith-based institutional investors managing an estimated $110 billion in assets.

ICCR members filed the resolution at many other companies across multiple diverse sectors.

"HIV/AIDS is an economic, security, and humanitarian issue which cuts across industry lines--every company with a global footprint needs to be prepared to face the consequences of the global HIV/AIDS pandemic," said Dan Rosan, ICCR's program director for public health, who is coordinating this campaign. "Oil companies are particularly vulnerable because they have to go where the oil is, so if an oil-producing region is hard-hit by HIV/AIDS--and Angola and Nigeria certainly qualify--the oil majors have to deal with it."

ICCR members have filed the resolution with ChevronTexaco (CVX), where it received 8 percent support from shareowners yesterday. Interestingly, filers withdrew the resolution at ExxonMobil (XOM), which has a history of staunchly opposing resolutions, in favor of collaborating with the company on the issue.

"Exxon-Mobil doesn't have a good track record of being receptive to shareowner dialogue and resolutions, though they do have a good track record on dealing with malaria," Mr. Rosan told SocialFunds.com. "ExxonMobil responded very differently to the HIV/AIDS resolution than they do to most resolutions--they produced top-level executives, who discussed the company's policies and practices candidly."

"We're dealing with the company as good-faith partners based on their actions around this particular issue, and we're hoping to use this HIV/AIDS resolution to help build a constructive relationship that can impact discussions on other issues and other resolutions," he added.

The resolution was similarly withdrawn at Ford (F), Johnson & Johnson (JNJ), and Eli Lilly (LLY). The SEC allowed American International Group (AIG) to omit the resolution from its proxy under the "ordinary business" rule, reasoning that insurers' actuarial activities address such risks as a matter of course.

"I strongly disagree with the SEC's interpretation, but it was a very narrow decision that does not affect the status of the resolution at other companies," said Mr. Rosan.

The resolution received a remarkable 97 percent support from Coca-Cola (KO) shareowners, who were clearly influenced by the company's unusual recommendation of a "yes" vote. Competitor PepsiCo (PEP), has not followed suit. Last year, 7.5 percent of PepsiCo shareowners supported this resolution, which will go to vote again at the company's May 5 annual meeting.

"The numbers have just been terrific," said Mr. Rosan, indicating "the unusual degree to which ICCR has successfully moved corporate policy on HIV/AIDS in such a short time--at company after company, ICCR's HIV/AIDS program has changed policy and saved lives."

 

 
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