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December 07, 2004
Ford HIV Report Exemplifies New Shareowner Action Strategy
    by William Baue

Ford joins Coca-Cola, Cinergy, and others heeding shareowner resolutions requesting reporting on social and environmental issues, but it remains to be seen how far the strategy will extend.

A shift is taking root in shareowner action, borrowing a strategy of the Toxic Releases Inventory (TRI), the 1988 law that effected huge decreases in toxic emissions not by telling companies to reduce pollution but by simply requiring them to disclose the amount of toxins they release. Similarly, shareowner advocates are now less likely to tell companies what their problems are and how to fix them, and more likely to ask companies to study an issue and report on its pervasiveness and effects on valuation. In the process of identifying problems, companies typically innovate solutions that work best within their own idiosyncratic operations. To add to the old adage, sunshine not only disinfects, it also promotes new growth.

Companies are responding positively to this change in shareowner action strategy.

Take, for example, yesterday's release by Ford (ticker: F) of a report on the effects of HIV/AIDS on its global operations, prepared in response to a shareowner resolution filed last year by members of the Interfaith Center for Corporate Responsibility (ICCR) requesting such a report. The report uses Global Reporting Initiative (GRI) HIV/AIDS Reporting Guidelines, which comprise 16 indices including risk management, contingency planning, performance, prevalence and incidence rates, current and future costs and losses, and stakeholder involvement.

"Ford is the first automotive company to use the GRI HIV format to report on their activities--they are also the first company of any industry to use that format to report on their global activities," said Dan Rosan, ICCR's program director for public health. Several firms use the GRI for Africa-only reports. "It is my understanding as well that Ford is the first American multinational to extend antiretroviral treatment to their global workforce, not just in southern Africa."

Ford is expanding its HIV/AIDS program, which began in 1999 with an educational program at its Pretoria, South Africa plant, to some of the most high-risk regions of the world, including China, India, Russia, and Thailand.

It is unlikely that Ford would be pursuing such initiatives of its own accord absent engagement by shareowners and other stakeholders, but Ford finds value in this kind of collaboration, according to Neil Golightly, Ford's director of sustainable business strategies.

"Our team and the entire company works very closely with ICCR and other groups across a broad range of issues," Mr. Golightly told "One of the things we find most valuable about working with such groups is the range of perspectives we get on issues that might not arise in the normal course of doing business, so it helps us understand the various views of stakeholders and helps us look at issues in new ways, and actually helps to create opportunities for new solutions to some of the matters that are facing our business, on this and other issues."

Ford's move helps set a precedent in the corporate community for collaboration and transparency through reporting.

Actually, Ford is both taking the lead and following in the footsteps of Coca-Cola (KO), which shone the spotlight on this technique by recommending a "yes" vote this past proxy season to the ICCR-sponsored resolution that similarly asked for a report on AIDS. The resolution received 98 percent support from voting shareowners. Coke issued the report in October 2004, and ICCR issued a response letter that both praised the report and also pointed out shortcomings and areas for future steps.

The strategy has also taken hold in shareowner action campaigns on climate change. Last week, Cinergy (CIN) issued a report analyzing the potential effects of climate change regulations on its operations and discussing actions the company is taking to reduce or offset its greenhouse gas (GHG) emissions. American Electric Power (AEP) issued a similar report in August of this year, and TXU (TXU) released such a report the next month. All of these reports were in response to shareowner resolutions coordinated by ICCR and the Coalition for Environmentally Responsible Economies (CERES).

However, it remains to be seen how extensively this new collaborate-and-report strategy will take hold in the corporate community. Indeed, it is unclear the degree to which it is taking comprehensive hold even at companies already employing it.

Just today, Green Century filed a shareowner resolution asking Ford to report on whether its lobbying efforts to prevent an increase in federal Corporate Average Fuel Economy (CAFE) standards are consistent with its self-promotion as an environmentally responsible company. And ICCR members have re-filed a resolution asking Ford to report on GHG emissions reduction strategies, a resolution they also filed with General Motors (GM). Last year, this resolution received support from over six percent of voting Ford shareowners, more than double than the three percent re-filing threshold required by the Securities and Exchange Commission (SEC) for a first-year resolution.

"Ford and the entire automotive industry have more work to do on environmental issues, and ICCR will be with them to help them do that work, encouraging and cajoling them to do it," Mr. Rosan told "The announcement today serves as perhaps a model for a way that a collaborative approach can strengthen both humanitarian and fiduciary or economic performance of a company."


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