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March 06, 2006
Resolution Withdrawals Signal Success in Shareowner Advocacy Early in 2006 Proxy Season
    by Bill Baue

Part one of this two-part article examines withdrawal of resolutions on climate change, sexual orientation nondiscrimination, political contributions, and HIV/AIDS policies.

The 2006 proxy season is just starting to gather steam and has already generated successes. A number of companies have complied with the terms of shareowner resolutions--which is the primary goal of resolution-filing--prompting shareowner activists to withdraw their proposals. Of the 256 resolutions filed this year by the Interfaith Center on Corporate Responsibility (ICCR), the leading coordinator of shareowner activism through its 275 faith-based institutional members, 46 have already been withdrawn, according to ICCR's EthVest database.

The withdrawn resolutions span the gamut, from corporate governance issues such as annual board elections and director compensation to social issues such as labor standards and human rights codes of conduct to environmental issues such as protecting biodiversity on Native Lands.

More than a quarter (13) of these withdrawals involve resolutions asking companies to address climate change by reviewing and reporting on the potential impacts of future regulations on greenhouse gas (GHG) emissions. These resolutions are part of a campaign coordinated by Ceres, an advocacy group comprised of investors and environmentalists, and the Investor Network on Climate Risk (INCR), a coalition of US and European institutional investors with more than $3 trillion in assets.

Four of the climate change resolutions were withdrawn from mid-western electric power companies that have plans to build new pulverized coal-fired power plants, namely Great Plains Energy (ticker: GXP), Alliant Energy (LNT), WPS Resources (WPS), and MGE Energy (MGEE).

"Investors are particularly concerned about the long-term financial viability of coal-burning power plants if regulations limiting carbon emissions are adopted," said Leslie Lowe, ICCR's energy and environment program director. "Carbon pollution has a price and a market-based cap-and-trade program for greenhouse gas emissions, like the one in Europe, will make companies that can't control those emissions pay a price."

Other companies complying with climate change resolutions (resulting in their withdrawal) include General Motors (GM), Anadarko Petroleum (APC), Home Depot (HD), Lowes (LOW), Chubb (CB), Toronto-Dominion (TD), and Simon Properties (SPG). ExxonMobil (XOM) issued a report requested in two different climate change resolutions, one asking for information on how the company intends to comply with Kyoto Protocol GHG emissions limits, the other asking for data behind the company's skepticism on climate science.

"We decided to withdraw our resolution with ExxonMobil because its report complied with the request made in the resolution, which was for the company to explain and defend its position on the science of climate," said John Wilson, director of socially responsible investing (SRI) at Christian Brothers Investment Services (CBIS). "The report indicates in a clear way for the first time that the company recognizes the connection between greenhouse gases and the use of fossil fuels."

"However, we are concerned that the company still questions the extent to which greenhouse gases contribute to climate change, even as the scientific consensus that human activity is the primary cause of global warming continues to grow," Mr. Wilson told

Resolution withdrawals represent only the tip of the iceberg of successful shareowner advocacy.

"Even after companies issue reports requested in our resolutions, we remain in dialogue with them to promote further progress--we don't just walk away," Ms. Lowe told

As well, behind-the-scenes dialogue often averts resolution-filing.

"There's more investor action on the climate change issue than ever, and a lot of it is through the wholesale approach that you wouldn't necessarily see through the resolutions out there," explained Rachel Harold, investor programs associate at Ceres. "Letters are going to the largest companies in the insurance and electric power industries asking for the same thing that the resolutions are, and we've had some progress through that, with five electric companies agreeing to issue reports."

In addition to the climate change campaign, several other shareowner campaigns are meeting success. One of the longest-running campaigns, which since 1995 has convinced more than 50 companies to extend their equal employment opportunity (EEO) policies to cover sexual orientation, achieved compliance at eight companies so far this year. These companies include Cooper Tire & Rubber (CTB), CR Bard (BCR), DTE Energy (DTE), Emerson (EMR), General Dynamics (GD), Paccar (PCAR), Sherwin-Williams (SHW), and Strayer Education (STRA).

The resolution was also withdrawn at Halliburton (HAL)--not because the company complied, but due to a technical error in the filing. A withdrawal is also imminent at Century Tel (CTL), which has agreed in principle to change its EEO policy. This resolution remains on the proxy ballots of ten companies this season, most notably ExxonMobil, which has notoriously resisted re-instituting such protection that was afforded to gay, bisexual, lesbian, and transgender (GBLT) Mobil workers before it merged with Exxon

A more recent campaign coordinated by the Center for Political Accountability (CPA) with ICCR asks companies to disclose their soft money political donations. It has resulted in compliance and withdrawals at Coca-Cola (KO), PepsiCo (PEP), Staples (SPLS), Eli Lilly (LLY), and Bristol-Myers Squibb (BMY). Shareowner activists can leverage such agreements to convince other companies to comply.

"If we know we can get a response from some companies and there are other companies where there's no response, then we ask those companies, why is it so difficult for you to do this?" said Sister Pat Wolf, executive director of ICCR. "We find some companies that are willing to take the lead, and their action becomes a seriously considered benchmark."

The campaign promoting corporate action to address the HIV/AIDS pandemic also met success.

"Chevron [CVX] agreed to make their AIDS policy public and strengthen its implementation, and clearly ICCR members are pleased at that progress," said Dan Rosan, ICCR's program director for health care. "Our dialogues with Chevron are in-depth and on-going."

Abbot Laboratories (ABT) and Anheuser-Busch (BUD) have made similar commitments leading to withdrawals.

"However, the SEC no-actions on Marathon [MRO], Pfizer [PFE], and ConocoPhillips [COP] on HIV/AIDS are highly disappointing and I think point to a general expansion of the ordinary-business exclusion which is, in my view, an unwelcome departure from tradition at the SEC," Mr. Rosan told

Part two of this two-part article examines no-action activity thus far in the 2006 proxy season.

Editor's Note:
To the Editor:

I read with interest the article "Resolution Withdrawals Signal Success in Shareowner Advocacy Early in 2006 Proxy Season" and celebrate the successes detailed.

Unfortunately, the chicken has not yet hatched at CR Bard; the resolution was withdrawn on a technicality. The company continues to lack an inclusive nondiscrimination policy. Walden is concerned that, as more than 80 percent of the Fortune 500 companies now have inclusive policies, CR Bard is losing a competitive advantage in recruiting and retaining employees from the widest talent pool. We are also particularly concerned that this company is headquartered in New Jersey, a state that explicitly prohibits discrimination in private employment.

In addition, although Walden and other investors have also had a very constructive conversation with Chubb on climate change, the resolution withdrawn was specific to sustainability reporting. This, however, leads me to mention that this proxy season has seen a number of successful withdrawals of sustainability report requests--AT&T, Black & Decker, Chubb, ITW, and Kinder Morgan. We at Walden have been particularly pleased with AT&T's commitment to develop a report, given the recent (and perhaps future) mergers.


Meredith Benton
Research Associate
Walden Asset Management
One Beacon Street
Boston, MA 02108


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