August 08, 2006
Shareowner Activists See Progress at TimeWarner, and Room for Improvement
by Bill Baue
In part one of this two-part article, activists applaud the company on its first corporate social
responsibility report while continuing to push on environmental, social, and governance issues.
Ever since the early 1990s, shareowner activists have engaged TimeWarner (ticker: ">TWX) on environmental, social,
and governance (ESG) issues ranging from vendor standards, recycled content in magazine paper,
smoking-related issues, pay disparity, and splitting CEO/chair roles. This year saw significant
progress forward on many of these fronts, according to shareowner activists affiliated with the
Interfaith Center on Corporate Responsibility (ICCR), a network of 275 faith-based institutional investors with
more than $110 billion in assets. At the same time, these activists see many areas where
TimeWarner still has much room for improvement in its corporate social responsibility (CSR)
"We commend the company for recently joining Ceres, issuing its first CSR report,
and creating the position of vice president of corporate citizenship and appointing Michele
Sacconaghi in that role," said Julie Tanner, corporate advocacy coordinator for Christian Brothers
Investment Services. CBIS, a socially
responsible investing (SRI) firm and ICCR member, has filed shareowner resolutions with TimeWarner
since 2004 on pay disparity and splitting the CEO and board chair positions. "We believe these steps represent real
progress at the company."
"The availability of environmental and social performance data
provides a basis for our social and environmental analysis, allows us to make industry and peer
group comparisons, and gives evidence of the company's commitment to disclosure," Ms. Tanner told
SocialFunds.com. "We also believe that the company has been more responsive in dialogues with ICCR
shareholders and that our engagement has improved."
Conrad MacKerron, director of the
corporate responsibility program at the As You
Sow Foundation, first engaged with Time Inc. in 2003 on recycled paper content in its
magazines, and expanded to address TimeWarner on smoking in movies in 2004 and vendor standards in 2005. Through these dialogues, it became clear to Mr. MacKerron
that TimeWarner lacked an internal system for gathering and monitoring CSR data in a centralized
fashion, so he and other shareowner activists (including Ms. Tanner) advocated for improved CSR
In response, not only did TimeWarner issue its first CSR report in
May 2006 promising to develop a vendor standards code of conduct and advancing a smoking in movies
policy, but also Time Inc. issued its own
sustainability report in April addressing paper usage issues.
reports are well-written summaries of the company's actions to date, but they lack a clear
articulation of a vision or blueprint for sustainable development," Mr. MacKerron told
SocialFunds.com. "Furthermore, there is no mention of how these policies were developed and
adopted as a result of outside pressure by stakeholders, giving the incorrect impression that the
company was proactive."
In March 2005, Mr. MacKerron sent a letter to Susan Waxenberg,
then-assistant general counsel and assistant secretary, to ask if the company had a vendor
standards code of conduct to cover the manufacture of products licensed with such popular
characters as Harry Potter and Batman. At first the company did not respond, then said they never
received the letter or lost it, then let several months lapse again after receiving a faxed copy of
the letter, according to Mr. MacKerron.
"In the context of a decade of controversy on
vendor issues faced by Gap, Nike, Wal-Mart, and others, it was
incredible that the company could not or would not provide a straight answer to a simple question,"
said Mr. MacKerron, who filed a vendor standards resolution in late 2005. "At that time it became
clear they had no code, even though Walt Disney, their direct
competitor, established a code and a system for implementing it in 1996."
CSR report says on page 39 that the company will develop a supply chain code and monitoring systems
'06 and '07 and take 'a few years' more to implement," Mr. MacKerron added. "This is not an
ambitious timetable and does not imply a high level commitment, especially in view of a shareholder
vote of 20 percent this year on this issue."
Susan Duffy, vice president of corporate
communications at TimeWarner, reports that the code of conduct is on schedule for finalization by
the end of 2006, and points out that implementing a system with integrity takes time.
thorough internal assessment, the establishment of a compliance and monitoring system, and a
remediation strategy are all elements that we believe could take several years," Ms. Duffy told
SocialFunds.com. "Indeed, even those companies that have been focusing more intently on these
issues for a decade or more are still facing challenges and evolving their approaches."
"We are comfortable that the timeline TimeWarner has stated for this significant undertaking is
reasonable and on a par with our peers," she adds.
Part two of this two-part article
addresses shareowner engagement with TimeWarner over recycled content in magazine paper, depiction
of smoking in films, and pay disparity, among other issues.