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May 13, 2011
Decades of Shareowner Engagement with Tobacco Companies Yield Mixed Results
    by Robert Kropp

SocialFunds.com talks with Reverend Michael Crosby, an ICCR member who since 1980 has filed shareowner resolutions addressing health issues, marketing tobacco products to children, and human and labor rights for tobacco farmworkers.


For over thirty years, Reverend Michael Crosby of the Province of St. Joseph of the Capuchin Order has led a shareowner movement seeking to improve the corporate responsibility of companies in the tobacco industry.

As the coordinator of the Tobacco Issues Group for the Interfaith Center on Corporate Responsibility in New York (ICCR), Crosby has filed resolutions at all the major tobacco companies addressing such issues as the marketing of tobacco products to children and the inclusion of health warnings on packaging not only in the US, but globally.

"I don't know of another product in any other industry that, if used as intended, will be detrimental to health," Crosby told SocialFunds.com. "The basic issue is these companies are making a product that is killing or harming the health of people who use it."

"If you then accept that fact and decide to engage these companies, you know that their basic argument is that this is a legal product," he continued.

An issue on which Crosby and his many allies are concentrating their activism at present is the working conditions of farm laborers in the US and globally. A recently published report by Oxfam America and Farm Labor Organizing Committee (FLOC) found that "America's migrant farmworkers toil for sub-poverty wages under some of the most dangerous working conditions in the nation."

"Fear dominates the workers' lives," the report continued. "Fear of arrest and deportation, fear of employer retaliation, fear of being unable to repay the thousands of dollars demanded by the recruiters and smugglers who brought them across the border to these jobs."

"Sixty-five to 70% of all tobacco workers in North Carolina are undocumented," Crosby told SocialFunds.com, "And the companies know it."

This year, for the fourth proxy season in a row, Crosby and his allies have submitted a shareowner resolution at Reynolds American, calling on the company "to implement protocols ensuring basic worker rights consistent with internationally agreed-upon human rights conventions in the countries which supply its tobacco and to find ways to ensure, through truly independent monitoring, that its varied suppliers are enforcing these protocols as well as all other pertinent laws of the nations in which its suppliers operate."

The resolution won about 10% of the shareowner vote this year, which according to Crosby, was "very good, since 42% of Reynolds is owned by British American Tobacco (BAT)."

In opposing the resolution, the company's Board of Directors stated that the company has adopted and reaffirmed a "Statement on Our Efforts to Support Human Rights," and contracts with LeafTc "to evaluate tobacco dealers on a broad range of leaf-procurement requirements."

"I've never gotten the impression that Reynolds is serious about the topic," Crosby said. "Reynolds has a human rights protocol on paper. But in response to our resolution at the annual meeting, they assured the shareholders that there were no violations of human rights in any of their producing fields."

"But as we've said every year, not only are there violations of human rights; there are violations of US law as well, because the company has been told that it is purchasing tobacco from entities that hire undocumented workers," he continued. "Reynolds also said there were no problems with the health of their workers, so clearly there's a disconnect going on."

The Oxfam-FLOC report documented widespread occurrences of green tobacco sickness (a form of acute nicotine poisoning), heat stroke, and exposure to pesticides.

"And LeafTc has no credibility," Crosby asserted. "It's two former BAT people."

In contrast to their experience with Reynolds, the shareowner activists have engaged somewhat more successfully with Philip Morris International (PMI) and Altria, and a resolution addressing forced child labor in the tobacco fields of Malawi was withdrawn in advance of PMI's annual meeting.

"At a meeting with PMI last December, they proposed that Verite come up with protocols that would be made with the input of significant stakeholders, including ICCR," Crosby said. Verite, a US-based non-governmental organization (NGO), conducts workplace audits to ensure that people worldwide work under safe, fair, and legal working conditions.

"Since December, a protocol has been piloted in two South American countries," Crosby said. "If all goes well, Verite will launch the protocol globally this summer."

"Reynolds hasn't evidenced any care until now, when they've been exposed in the Oxfam-FLOC study," Crosby asserted. "Now, they say they support the recommendation for an industry-wide, multi-stakeholder convening to address the issues.

"Reynolds made it clear that they would not meet unilaterally with FLOC," he continued. "Reynolds knows that FLOC is committed to being a union of farm workers, and the issue of a union in this nation is a red light for every corporation."

"We will look at what Reynolds will do," Crosby said. Under Securities and Exchange Commission (SEC) rules, the coalition is permitted to submit the resolution again at the company's 2012 annual meeting.

Asked to provide an overview of his more than thirty years of engagement with tobacco companies, Crosby said, "If you accept that these companies are not going to accept the morality of the issue, then our engagement produced some results. We were influential in getting Joe Camel out of the business. They admit that the product is harmful, and that it is addictive. But Reynolds still will not admit that second-hand smoke is harmful."

"But some of things we've accomplished have been beneficial for the tobacco companies themselves," Crosby observed. "We had health warnings put on the products, and filed a resolution to have warnings placed on tobacco products everywhere in the world. Philip Morris accepted that, and it looked like a victory. But in the long run, it's part of their strategy that says, we've warned the consumer."

 

 
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