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September 06, 2001
Socially Responsible Shareowner Proposals Continue to Gain Support
by Mark Thomsen
The number of social issue proposals receiving at least 10 percent support in the 2001 proxy season
outpaces that of recent years.
SocialFunds.com --
Results are now in for the lion's share of the 140 social policy shareholder proposals that came to
vote at U.S. corporate annual meetings this year through June 30. An analysis by the Investor
Responsibility Research Center (IRRC) revealed that of the 136 social policy proposals where vote
tallies are known, 36 received 10 percent or more support from voting shareowners. Last year, just
25 proposals out of 150 total received more than 10 percent support.
 IRRC, a Washington D.C.-based independent
organization that researches corporate governance, proxy voting and corporate responsibility
issues, also found that the average support for social policy resolutions was 8.3 percent of the
shares voted. This is an increase from last year's average of 7.5 percent.
Meg Voorhes,
Director of IRRC's Social Issues Service, notes that, "The 10 percent figure is an important
benchmark, because under the shareholder proposal rule administered by the Securities and Exchange
Commission, a proposal that earns this level of support may be resubmitted, all things being equal,
regardless of how many times it has appeared on the company's proxy statement in the past."
Nine of this year's top vote-getting proposals asked companies to take various steps to report
on or improve their global labor standards. Of the three social issue proposals that won more than
20 percent support, one was a resolution asking Unocal (ticker: UCL) to implement International
Labor Organization (ILO) standards in its global operations. In years past, this issue produced
few high votes.
Another striking feature of the 2001 proxy season is the relatively high
support for proposals that, directly or indirectly, questioned companies about their operations in
Burma. There have been accusations from the ILO and human rights organizations regarding the
extensive use of forced labor in that country. Both the ILO standards proposal at Unocal, and
another proposal at Unocal concerning executive compensation that received over 15 percent support,
made unfavorable mention of the company's operations in Burma. Proposals at three other companies
asking for reports on business ties to Burma averaged double-digit support.
As in the
past two years, proposals calling on companies to increase racial and gender diversity on their
board of directors got the highest support levels as a group among social policy resolutions. The
two top vote-getters of the 2001 season so far are board diversity proposals at American Power
Conversion (APCC) and Bed Bath and Beyond (BBBY) that each garnered more than 27 percent support.
Average support for such proposals this year is 19 percent.
As in past years, the majority
of the proposals were filed by religious investors affiliated with the Interfaith Center on
Corporate Responsibility, but this year saw increased sponsorship by New York City pension funds,
particularly for proposals on monitoring global labor standards. Socially oriented investment
management firms and individual shareholders also filed numerous resolutions.
©
SRI World Group, Inc. All Rights Reserved.
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