DARTMOUTH COLLEGE ADVISORY COMMITTEE ON INVESTOR RESPONSIBILITY EXECUTIVE SUMMARY PREPARED FOR THE DARTMOUTH COMMUNITY 2013

Transcription

1 DARTMOUTH COLLEGE ADVISORY COMMITTEE ON INVESTOR RESPONSIBILITY EXECUTIVE SUMMARY PREPARED FOR THE DARTMOUTH COMMUNITY 2013

2 2 I. EXECUTIVE SUMMARY 1. Overview This executive summary will provide an overview of the work performed by Dartmouth College s Advisory Committee on Investor Responsibility ( ACIR ) in As background, former President James E. Wright mandated the formation of ACIR in 2003 as one means for Dartmouth College to act as a responsible and engaged investor. The principal mission of ACIR is to review proxy resolutions relating to social issues raised by shareholders and to make recommendations to Dartmouth through its Investment Office on how it should vote those shareholder-initiated proxy resolutions filed at publicly traded companies in which Dartmouth directly holds shares. However, ACIR s mission is quite broad, and it is also charged with: making recommendations to Dartmouth regarding: the desirability of disclosing information regarding Dartmouth s investment portfolio to its constituents; the process by which Dartmouth determines its position with respect to proxy resolutions, and the practices Dartmouth employs to express its positions; the guidance, if any, that Dartmouth s investment advisors should be given to avoid selection of investment positions that could be deemed inconsistent with Dartmouth s mission; and the possibilities for education of students and other interested parties regarding the goals and constraints of Dartmouth s investment portfolio. This Executive Summary contains a description of ACIR s activities during ACIR Recommendations on the Voting of Proxy Resolutions ACIR met during April and May of 2013 to review proxy resolutions and make recommendations to Dartmouth through its Investment Office on the voting of such resolutions filed at publicly traded companies in which Dartmouth held shares. During this period, ACIR made recommendations to the Dartmouth on the voting of 53 proxy resolutions. These proxy resolutions dealt with the following social issues subject areas: banking and finance issues, corporate political activity, climate change, natural resources management and miscellaneous environmental issues, board oversight and activity, discrimination in the workplace, human rights, labor rights and worker safety, network neutrality and healthcare issues. Every single ACIR recommendation was accepted by the Investment Office and voted upon accordingly. The chart below

3 3 provides a summary of the proxy voting recommendations made by ACIR by subject area in Issues Proxy Resolutions Voted Proxy Resolutions Recommendations Support Oppose Abstain Banking and Finance Issues Corporate Political Activity Climate Change Sustainability Natural Resources Management and Miscellaneous Environmental Issues Board Oversight and Activity Non-Discrimination and EEO Human Rights Labor Rights and Workplace Safety Network Neutrality Healthcare Issues TOTAL Appendix I to this Executive Report lists the resolution topics and ACIR s recommendations by company name and also includes the level of shareholder support received by each resolution. Appendix II lists the resolution topics and ACIR s recommendations by subject area and also includes the level of shareholder support received by each resolution. 3. Screens to Prevent College Ownership of Shares of Certain Companies with Operations in Sudan Acting on recommendations from ACIR, in November 2005 the Board of Trustees of Dartmouth College announced that it would bar College ownership of shares in 6 publicly traded companies with operations in Sudan due to conclusion by ACIR that their activities amounted to direct complicity in the genocidal activities of the government of Sudan in its Darfur region. Pursuant to the Board of Trustees direction, Dartmouth College s Investment Office created a Sudan No Hold List effectively prohibiting its investment managers from

4 4 purchasing shares of the companies that Dartmouth through ACIR had identified as being complicit with the Khartoum regime s genocidal activities. ACIR reviews Dartmouth s Sudan No Hold List on an annual basis to ensure that the companies on the List continue to meet the criteria set forth above; company operations change over time and ACIR recognizes its responsibility to update the Sudan No Hold List. Currently, the following 17 companies are on Dartmouth s Sudan No Hold List: AREF Energy HJolding Company AviChina Industry and Technology Company (AviChina) China National Petroleum Company China North Industries Group Corporation (CNGC/NORINCO) China Petroleum Corporation (Sinopec Group) China Poly Group Co. Citadel Capital Dongfeng Motor Group Ltd. Egypt Kuwait Holding Company G A Z G rou p Indian Oil Corp. Ltd. Jiangxi Hongdu Aviation Industry Co. Ltd. Nuinsco Resources Ltd. Oil and Natural Gas Corporation Ltd. ONGC Videsh Ltd. PetroChina Co. Ltd. Petronas Gas Bhd Petrolium Nasional Bhd ACIR will continue to review the activities of publicly traded companies in Sudan and request updates to the Sudan No Hold Screen annually until such time that the Board of Trustees votes to remove the Sudan investment screen. Absent any significant improvement in the human rights situation in Sudan, however, ACIR anticipates that the College will continue to maintain the Sudan No Hold List. 4. Fossil Fuel Divestment Movement In recent years, there has been a movement by educational and religious

5 5 groups, unions, city and state governments and many others both nationally and internationally to encourage investors to divest from companies in the fossil fuel sector in recognition of the damage caused to the environment and the direct link that fossil fuels have to climate change. In the fall of 2013, Dartmouth s Board of Trustees was approached by a student group calling itself Dartmouth Divests. This group requested that Dartmouth enter into a dialogue to discuss the possibility of Dartmouth divesting its holdings of companies contained on the gofossilfree.org website. There are at least 10 companies listed on that site that Dartmouth has owned in recent years or currently owns, including Chevron, ConocoPhillips and ExxonMobil. In response to this request, the Board of Trustees released the following statement: The primary purpose of the endowment and other investment pools is to support Dartmouth's mission in preparing students for a lifetime of learning and of responsible leadership, through a faculty dedicated to teaching and the creation of knowledge. The values inherent in Dartmouth's mission are academic excellence and independence of thought within a culture of collaboration. Dartmouth supports vigorous open debate of ideas within a community marked by mutual respect, as well as a culture of integrity, self-reliance, collegiality and a sense of responsibility for each other and for the broader world. The use and management of Dartmouth's resources are to advance this mission and these values. Dartmouth's endowment represents funds donated to Dartmouth which have been invested and stewarded over the years to support current students and faculty as well as future generations of students and scholars. The primary investment objective of the endowment is to generate long- term, inflation-adjusted investment returns in excess of the annual distribution to preserve intergenerational equity for the institution. Dartmouth's position regarding its investment assets is to maintain a flexible investment mandate to maximize the earning power of these resources. In limited circumstances, there may be social, environmental or governance related factors to consider regarding Dartmouth's investments. The Advisory Committee on Investor Responsibility (ACIR) is comprised of members of the Dartmouth community including

6 6 students, faculty, alumni and staff, and was formed by the President's Office to study and make voting recommendations for Dartmouth regarding social issues on proxy ballots for shares of publicly held companies. The ACIR also offers a forum for the Dartmouth community to present socially driven investment concerns while recognizing the need for Dartmouth to continue to maximize investment returns in support of its mission. In cases of broader socially-driven investment matters, the Advisory Committee may be engaged for an initial review of the issue and may make a recommendation to the Board of Trustees if the President determines that action is warranted. Dartmouth's Board ultimately has sole responsibility for all investment matters, including determination of socially-driven investment issues that arise as a result of Dartmouth's investments. It seems likely that the issue of fossil fuel divestment will eventually be brought to ACIR for discussion, and President Phil Hanlon may ask ACIR to make a recommendation to the Board of Trustees. 5. Access to Information about Dartmouth s Holdings and to ACIR s Meetings ACIR continues to make available to the Dartmouth community a listing of Dartmouth s direct holdings of publicly traded equities. This listing is updated on a quarterly basis and is available for review during normal business hours at Dartmouth s Investment Office, which is located at 7 Lebanon Street, Hanover, New Hampshire. In addition, members of the Dartmouth community are welcome to attend ACIR s regular weekly meetings in the spring. 6. Membership 2013 There were 13 voting members of ACIR for during 2013 recruited from Dartmouth s faculty, administration, undergraduate and graduate schools, and alumni. Membership included the following individuals: Mary R. Albert, Professor of Engineering, Thayer School of Engineering, Executive Director, U.S. Ice Drilling Program Office Lindsay J. Brewer, Dartmouth College 13 Scott S. Brown, Dartmouth College 78 Charles A. Culp, Tuck School of Business 13

7 7 Aditya A. Gulanikar, Dartmouth College 14 Erzo F. P. Luttmer, Associate Professor of Economics Kerr O. Mone, Tuck School of Business 13 Keiselim (Keysi) A. Montas, Associate Director, Safety and Security Nicholas D. Pavlis, Dartmouth College 15 (alternate) Leigh A. Remy, Assistant Dean of Undergraduate Students, Office of the Dean of the College Oliver W. Schreiner, Dartmouth College 15 Emma L. Smith, Dartmouth College 13 Elizabeth S. Yepsen, Dartmouth 07, Tuck School of Business 13 In addition, Heather W. Huff, Director of the Investment Operations, served as a non-voting member, and Allegra B. Lubrano, also a non-voting member, served as ACIR s Executive Administrator for the tenth year. 7. Executive Summary Conclusion Shareholders representing foundations, unions, religious organizations, social investment funds, pensions and special interest groups filed hundreds of social issue proxy resolutions at public companies in The filing of so many resolutions covering such a broad swath of social and public policy issues demonstrates the sustained efforts of shareholders to continue to engage public companies on many different fronts. Shareholders continue to vote in increasing numbers on many of these resolutions reflecting recognition of the importance of the social and environmental issues the resolutions raise. Dartmouth continues to act as an engaged and responsible investor by actively voting its shares with regard to these issues. ACIR will continue to act on the College s behalf as a responsible shareholder by carefully and thoughtfully reviewing social issues proxy resolutions filed at companies the College owns shares of in ACIR looks forward to input from the Dartmouth community regarding its work and quite possibly the fossil fuel divestment movement.

8 8 APPENDIX I INDEX TO ACIR RECOMMENDATIONS ON PROXY RESOLUTIONS BY COMPANY KEY: Rec: - ACIR Voting Recommendation F = Vote in favor of resolution O = Vote to oppose resolution A = Vote to abstain on resolution W Resolution either withdrawn by proponent or noted voted upon for other reason Company Subject Area Rec. Support 3M Corp. End political contributions O 6.1% Abbott Laboratories Report on lobbying F 28.4% Apple, Inc. Amend by-laws A 5.6% AT&T Report on lead batteries F 27.0% AT&T Report on political contributions F 25.3% Berkshire Hathaway Establish greenhouse gas emissions goals F 8.7% Chevron Corp. End political contributions O 3.3% Chevron Corp. Recommend environmental expert to Board F 21.7% Chevron Corp. Report on climate change risks F 7.5% Chevron Corp. Report on country selection criteria F 22.0% Chevron Corp. Report on lobbying F 24.3% Chevron Corp. Report on off-shore wells O 7.2% Chevron Corp. Report on shale energy F 30.2% Coca-Cola Companies Nominate member with human rights exp. O 3.5% ConocoPhillips Broaden non-discrimination policy F W ConocoPhillips Establish greenhouse gas reduction goals F 29.4% ConocoPhillips Report on lobbying F 26.1% Cincinnati Financial Report on sustainability F 28.0% E.I. Du Pont de NeMours Report on compensation A 6.6% E.I. Du Pont de NeMours Report on GMO s O 5.6% E.I. Du Pont de NeMours Report on lobbying F 33.4% EMC Corp. Adopt corporate values O 5.0% ExxonMobil Corp. End political contributions O 5.7% ExxonMobil Corp. Establish greenhouse gas reduction goals F 26.7% ExxonMobil Broaden non-discrimination policy F 19.7% ExxonMobil Corp. Report on lobbying F 24.9% ExxonMobil Report on shale energy F 30.1% Goldman Sachs Establish human rights committee O 3.9% Hasbro, Inc. Report on supplier safety F 3.0% International Business Machine Report on lobbying F 24.4% Marathon Oil Report on lobbying F 42.1%

9 McDonald s Corp. Report on compensation A 7.6% McDonald s Report on human rights F 34.5% McDonald s Report on obesity O 8.1% Mondelez International Report on EPR and recycling F 9.5% Mondelez Internationl Report on gender equality O W Mylan Report on political contributions F W Nisource Report on political contributions F W NextEra Adopt policy on spent fuel rods O 4.9% ONEOK Report on methane emissions F 38.2% Republic Services Report on political contributions F 36.9% Spectra Energy Report on methane emissions F 35.3% Spectra Energy Report on political contributions F 33.3% The Home Depot, Inc. Report on equal employment opportunity F 25.9 The Travellers Group Report on political contributions F 30.2% Time Warner Cable Report on lobbying F 14.6% United Parcel Service Report on lobbying F 11.6% Valero Energy Amend policy F 42.8% Verizon Communications Report on lobbying F 25.7% Verizon Communications Network neutrality F 24.0% Wells Fargo & Co. Report on lending practices O 24.7% Wells Fargo & Co. Report on lobbying F 13.4% Yum Brands Adopt policy on recycling packaging F W 9

10 10 APPENDIX II INDEX TO ACIR RECOMMENDATIONS ON PROXY RESOLUTIONS BY SUBJECT AREA KEY: Rec. ACIR Voting Recommendation F = Vote in favor of resolution O = Vote to oppose resolution A = Vote to abstain on resolution W resolution either withdrawn by proponent or not voted upon for other reason BANKING AND FINANCE ISSUES Wells Fargo & Co. Report on lending practices O 24.7% CORPORATE POLITICAL ACTIVITY 3M Corp. End political contributions O 6.1% Abbott Laboratories Report on lobbying F 28.4% AT&T Report on political contributions F 25.3% Chevron Corp. End political contributions O 3.3% Chevron Corp. Report on lobbying F 24.3% ConocoPhillips Report on lobbying F 26.1% E.I. Du Pont de NeMours Report on lobbying F 33.4% EMC Corp. Adopt corporate values O 5.0% ExxonMobil Corp. End political contributions O 5.7% ExxonMobil Corp. Report on lobbying F 24.9% International Business Machine Report on lobbying F 24.4% Marathon Oil Report on lobbying F 42.1% Mylan Report on political contributions F W Nisource Report on political contributions F W Republic Services Report on political contributions F 36.9% Spectra Energy Report on political contributions F 33.3% The Travellers Group Report on political contributions F 30.2% Time Warner Cable Report on lobbying F 14.6% United Parcel Service Report on lobbying F 11.6% Valero Energy Amend policy F 42.8% Verizon Communications Report on lobbying F 25.7% Wells Fargo & Co. Report on lobbying F 13.4% CLIMATE CHANGE

11 11 Berkshire Hathaway Establish greenhouse gas emissions goals F 8.7% Chevron Corp. Report on climate change risks F 7.5% ConocoPhillips Establish greenhouse gas reduction goals F 29.4% ExxonMobil Corp. Establish greenhouse gas reduction goals F 26.7% ONEOK Report on methane emissions F 38.2% Spectra Energy Report on methane emissions F 35.3% NATURAL RESOURCES MANAGEMENT AND MISCELLANEOUS ENVIRONMENTAL ISSUES AT&T Report on lead batteries F 27.0% E.I. Du Pont de NeMours Report on GMO s O 5.6% Chevron Corp. Report on off-shore wells O 7.2% Chevron Corp. Report on shale energy F 30.2% ExxonMobil Report on shale energy F 30.1% Mondelez International Report on EPR and recycling F 9.5% NextEra Adopt policy on spent fuel rods O 4.9% Yum Brands Adopt policy on recycling packaging F W BOARD OVERSIGHT AND ACTIVITY Chevron Corp. Recommend environmental expert F 21.7% Coca-Cola Companies Nominate member with human rights exp. O 3.5% Goldman Sachs Establish human rights committee O 3.9% DISCRIMINATION IN THE WORKPLACE ConocoPhillips Broaden non-discrimination policy F W ExxonMobil Broaden non-discrimination policy F 19.7% Mondelez Internationl Report on gender equality O W The Home Depot, Inc. Report on equal employment opportunity F 25.9 HUMAN RIGHTS Apple, Inc. Amend by-laws A 5.6%

12 12 Chevron Corp. Report on country selection criteria F 22.0% McDonald s Report on human rights F 34.5% LABOR RIGHTS AND WORKPLACE SAFETY E.I. Du Pont de NeMours Report on compensation A 6.6% Hasbro, Inc. Report on supplier safety F 3.0% McDonald s Corp. Report on compensation A 7.6% NETWORK NEUTRALITY Verizon Communications Network neutrality F 24.0% SUSTAINABILITY Cincinnati Financial Report on sustainability F 28.0% HEALTHCARE ISSUES McDonald s Report on obesity O 8.1%