Shareholder Advocacy Committee University Community Meeting on SRI

1. Shareholder Advocacy CommitteeUniversity Community Meeting on SRI Thursday, October 14, 2009

2. 2009-2010 Shareholder Advocacy Committee Members (SAC) • Raymond Catania, Staff Representative & Chair • Annemarie Barrett, Undergraduate Representative • Patrick Eccles, Staff Representative • Elaine Lehman, Staff Representative & Secretary • A. (Tassos) Malliaris, Faculty Representative • Charles Murdock, Faculty Representative • Mary Elsbernd, Faculty Representative • Eilleen Rollerson, Graduate Representative • Lucia Samayoa, Undergraduate Representative •  Navneeth Iyengar, transition Undergraduate Representative Ex-Officio Members • Erik Grimshaw, Manager- Investment Administration • Eric Jones, Assistant Treasurer- Office of the Treasurer

3. Discussion Topics Welcome What is Shareholder Advocacy? Taking “Stock” of Corporate Behavior SRI Example: Chevron Corporation Overview of 2008-2009 Advocacy Initiatives Overview of SAC Agenda for 2009-2010 Statement on SAC Activities Open discussion

4. What is Shareholder Advocacy? “...[S]hareholder advocacy involves actively working with the company management to encourage business practices that respect human rights, promote environmental sustainability, and fulfill other aspects of social responsibility and good corporate governance.  Unlike social screening, shareholder advocates do not refrain from investing in certain corporations; instead they seek change by engaging with company leadership.” “Integrating Environmental, Social and Governance Issues Into Institutional Investment” co-produced by the Responsible Endowment Coalition (REC) and the Business & Human Rights Program of Amnesty International USA (AIUSA)

5. Taking “Stock” of Corporate Behavior When you own stock in a company, you are truly an owner, and the management should be working on your behalf. As such, you enjoy certain rights and privileges. Owning shares helps you: • Receive a response when you write the company • Secure a meeting with corporate managers to raise your concerns • Attend annual shareholder meetings and pose questions directly to a company’s CEO • Obtain media coverage of the company and the issue • File a shareholder resolution

6. Shareholder Advocacy: How A Resolution Works At the heart of shareholder activism is the right to file resolutions….It is moved at a company’s annual shareholder meeting and voted on by shareholders. Many shareholders voluntarily withdraw their resolutions after reaching a settlement with a corporation. For instance, in 2004, Amnesty International USA withdrew a resolution that it had filed with ExxonMobil after the company committed to uphold fundamental worker and human rights. AIUSA continues to monitor the company’s progress in fulfilling its promise. (Source: Amnesty International USA)

7. Shareholder resolutions very rarely win a majority of shares voted. The resolution filer’s immediate goal is to gain the attention of top management and the Board, and to get the necessary threshold level of support to resubmit the resolution the following year. In the first year a proposal must win 3% of the vote to be re-filed the next year. In the second year, 6% is the threshold; and in the third and subsequent years, 10% is the minimum needed.

8. Resolutions do not have to win a majority in order to help change corporate behavior. Many corporations adopt, in part or in whole, the recommendations of shareholders: • Because they agree (in part or in whole) the position expressed • To forestall the filing of future resolutions • Shareholders can identify and win over corporate executives to their views, in the process of negotiating the withdrawal of a resolution • If a resolution is moved at a shareholder meeting, it can attract attention to the issue by other shareholders and the media

9. What Is Required To File A Shareholder Resolution? (Source: Amnesty International USA) • Shareholders must hold at least $2,000 worth of stock for over 1 year • Shareholder resolutions, to be filed successfully, must meet several procedural and content requirements set forth by the Securities & Exchange Commission (SEC) • To avoid the SEC excluding the resolution, shareholders seek expert legal advice In the supporting role of co-filer, Loyola’s SAC seeks the advice of experienced shareholder activists. i.e. NJCIR and ICCR, who are well-versed in these complicated legal requirements.

10. But, Does It Really Work?(Source: Amnesty International USA) Yes! By using shareholder resolutions, shareholder activists have been able to engage companies in dialogue about their liabilities and obligations. In the activist portfolio which is utilized wholly for advocacy purposes (therefore, separate from an organization’s Investments), one should hold stock in several companies just to be able to file resolutions in future years where it is an appropriate and effective tactic. For example, In 2008, SAC asked the University to purchase sufficient stock in OM Group to be eligible to participate in potential future shareholder resolutions, in support of the NJCIR.

11. SRI Example: Chevron Corporation Since 2004, Jesuits and religious investors have engaged Chevron Corporation (CVX) on the need to develop a comprehensive, transparent and verifiable human rights policy to deploy throughout the 180 countries where they operate. The National Jesuit Committee for Investment Responsibility (NJCIR) with the support of the US and English Canada Jesuit Provincials, have focused on Human Rights as a core area of shareholder advocacy. This issue coincides closely to Jesuit apostolic concerns regarding the marginalization of Africa, the rights of indigenous people, economic justice and conflict & violence. (Source: NJCIR)

12. NJCIR: Chevron Corporation, cont’d The company is heavily involved in crude oil production in West Africa. Escravos, Pennington, Bonny Light and Cabina are just a few of the crude oils produced by Chevron in this region. According to the company’s website, Chevron is also the leading refiner and marketer of petroleum productions in South Africa. 

13. SRI Example: Chevron, cont’d The energy sector is under mounting scrutiny for human rights practices. Increasingly, oil and gas resources are located in conflictive, repressive and deprived locations which can make operating environments more volatile. The coalition maintains that the establishment of a Human Rights policy will improve Chevron’s social license with host communities and position the company as partner of choice for all stakeholders.

14. Chevron: NJCIR & Resolution on Human Rights • 2003 – Withdrawn: Shareholders request the Board to adopt a human rights policy • 2005 – Withdrawn: Shareholders request the Board to adopt a comprehensive, transparent, verifiable human rights policy and report to shareholders on the plan for implementation by October, 2006. This report to be prepared at reasonable expense, omitting proprietary information. Lead filer: Society of Jesus - Wisconsin Province. (Source: Interfaith Center on Corporate Responsibility)

15. Chevron: NJCIR & Resolution on Human Rights While Chevron has passed some human rights initiatives, this movement of shareholders urges the company to create a more detailed policy that is integrated into all aspects of the company.

16. Chevron: NJCIR & Resolution on Human Rights • 2006 – Resolved: Shareholders request the Board to adopt a comprehensive, transparent, verifiable human rights policy and report to shareholders on the plan for implementation by October, 2006. This report to be prepared at reasonable expense, omitting proprietary information. Actual vote: 23.93% Lead filer: Society of Jesus - Wisconsin Province. Co-filed by 16 ICCR members. (Source: Interfaith Center on Corporate Responsibility)

17. Chevron: NJCIR & Resolution on Human Rights • 2007- Resolved: Actual vote: 26.94% • 2008 – Resolved: Actual vote: 27.94% (Source: Interfaith Center on Corporate Responsibility) The 2008 Resolution coincides with 60th Anniversary of UN Declaration of Human Rights (December 10, 2008), and attracted 36 institutional investors including international Jesuit provinces,   schools/universities, Catholic healthcare networks and many religious orders Chevron is the only Jesuit-led resolution that went to shareholder vote this year. (Source: NJCIR) In 2008, the Shareholder Advocacy Committee at Loyola University Chicago expressed support of the resolution on human rights.

18. Chevron: NJCIR & Resolution on Human Rights • 2009-Resolved. Actual Vote: 29.10% • 2010 - in progress (Source: Interfaith Center on Corporate Responsibility) As a result of receiving 29% of the vote on their initiative, the religious investment community expects to see the establishment of a comprehensive human rights policy by Chevron. The SAC at Loyola supported the 2009 resolution as co-filer on human rights, and will continue endeavors in 2010.

19. Advocacy Initiatives in 2008-2009 •  The Committee asked the University to purchase sufficient stock in OM Group to be eligible to participate in potential future shareholder resolutions, in support of the NJCIR • The SAC continued collaborative actions on Chevron on the issue of the company’s development and adoption of a comprehensive, transparent, and verifiable human rights policy • In April, the SAC endorsed the ICCR’s Statement on Financial Regulation

20. Advocacy Initiatives in 2008-2009 • In February 2009, the SAC signed a letter to US Airways to thank the firm for its advertisement warning tourists about the crime of child sex tourism, which appeared in the September 2008 edition of their in-flight magazine • In March 2009, the SAC coordinated with the Loyola Undergraduate Research Opportunities Program (LUROP), and assisted SAC undergraduate representative Annemarie Barrett in submitting her application to complete a research project on negative screening. Barrett was accepted for the AY 2009-2010 program

21. Advocacy Initiatives in 2008-2009 • Endorsed the ICCR’s Statement on Financial Regulation • Met with students concerned about investment in Lockheed Martin • Informed ICCR that the Committee would sign a letter to the director of the International Labor Organization (ILO), to express collective concern regarding forced labor in the cotton sector of Uzbekistan.

22. SAC Agenda for 2009-2010 • Continue to serve as co-filer in support of the Chevron human rights policy resolution coordinated by lead filer, Wisconsin Province of the Society of Jesus • Continue to hold sufficient stock in OM Group to be eligible to participate in potential future shareholder resolutions, in support of the NJCIR • Expand research to include all issues identified by respondents to the Committee's 2008 SRI survey of the Loyola community

23. SAC Agenda for 2009-2010 • Identify a short list of companies (ideally a local company) facing these issues, and conduct independent research • Continue engagement among the advocacy community  • Continue endeavor to create a 3-to-5 year plan of action • Expand community outreach, with emphasis on the student body.  • Committee will finalize its committee activities and divestment statement

24. Statement on SAC Activities • Commitment • Advocacy • Stock Selection, Shareholder Resolutions, and Proxy Voting