May 7, 2008
FINAL PROJECT KALEIDOSCOPE REPORT RELEASED
As You Sow, Disney, McDonald’s and Other Investors Took Part in Project Kaleidoscope, Multi-Year Project to Improve Working Conditions in Corporate Supply Chains
McDonald's Corporation, The Walt Disney Company, and a group of organizations working to improve working conditions in company supply chains, including As You Sow, announced the release of the final report of Project Kaleidoscope, a multi-year collaborative project designed to promote sustained compliance with labor standards mandated by corporate codes of conduct for manufacturers. The full text of the report may be accessed here.
The project was piloted at 10 contractor factories in southern China that produce goods for McDonald's restaurants and Disney licensees. This collaborative effort developed and successfully field-tested an alternative approach to promoting and enhancing long-term, sustained code compliance.
For many years, McDonald’s and Disney have maintained strict codes of conduct for their licensees and manufacturers. These codes address a range of key labor rights issues including the prohibition of forced and child labor and the setting of requirements in such areas as health and safety, working hours, compensation, and compliance with applicable laws. In addition, both companies report that they have been active in undertaking educational, monitoring, and remediation efforts to promote compliance with these codes at the factories where their products are sourced throughout the world.
The project was launched as part of an ongoing effort to strengthen the effectiveness of these labor standards by drawing on the interest and expertise of interested investor organizations and jointly exploring means of promoting “sustained compliance” with labor codes. The project sought to foster the creation and testing of internal systems within factories in order to promote such compliance over time, including enhanced training and education for management, supervisors, and workers, and potential positive compliance incentives. The project also sought methods of encouraging remediation in facilities that demonstrate significant compliance issues, in order to minimize circumstances in which factory termination is the only business alternative.
In pursuing the project the group worked with local nongovernmental organizations as well as individual factories with the goal of developing practical implementation approaches, including training and remediation methods and tools. The project’s first Interim Report was published in January 2005.
The project grew out of mutual concerns discussed during the extended dialogue among the investor group and the two companies regarding ways to improve conditions in factories on a sustained basis.
In addition to As You Sow, The Walt Disney Company and McDonald’s Corp., the Project Kaleidoscope Working Group consisted of the Center for Reflection, Education and Action (CREA); the Connecticut State Treasurer's Office (fiduciary for the Connecticut Retirement Plans and Trust Funds); Domini Social Investments LLC, the General Board of Pension and Health Benefits of the United Methodist Church; the Interfaith Center on Corporate Responsibility (ICCR); and the Missionary Oblates of Mary Immaculate.
As You Sow congratulates Scholastic Inc., the largest publisher of children’s’ books, for adopting an industry-leading environmentally preferable sourcing policy, including strong commitments to recycled content, supply chain certification, and clean production methods.
Scholastic’s new policy, issued Jan. 9, 2008, commits the company within five years to use 25% recycled content in book paper, 75% of which will be post-consumer waste. It also promises to certify that 30% of the paper it uses will come from lands certified as well-managed by the Forest Stewardship Council.
The policy favors suppliers committed to continuous improvement in source reduction and pollution prevention that meet or exceed legal requirements to minimize the environmental footprint of paper production on water, air and climate, and use of clean production methods. It also will favor suppliers adopting more energy-efficient production methods.
As You Sow has been in dialogue with the company, urging it to develop such a policy and served on an advisory panel that reviewed a draft policy. “The Scholastic policy is a great model for other book and magazine publishers to follow,” said Conrad MacKerron, director of As You Sow’s CSR program. “This action shows how publishers can use their purchasing power to help develop a stable, long-term demand for post consumer content, which is needed before paper mills will invest in new capacity.”
The Scholastic policy states, “We have engaged our paper suppliers in an ongoing dialog to monitor and remain informed about opportunities to design, produce and procure an increasing amount of environmentally responsible paper.”
This action, coupled with recent recycled content commitments by Random House and Simon & Shuster, sends a signal to the paper markets that new investments in facilities that de-ink and process post-consumer paper are needed and will be supported by publishers.
These policies will help reduce the enormous climate change impact associated with the pulp and paper industry. The paper and pulp industry is the fourth largest emitter of greenhouse gases among manufacturing industries, contributing 9 percent of total carbon dioxide emissions. Huge amounts of paper that could be captured and recycled are still are dumped in landfills creating methane, a gas with 23 times the heat-trapping power of carbon dioxide.
As You Sow has challenged other major publishers to set recycled content goals and to take actions to increase the recovery of high-quality post-consumer paper so it can be recycled back into magazine and book papers. As You Sow filed a shareholder proposal for 2008 with McGraw-Hill Cos., asking the company to develop similar policies and has been in dialogue with Time Inc. for several years as well as Newsweek and Reader’s Digest magazine.
Congratulations also to Rainforest Alliance, Green Press Initiative, and the National Wildlife Federation who were key policy players in discussions with Scholastic around development of this policy. Learn more.
On September 5, 2007 Coca-Cola announced a series of commitments related to environmental sustainability for product packaging that respond to requests in shareholder proposals filed in recent years by As You Sow and Walden Asset Management and other shareholders.
Coke agreed to invest $60 million to build the world's largest plastic bottle recycling plant in
For several years, AYS and Walden have partnered to press Coca-Cola Co. and Pepsico to (a) set high levels of recycled content for plastic soda and water and juice bottles, and to (b) engage the rest of the beverage industry to develop strong container recovery goals. We are excited that the industry now seems poised for some potentially seismic shifts.
Coca-cola’s actions move the company toward fulfilling our first goal of using higher levels of recycled PET by making a long-term investment in a more stable supply of PET. The company has also responded to our request to establish a PET plastic beverage container recycling goal. We will be encouraging the company to extend this pledge to its other beverage containers and other regions, and will be encouraging other beverage companies to follow Coca-Cola’s lead. We also look forward to hearing how the company will achieve its 100% recovery goal, and over what timeframe.
The company also will spend $16 million this year to promote recycling by investing in RecycleBank, a new experiment in incentive-based recycling.
We are also encouraged that Nestle Waters North America has recently made public statements about the need to improve recycling efforts. Nestle Waters CEO Kim Jeffrey has called for enactment of more comprehensive recycling programs that those contained in current legislation. Nestle received a failing grade in a beverage container report card published by As You Sow last fall. Learn more about As You Sow's plastic bottle recycling efforts.
We are excited that the industry may finally be moving toward meaningful reform on container recycling. A recent spate of articles about mountains of plastic used for bottled water has increased pressure on the companies as well. But years of sustained pressure by As You Sow and Walden, and other SRI colleagues, demonstrate once again the value of the shareholder process and of long-term engagement in driving stronger corporate environmental practices.
A “say-on-pay” proposal filed by As You Sow at Activision Inc. garnered a huge 70% of the vote at the company’s annual meeting Sept. 27 in Beverly Hills, Calif. Activision, based in Santa Monica, publishes popular video games like Quake, Doom and Guitar Hero. The Securities and Exchange Commission is investigating the company’s stock option practices.
Our work is part of a national effort to give shareholders substantive input on executive compensation without placing specific controls on compensation. The proposal asks the board of directors to provide the opportunity at each annual meeting to vote on an advisory resolution to ratify the compensation of executive officers. Our Activision vote is the highest vote result of approximately 50 companies whose shareholders voted on “say-on-pay” proposals this year.
We also filed the proposal at Cupertino-based Symantec, where it got a 48% vote on Sept. 13, 2007.
“This strong vote result sends a strong message to Activision management, said Conrad MacKerron Director of As You Sow’s Corporate Social Responsibility Program. “We believe the current system of paying CEOs in the U.S. is broken. Average executive pay is 300 times greater than that of the average U.S. worker. U.S. executives make twice their European counterparts. National surveys indicate that even a majority of corporate directors think the current executive compensation system has overpaid executives.”
The proposed shareholder vote would not override compensation decisions, but allow shareholders to weigh in on whether they believe the level of executive compensation is warranted. Investor votes on pay reports are a growing governance trend in other markets. Britain, the Netherlands, Australia, and Sweden have each adopted measures allowing stockholders to vote on executive pay. In Britain, the growth rate of executive pay is declining, and communication between companies and shareholders over compensation has improved because of the rule.
The same proposal has received a majority vote this year (filed by others) at Motorola, Verizon, Blockbuster, Clear Channel, Verizon, Valero Energy and Ingersoll-Rand. So far, only Aflac Inc. has agreed to voluntarily allow an advisory vote as called for in the proposal. The broader national shareholder effort is being coordinated by the American Federation of State Municipal and County Employees and Walden Asset Management.
Target, the fifth largest U.S. retailer with $59 billion in revenues a year, is joining a growing list of dozens of companies including Wal-Mart, Microsoft, Johnson & Johnson, Nike, and Apple that are eliminating or reducing its PVC products and packaging.
A year of pressure from an AYS led shareholder coalition combined with a large scale grassroots effort led by the Center for Health and Environmental Justice has resulted in Target agreeing to systematically reduce its use of polyvinyl chloride (PVC) plastic. The company is reducing PVC found in many of its owned brand products including infant products, children's toys, shower curtains, packaging and fashion accessories.
PVC is ubiquitous as it is found in an endless number of common consumer products such as credit cards, athletic shoes, packaging, computer parts, toys, garden hoses, shower curtains, upholstery, carpets, and plastic cable. Its use creates hazards throughout its lifecycle from production, useful life, and disposal. During its useful life it is a major source of volatile organic compounds (VOCs) in homes, a probable factor in soaring asthma rates, and ingestion of phthalates by children, chemicals known to have developmental impacts. PVC production results in the creation of several highly toxic chemicals including dioxin, ethylene dichloride and vinyl chloride. These can cause severe health problems, including: cancer, endocrine disruption, endometriosis, neurological damage, birth defects and impaired child development, reproductive and immune system damage. Incineration of PVC releases dioxin and other toxins. Production plants and incinerators, in turn, are often located in low-income communities. Testing of residents in local communities as well as that of PVC factory workers shows higher levels of dioxin and other hazardous chemicals.
Target is widely held among social investors and that allowed AYS to quickly bring together 16 investor groups as part of a shareholder coalition to approach the company. Beginning in September 2006, As You Sow led a dialogue between shareholders, company senior management and NGO experts. Shareholders asked the extent of PVC in Target products and packaging and the company’s plans to phase out PVC use. Target responded that they hired a senior staff person designated to address this issue, and that they had completed an "80/20" inventory of their products and found PVC to be prevalent, but declined to state if they would substitute ingredients or set out a timeline or concrete goals for substitution.
Shareholders roundly criticized the company for its lack of commitment and insufficient action and the PVC issue was repeatedly raised again by shareholders at Target’s annual meeting in May 2007, forcing Target president Gregg Steinhafel to publicly state their intention to address this issue. As You Sow and grassroots groups continued to pressure the company to act on this issue and Target has since begun to to eliminate and/or find alternatives for PVC.
The company is taking the following steps in their owned brands:
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