A Publication of NorthStar Asset Management, Inc.

Face to Face: Activists Confront Company Officials

NorthStar submits shareholder resolutions and we help activists attend annual meetings to raise issues with management. We assign our right as shareholders to attend the annual meeting to an activist with in-depth knowledge about the particular issue. Our close working relationship with non-profit organizations enabled environmental and health activists to engage managements at the annual meetings of Altria, Coca-Cola, Gillette, and Kimberly-Clark.

Altria: Blowing Smoke

Activists from Corporate Accountability International (formerly In Fact) attended the annual meeting of Altria (formerly Philip Morris) to decry the company’s expansion into countries in Africa and Asia, saying the moves will worsen smoking rates in those areas. CAI organizer Megan Rising utilized shareholder access using Altria shares held by NorthStar. Ms. Rising read a statement from over a dozen African organizations opposed to Altria’s expansion.

The statement reads, in part, “People in African countries are already dealing with a tremendous burden of economic, health and environmental issues. We simply cannot afford to add a tobacco epidemic, particularly when it is entirely preventable….Your attempts to expand into African countries and to interfere in our public health policy are most unwelcome….We urge you to stop thinking of African countries and countries across the Global South, as expansion markets for your deadly products.”

The activists of CAI were instrumental in putting the Framework Convention on Tobacco Control (FCTC) into force, with 63 countries including France, India and South Africa, ratifying the treaty. (The US has not signed the treaty and is unlikely to do so.) The treaty bans tobacco advertising, promotion and sponsorship, and encourages litigation to hold tobacco companies responsible for harms they cause. CAI seeks to halt the spread of addiction and disease that follow tobacco companies’ expansions.

Coca Cola: Sucking the Poor Dry

Corporate Accountability International (formerly InFact) accuses Coke of draining water from some of the poorest communities in the world to sell as bottled water and to make soft drinks. Members gained access to the annual meeting and spoke directly to Coke’s shareholders using Coca Cola shares held by NorthStar.

“Ensuring that people have access to water is an emerging global crisis. In draining water from communities for soft drinks and bottled water, Coke is an industry leader that threatens this very basic human right. The soft drink giant gets away with these irresponsible and dangerous actions because of its political and economic clout. Our members are joining with people around the world to reject Coke’s abuses”, said CAI Associate Campaigns Director Gigi Kellett who spoke at the meeting.

The United Nations estimates that by the year 2025, two-thirds of the world’s population will not have access to enough water if current trends are not reversed. In India, Coke bottling facilities have had devastating impacts on local communities. The water drained by Coke has caused severe water shortages in at least five Indian communities leading to a variety of health problems. Activists asked Coke to close plants in beleaguered areas in India and to pay for the damage Coke has caused to these communities.

Additionally, Coke is accused of distributing bottling plant sludge containing contaminants to Indian farmers as fertilizer; selling products that contain pesticides in India; and conspiring with paramilitary groups in Columbia to harass and harm union members. Coke recently agreed to examine its labor and business practices in India and Columbia as a condition of contracts with the University of Michigan worth $1.3 million.

Gillette: Razor Thin Labor Standards?

Members of the Merrimack Valley Project (MVP), a coalition of tenant organizations, labor unions, synagogues and churches, works to save and create jobs, provide public services and bring new investment to one of the country’s oldest industrial areas in Massachusetts. MPV has been trying to engage Gillette to respond to allegations of unfair labor practices at three facilities in the Merrimack Valley region. NorthStar shares of Gillette enabled two members of this coalition to engage Gillette’s management at the annual shareholder meeting.

Gillette is one of the largest employers of temporary workers from this region of Massachusetts. Hundreds of immigrant temporary workers work at a Gillette facility and two packaging centers. MVP has gathered over 35 accounts of substandard and potentially illegal work conditions at these facilities.

Because of Gillette’s role as one of the major employers in the region and its stated concern for holding its suppliers and vendors to “the highest ethical standards,” MVP is asking Gillette to take advantage of its leadership position to improve the lives of hundreds of temporary workers. Setting high standards for just and fair treatment of temps should be one its concerns.

Attendance at the annual meeting allowed members of MVP to set another meeting with Gillette executives. MVP Director Loren McArthur wrote, “This is definitely an achievement–it’s taken seven+ months to get this meeting–and we thank you for your help in gaining access to the [meeting] which was clearly a critical step in the process.”

Kimberly-Clark: Flushing Forests Down the Toilet

Greenpeace members attended the annual meeting of Kleenex maker, Kimberly-Clark, to press the company to use more recycled material in its tissues. The activists say the company is cutting down ancient forests in Canada’s boreal forest to make disposable tissue paper like Kleenex. Kimberly Clark, the largest tissue product manufacturer in the world, produces Kleenex band tissue in the US and Canada, as well as Scott, Viva, and Cottenelle products in the US.

In North America, less than 19% of the pulp that Kimberly-Clark uses as raw material comes from recycled sources and most of this recycled pulp is used in its commercial products. Most of the brands sold in grocery stores (Kleenex, Scott) are made from 100% virgin tree fiber.

Kimberly-Clark persists in using virgin fiber for its tissue products when other companies have shown that commercially viable alternatives exist. Cascades, the fourth largest tissue product manufacturer, meets 96% of its pulp requirements with recycled fiber while Seventh Generation sells 100% recycled consumer tissue products.

Kimberly-Clark is part of the growing demand for pulp from Canada’s boreal forest which puts pressure on the parts of the forest still not allocated for forestry. Greenpeace urges the Company to take this opportunity to lessen that pressure by increasing the amount of post-consumer recycled content in all of its products.

Whose Responsibility Is It?

“It’s not my fault!” How often have we heard kids scream this at each other, at their parents…It’s never anyone’s fault. It’s the tree’s fault for growing a limb that simply needed to be stomped on until it came off, or it’s the car’s fault for being parked in the spot where the baseball landed – whatever it is, it’s not their fault. Ever. Teaching our kids the importance of taking responsibility becomes a parent’s greatest responsibility.

Shareholder resolutions before companies like Caterpillar, Eli Lilly, General Electric and many, many more, ask the company to take responsibility for not only its products, but for the health and well being of its workforce, and for the community in which the company operates. Unfortunately, the company response is often an overwhelming, “It’s not our fault!” Companies like Caterpillar say the AIDS epidemic in the African communities where their factories are, is simply not their responsibility. They provide health insurance for their employees believing “That’s enough.” Is it? Who will pay to keep communities healthy, educated, and growing? Are workers that disposable?

More than 42 million people worldwide are living with HIV/AIDS with over 95% of those people living in developing regions of the world such as Africa. Effective treatments exist but only 4% of those who need treatment have access to it, furthering the devastation. In Africa, young adults make up the majority of the workforce and they are also the majority of those affected by AIDS. We want companies to understand that not only is an unhealthy workforce neither productive nor profitable, it is unethical for a company to stand by while its workforce slowly dwindles.

We are the shareholders who are asking for heath insurance from Coca-Cola. We are the shareholders asking for community involvement in the issues surrounding HIV and AIDS from Caterpillar. We believe there is more profit in keeping the workforce healthy and in creating loyalty in the community by investing in the concerns facing the people. Considering the break on wages and salaries the company is benefiting from by being in Africa, it seems like a small pay back. And let’s face it, people don’t tend to want to sue the good guys. People don’t tend to fight against companies that are improving the world.

It’s about teaching responsibility. If the people running the companies are unwilling to take responsibility for the health of their workers, the shareholders can persuade them to do so. Companies are responsible for more than the bottom line. It is their problem when the community of workers they need to make their profit is suffering from a disease. It may not be their fault, but it is their responsibility.

Family Money: What Young Adults Need to Know

You are a young adult and have grown up in a family where it has always been apparent there is money, maybe a lot of it, maybe not. Maybe there were moments that would shock or surprise others, like when your parents pulled out a checkbook and paid for a year’s tuition. You’ve never really been told any specifics, but whenever you needed money to cover an expense, the family accountant was available to get the needed resources.

A trust has come due. Your grandparents give you a large sum of stock. Your parents give you a gift of $50,000. You have some idea of the presence of future trusts but no specifics have been given. Or your parents have vaguely referred to you being taken care of, no matter what. At this point in your life, you want to learn more about investing, more about how to deal, in general, with money in your life.

An investment advisor can give you options with the money you have, explain different types of investments, such as mutual funds, CD’s, options that are appropriate for an investment of $50,000. But, what you really need to know is what role money will have in your life. Will the family accountant always be available to call? Will your parents write a check for the house you want? What role do they play in your future financial needs? Understanding future revenue streams is essential — without that information, you simply cannot plan for the future. And part of being financially responsible is being able to plan and budget for the future.

For some families, this is a difficult conversation. Parents who have made the money in their own business may struggle with the decision to give financial information to their children. Having made the money themselves, they don’t have a framework or any past experience — their parents may not have had access to any wealth to pass on. No one sat them down and described the “whole picture,” what they would inherit, how they would inherit it, and what expectations they have about the money. Some families with inherited wealth come with a list of instructions, traditions, advice and some don’t.

Regardless of how difficult it may be to initiate the conversation, it is important. Questions you may think about asking are:

• Are there any trusts in my name? How much money is in each trust?
• Where are they invested? Can you show me an investment statement and explain it to me? Who is responsible for the investments?
• What is my role, if any, in the family business? Is this the best opportunity for re-investment?
• Can I expect the business or parents to pay for a house? A car? Further education?
• If I have a credit card where someone else pays the bill (a parent or trustee), where is the money coming from to pay these bills? Are there limits?
• Is there a point when I will need income from a job to support myself?

And some other questions you need to find answers for, hopefully through your family’s own disclosure, are: How much money can I expect to inherit someday, if any? Will the family business always provide for me? Are the trusts and your career choices key to your financial well being?

These questions are the first steps to taking control of your own financial life. Information is key. Learning about stocks, bonds, and other investment vehicles is important but meaningless without the larger picture. Be prepared to find the overall picture overwhelming, not because of numbers, but because it means opening the door to more responsibility.

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Written by Margaret J. Covert & Sara Whitman