Q3 2024 Impact Update
Marcela I. Pinilla
Director of Sustainable Investing
Download Q3 2024 Impact Update.
This quarter we filed our first resolution of the 2025 proxy season. We did so despite the headwinds to shareholder advocacy driven by ideological opposition to facts and science. With an imminent presidential election, political vociferations have risen to new heights of absurdity. These include accusations to sustainable investors of being in a “climate cartel, handcuffing corporate leadership and muzzling corporate free speech” Apparently, we are “colluding to declare war on the American way of life by being part of a cabal forcing companies to decarbonize. If there was ever a backhanded compliment given to us, this is it.
Today, some officials have armed themselves with narratives cobbled together by well-funded trade associations with politically aligned interests. Some state attorneys general have worked together to target federal policy including a lawsuit against the Environmental Protection Agency seeking to block greenhouse gas emissions reduction rules. As the Supreme Court found affirmative action policies in college admissions to be unconstitutional, State officials have also used the Supreme Court's ruling on diversity in college admissions to push companies to abandon their diversity, equity, and inclusion (DEI) initiatives. These dismantling efforts also impact workplace practices to respect non-discrimination based on race/ethnicity, gender, LGBTQ+, disability or religion.
This aggressive steamrolling is a sign that our work is having an impact, that our work to change corporate behavior is effective. Unfortunately, some investment firms and corporations have been scared off by these threats, but Zevin Asset Management continues to work in a broad coalition of key allies among investors and civil society organizations.
First filing of the season: Apple’s Lobbying Spending
Over the past several decades, business influence on rule of law has grown exponentially. For every dollar spent on lobbying by labor unions and public-interest groups together, large corporations and their associations now spend thirty-four dollars. Of the hundred organizations that spend the most on lobbying, ninety-five consistently represent business.
As public concerns about the governance of artificial intelligence rise, lobbying on AI issues has correspondingly skyrocketed this year. Amidst a lack of regulation on lobbying spending, the technology sector has harnessed a magnificent amount of influence—out-spending even the pharmaceutical industry—to continue its fast-paced advancement of the training and deploying AI across industries. Meanwhile, as emissions from data centers intensifies, the U.S. Chamber of Commerce has filed a lawsuit against the SEC’s climate change disclosure rule. Apple’s membership to the Business Roundtable, which filed an amicus brief supportive of the suit weakens Apple’s credibility and positioning on fighting climate change. This is why we filed a shareholder proposal requesting disclosure of Apple's direct and indirect lobbying spending and grassroots related payments.
A Visit to an Amazon Fulfillment Center
Amazon’s profits continue to soar as hundreds of thousands of workers move, package and distribute personal items across millions of homes across the country. Especially in a post-COVID world we saw weaknesses in Amazon’s relentless focus on its customers at the expense of focusing on the wellbeing of its workers. Some years on, Amazon has made changes, and we were glad to be invited, along with four other investors, to visit a fulfillment center located in Carteret, New Jersey.
As we stood overlooking a massive robotics field that took up most of the approximately 850,000 square foot warehouse, the perplexity of the scale of Amazon’s massive operations snapped into place.
Within the fulfillment center hundreds of tall yellow storage bins glide forward, back, and sideways in precisely choreographed automated motions guided by the constant exchange of information on the eighteen million items moving through the warehouse.
Around the perimeter of the warehouse, Amazon Associates were stationed, scanning one object at a time—nothing larger than a microwave is processed at this fulfillment center—and placing it in one of the four panels of the yellow bin that glided into position, waited, then glided away.
It’s a twenty-four-seven operation, with only two or three days of stoppage every year. Otherwise, it's the hum of miles of conveyor belts, robotic arms moving, and focused workers keeping pace while the machines churns on. Every movement is tracked and more finely sliced for saving time, with any interruptions absorbed by the operations, so that the customer is not impacted when there are delays.
A look into the work environment and the interaction between man and machine brought the stark reality of an Amazon worker’s life into focus. Working full-time at the fulfillment center involves a ten-hour shift that includes two fifteen-minute breaks and one thirty-minute break. Unfortunately, there did not seem to be an inviting space outside to enjoy that break, as the lunch tables were also inside the warehouse, within the whirring orb of sound and machinery.
In September Amazon announced that it had hit its fastest Prime delivery speeds in the US and around the world, with more than 5 billion items arriving the same or next day globally. There is a rigidity needed to proceed uninterrupted that feels out of sync with the human pace of work. We walked through packaging areas, labeling and sorting areas. One Associate stood in front of a tall pile of flattened boxes. He took one, folded it into a box, placed the precisely measured tape on the box that then went on the conveyor belt. The process is repeated.
As Amazon continues to automate processes and will rely on fewer people, human intervention continues to be essential. The company has taken positive steps by making significant investments in raising the starting average wages for all Associates to $22 per hour and has now adopted flexible scheduling, which it did not have in place prior to the COVID pandemic. Encouragingly, employees can sign up for benefits from day one, something that used to be a ninety-day waiting period.
Once outside, after a nearly three-hour visit, the constant humming of miles of moving conveyor belts was replaced by relative quiet, only subtle traffic sounds within hearing distance. As there was no natural light inside, my eyes slowly adjusted back. As Amazon continues to solicit employee feedback to improve its workplace, there is a lot of runway for reimagining work environments that prioritize worker wellbeing as equally as its customers’ satisfaction.
Chubb will no longer insure Rio Tinto
Once the risks of climate change are accounted for, they are impossible to ignore. In the case of Chubb and its underwriting of methane and other fossil fuel projects it is becoming ever more difficult to justify. We were therefore pleased to learn that Chubb updated its oil, gas, and conservation policies and announced it will no longer ensure a proposed Rio Tinto liquified natural gas project in Texas.
This decision came following months of community opposition by environmental justice advocates and the Carrizo/Comecrudo Tribe, who dwell on the land that was to be turned into an industrial methane export hub. They successfully raised the alarm on the project’s impacts on soil, air and water quality, as well as the effects on tourism, commercial fisheries, and noise.
As a result, the social license to operate was not secure. While Chubb’s announcement is an encouraging step, loopholes remain given the narrow scope of their changes, which still do not address the impact of other oil and gas operations on nearby ecosystems and communities.
Last but not Least: Unilever’s Russia Exit
Unilever has faced criticism for remaining in Russia since Moscow sent troops into Ukraine in February 2022 even as many other large companies had long departed or suspended their operations in Russia. Earlier this year Zevin Asset Management held a meeting with Unilever management to question their position and put one more point of pressure on the company. While Unilever had halted all media and advertising spending there, it continued to operate in Russia supplying everyday products. We were pleased to learn that Unilever at last took the step of offloading its Russian assets.
Unilever’s Russian operations accounted for only about 1% of the company’s turnover and net profit, but tax revenues from their operations still contributed to Russian aggressions. This all stood in stark contrast to the company’s recognized leadership in upholding human rights.
While we do not know what the next quarter will bring, we have our work cut out for us to defend our hard-fought wins protecting civil rights as we continue to work alongside stakeholders who are most affected.
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Thank you for reading and sharing. For more on this work and our broader advocacy, visit our website, and join us on LinkedIn and Twitter. And please don’t hesitate to contact Marcela Pinilla, Zevin Asset Management’s director of sustainable investing, at marcela@zevin.com with your questions, thoughts, and suggestions.
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