Pat Miguel Tomaino
Director of Socially Responsible Investing
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At Zevin Asset Management, we build responsible investment portfolios for our clients. We then address risks and create positive social impact by engaging with portfolio companies. As 2019 closed, we continued challenging companies for positive change on several important issues.
In focus: The climate crisis conundrum
This month’s UN Climate Summit ended in disappointment, as countries failed to find new ways to pressure high-emitter countries to cut carbon, and rich nations ignored calls to increase payments to poor countries struggling to adapt to climate change. Scientists and activists agreed on a grim and urgent reality, however: the world may have only a decade to curb emissions in line with the Paris climate agreement, which attempts to keep global warming within two degrees of pre-industrial levels.
Continuing global diplomatic failures contrast with more promising climate action at other levels. China is apparently on track to meet Paris-based emissions goals, and the “European Green Deal” was unveiled last month promising a carbon-neutral EU by 2050. If many countries are not moving to confront climate change, large companies are still a good target for action. Zevin Asset Management encourages corporate emitters to analyze risks, redirect capital, tune up their operations, and deploy green energy — all in pursuit of implementing the Paris Agreement at the company level.
Changes at Amazon indicate the possibilities of investor advocacy. While the logistics and retail giant has refused to disclose the total size of its carbon footprint, it’s a safe bet that global distribution operations, including the Prime Air fleet that will soon swell to 70 aircraft, mean that Amazon’s climate impacts are rapidly increasing. At the same time, the company peddles data services to the world’s major fossil fuel companies. NGOs and investors have targeted Amazon on climate change in the past. However, 2019 marked a new strategy in which employees used stock in the company to propose a brand-new investor proposal urging drastic emissions cuts.
More than 7,000 Amazon workers signed on in support of the shareholder proposal in May and 15,000 workers threatened to walk out in September when the company had still failed to take action. The combination of investor and worker pressure created a win this fall: Amazon announced a new goal to become climate neutral by 2040 — although it punted on the question of services for oil companies. In association with the Interfaith Center for Corporate Responsibility (ICCR), we have worked side-by-side with the worker-investor group leading this climate activism. In early December, we took part in a rare meeting with legal and sustainability executives to assess Amazon’s changing approach to climate change and push for more accountability. The company has shown willingness to change, but questions remain, such as whether the “Climate Pledge” will apply rigorously to the company’s airplanes, which are technically owned by another firm.
At the same time, we continue to lead advocacy with UPS, another logistics leader, regarding long-term carbon emissions from ground and air fleets. We have engaged closely with UPS over several years, leading the company to adopt a science-based greenhouse gas reduction target covering much of its business, and to set clear targets for purchasing more renewable energy. These measures have helped make UPS’s approach somewhat more credible than Amazon’s, even if it lacks the splashiness of “climate neutrality.” When we met with executives in Q4, we were more encouraged to hear that UPS is currently analyzing how it can fully bring its business in line with the strictest goals of the Paris Agreement, to avoid 1.5-degree warming.
However, as with Amazon, airplanes and their massive jet fuel emissions remain a question mark, and UPS is reluctant to set a clear Paris-based goal for its air fleet. We believe UPS should be able to define a roadmap for how it will get to a climate strategy that includes air fleet emissions — whether through efficiency measures, deploying still-not-widely-available sustainable jet fuels, and/or simply by working with big customers to reduce air miles. This quarter we filed a new shareholder proposal to drive the point home with UPS and we will update you here on progress.
Still on the job
We have also continued working with companies that have large front-line workforces on steps they can take to protect workers and their rights on the job. Now the second-largest employer in America, Amazon has serious labor risks, which have played out in safety issues and some unrest, as workers in distribution centers from Minnesota to Spain have begun taking more action. In our meetings with Amazon, mentioned above, we have observed that Amazon is more willing to acknowledge human rights risks and gaps. However, unlike many leading companies that profess respect for human rights and for the core labor conventions of the International Labor Organization (ILO), Amazon does not evidently respect workers’ right of freedom of association and collective bargaining where these rights are not explicitly guaranteed by local law. We spent much of our recent Amazon meeting calling out this approach, which leaves the company open to piecemeal risks around the globe, and we will insist that these issues are on the table every time Amazon sits down to discuss human rights.
We have also continued pressing large employers to pay their workers equally and sustainably. We recently checked in with TJX Companies (parent of TJMaxx and Marshall’s) to confirm that they are on track to complete a racial pay gap analysis, as they committed to us earlier this year. And we wrote to Kroger about potential gender- and race-based pay gap risks in its grocery workforce.
What Else Is New?
We submitted shareholder proposals urging change at key companies in 2020, including co-filing a proposal asking Chevron for human rights risk analysis and a renewed push for T. Rowe Price to vote proxies in a responsible manner concerning climate change.
We wrote to the SEC challenging proposed regulatory rules that would curtail investors’ right to file shareholder proposals.
We joined other investors in a meeting with Novartis regarding expanding access to medicines in poor countries, and we signed a letter from investors with assets totaling more than $3 trillion to urge keeping a moratorium on soy cultivation in Amazonian forests.