Corporation Addresses Fracking, Political Contributions

Two subcommittees of the Harvard Corporation tasked with determining Harvard’s shareholder position as a major investor called on several companies to disclose more about their political contributions —among other proposals—according to the 2015 Corporation Committee on Shareholder Responsibility annual report released last week.

An institutional investor in a wide-ranging array of companies, the University relies on the annual recommendations of the two subcommittees to determine how Harvard votes as a stakeholder on a number of social and ethical shareholder proposals facing those companies. At $37.6 billion, Harvard boasts the largest endowment of any institution in higher education.

In 2015, the two committees—the corporation committee, which consists of four members of the Corporation, and the Advisory Committee on Shareholder Responsibility, a 12-member panel of students, faculty, and alumni—voted on 54 proposals. They considered lobbying activity at JPMorgan Chase, the prevalence of genetically modified organisms at McDonald’s, and fracking practices at Chevron.

The advisory committee first considers each proposal and presents its recommendation to the corporation committee, whose four members cast the final votes to determine Harvard’s position. In 2015, the members of the corporation committee included Corporation Senior Fellow William F. Lee ’72, University Treasurer Paul J. Finnegan ’75, Corporation fellow Nannerl O. Keohane, and Corporation fellow Jessica T. Mathews ’67. Harvard Business School Professor Carliss Y. Baldwin served as the chair of the advisory committee; the other members of that committee were not included in the report.

As it did last year, the corporation committee again voted in favor of all 22 proposals—about 40 percent of all considered—advocating companies to disclose information on direct and indirect political spending and lobbying practices. As in past years, the corporate committee noted that proposals about corporate political activity have increased since the Citizens United v. Federal Election Commission Supreme Court Ruling in 2010, when the Court voted to end many restrictions on independent corporate political contributions.

The Corporation also voted against shareholder proposals that would ask General Electric and Intel to adopt the “Holy Land Principles”—guidelines designed to prevent employment discrimination against Arab Israelis in their offices based in Israel. For Intel, the advisory committee noted its existing commitment to “strong global principles and policies on discrimination,” and argued that GE’s employment practices were also modeled on accepted principles.

“Members questioned whether it would be in the best interests of shareholders or the company to impose what appears to be a redundant set of employment principles on Intel,” the report states.

A new proposal for eBay addressed a gender wage gap in the technology industry, with the corporation committee voting to urge eBay to prepare a report on its pay parity efforts for women.

In the wake of widespread outrage over price gouging in the prescription drug market, the Corporation voted to abstain on a proposal that would ask biotechnology firm Gilead Sciences to address concerns about the rising prices of specialty medications. The advisory committee found the proposal “ineffective,” writing that the profits on “blockbuster” drugs subsidize the costs of those drugs in developing countries and fund critical research and development.

In a year when students and activists calling for Harvard to divest from fossil fuel companies occupied and blockaded Massachusetts Hall, which houses University President Drew G. Faust’s office and other top Harvard leaders, the CCSR considered several proposals concerning the environment.

The corporation committee voted to call for the Southern Company to adopt goals for reducing its greenhouse gas emissions, writing that the Georgia-based utility company “appears to be lagging behind its peers” in reducing its carbon footprint. Still, the corporation committee abstained from voting on a proposal asking similar demands of Chevron, citing the energy giant’s existing commitment to such goals.

The Corporation subcommittee did vote for a Chevron shareholder proposal that requires the company to report on its efforts “to minimize the adverse water resource and community impacts from the company’s hydraulic fracturing operations associated with shale formations.”

“Committee members voiced support for pursuing shareholder engagement to press for environmental responsibility and for encouraging Chevron to approach fracking with a strong emphasis on safety and the avoidance of reputational, environmental, and litigation risks,” the report reads.

The corporation committee also voted in favor of requesting that chemical company DuPont prepare a report on its use of herbicide-resistant crop seeds, which have spawned herbicide resistant “monster weeds,” but rejected a proposal that would have asked PepsiCo to investigate the effects of its pesticide use on the “well-documented and widespread ‘bee colony collapse’ phenomenon.”

McDonald’s was the subject of three proposals, with the corporation committee rejecting two that would ask the fast food titan to “be more proactive in educating the American people about the health and environmental benefits of [genetically modified] ingredients” and report on the congruency of its political contributions with its corporate values. The committee approved one resolution calling for McDonald’s to publish information on the impact of its palm oil supply chain on tropical deforestation and human rights.

Other proposals considered issues including Verizon’s commitment to net neutrality and plant closures by DuPont.

—Staff writer Andrew M. Duehren can be reached at andy.duehren@thecrimson.com. Follow him on Twitter @aduehren.

—Staff writer Daphne C. Thompson can be reached at daphne.thompson@thecrimson.com. Follow her on Twitter @daphnectho.