Annual Stock Report Issued

The Harvard Committee on Shareholder Responsibility (CCSR) released yesterday its annual explanation of its proxy votes on more than 100 proposals involving companies in which the University holds shares.

The 54-page report explains the non-binding recommendations of the Advisory Committee on Shareholder Responsibility (ACSR)--that contains student members--and the CCSR's final decisions on the issues of social responsibility.

The CCSR is composed of two Corporation members--Chair Robert G. Stone, Jr. '45 and D. Ronald Daniel, University treasurer. They make the final decisions based in part on the recommendations of the ACSR.

Elizabeth A. Gray, secretary to CCSR, said the committees' decisions and report are important not only as actual votes, but also for the impact they have on a wider level. "The thinking that goes on in our meetings--as reflected in the report--is useful for people trying to make these decisions in similar circumstances," she said.

"The fact that Harvard is voting one way or another influences people," said Ben D. Tolchin '01, the only undergraduate on the ACSR. "The name is important." In addition to Tolchin, the ACSR is composed of three graduate students, four professors and four alumni.

The CCSR voted on 108 proposals, 24 of which dealt with environmental issues.

The report divided the issues that the ACSR and CCSR dealt with into 19 categories such as "Environment," "Tobacco-related Issues," "International Workplace Practices," "Equal Employment," "Board Diversity" and "Executive Compensation."

New Issues

The report explained that while the CCSR judges proposals in the light of previously established precedence, "the ACSR is responsible for keeping abreast of new information or circumstances which may suggest a different position."

New Issues

While the CCSR may abstain on less clear-cut issues, the ACSR often is forced to tackle issues that are garnering increased attention on the world stage.

This year, Tolchin said, genetically modified foods were for the first time a major issue. "All of a sudden bio-engineered foodstuff was a serious issue and the [ACSR] was split on it," he said.

The report described a proposal that called on multiple companies to remove genetically engineered ingredients from their products until more evidence about their safety is available.

The ACSR's debate on the measures, which involved Coca-Cola, Kellogg, Safeway, PepsiCo, Quaker Oats and McDonald's among others, centered on the question of the lack of evidence about the safety of genetically modified organisms (GMOs). "Everybody agreed there was little information on the safety or danger of these products. People interpreted this fact differently," Tolchin said

Ultimately, the ACSR approved the proposals by margins that varied from one vote to six for the different companies. The CCSR, however, abstained on all of the proposals, "in anticipation of further ACSR discussion of this new and controversial issue," according to the report.

Old Faces

Beyond GMOs, the issues voted on usually were old subjects in new contexts.

As part of an ongoing decade-long debate, the committees voted on proposals to force corporations to adopt an environmental code of conduct, the Ceres principles. The ten points on the environment have been discussed by the committees since 1990, when the ACSR recommended abstention.

Treating the proposals on a company-by-company basis, this year the ACSR recommended the resolution for two companies, but opposed it in the case of five others. The CCSR abstained from or opposed the proposals.

Extending a 1989 decision to restrict investment in tobacco-related products, the ACSR considered measures that called on companies themselves to restrict their sales to tobacco producing companies. The ACSR voted 8-1-0 to compel H.B. Fuller to, in the words of the proposal, "adopt a policy not to sell its adhesives to any tobacco related company when they will be used in the production of cigarettes."

The CCSR voted in accordance with the ACSR recommendation.

The ACSR-CCSR Connection

According to statistics published in the report, the ACSR and the CCSR were in agreement on 55 percent of the proposals. The majority of the remaining situations involved one committee issuing judgement while the other abstained.

Tolchin said that, in general, he thinks members of the ACSR find the CCSR's actions and attitudes reasonable. Personally, Tolchin said, he was moderately surprised by the some of the CCSR's final decisions. "The CCSR had a reasonably progressive stance on resolutions requiring board diversity," he said.

The diversity resolutions, approved by both committees, requested that companies make a greater effort "to locate qualified women and persons of color as candidates for nomination" to their governing boards.

In general, however, Tolchin said he thought the CCSR was too conservative. "I was not blown away by CCSR's stances. They were reasonable, but tended to be too cautious," he said. "They tended to abstain from the majority of potentially important progressive causes."