For at least a decade, HII has also engaged Coke (KO) in an ongoing dialogue on a variety of issues, including human rights principles, use of GMOs, health, water, death squads in Columbia, recycling, and climate change. This year, we introduced a resolution calling for Coke to create a board committee on sustainability.
Coke, like many giant junk food and sugar beverage companies, adopts policies, pledges, and signs voluntary codes, including making statements promising to conduct themselves with humane and environmental sensitivity, respecting human rights and sustainability, including an awareness of the dangers of climate change. Unfortunately, these pronouncements come with no rule of law commitment, sanctions, enforcement, or commitment to fiduciary responsibility. By establishing a board standing committee with a charter of specific duties, directors will have a fiduciary obligation to operate Coke sustainably. Our directors need to act as fiduciaries and be legally responsible for overseeing the corporation’s substantial carbon footprint spread throughout the world.
About five weeks after we submitted our resolution calling for the creation of a board committee on sustainability, Coke amended the board’s Diversity Review Committee Charter, adding a committee responsibility to “review the nature and source of the Company’s sustainability goals and the Company’s progress toward achieving those goals. The Committee will receive at least annually, presentations by the Chief Sustainability Officer, and others as required, related to the accomplishment of the Company’s sustainability goals.”
Based upon this amendment and our earlier legal opinions from both internal corporate counsel and an outside counsel that corporate committee charter duties are fiduciary obligations, the same as corporate bylaws, we withdrew our shareholder resolution and congratulated Coca-Cola at long last on adopting the rule of law regarding the board’s fiduciary obligations of environmental sustainability.
Shareholder Resolution 2017
“Board Committee on Sustainability”
Whereas, with the deepening and expanding interest by consumers and investors in sustainability, the success of our company is increasingly impacted by responses to challenges in an extensive range of public policy and sustainability issues including environmental priorities and initiatives, human rights, nutritional standards, water use and degradation, the use and labeling of genetically modified crops, and political engagement;
Whereas, as fiduciaries, our Board of Directors has a responsibility for our “. . . Company’s positions on corporate social responsibility and public issues of significance, which may affect shareholders, the Company, the business community, and the general public. . .”, the board has delegated specific duties to the Company’s Public Issues and Diversity Review Committee;
Whereas, in the Charter of the Public Issues and Diversity Review Committee, the Committee is given a vague responsibility to “…evaluate social, political and environmental trends, issues and concerns which affect or could affect the Company’s business activities and performance . . . “ the charter neither specifies nor prioritizes important company sustainability issues;
Whereas, while the aforementioned committee is specifically required to receive annual presentations by management regarding some committee policy goals (diversity and human rights), there are no similar annual requirements for presentations on sustainability goals, or for Company policies to be evaluated, or recommendations made;
Resolved, the shareholders request the Board of Directors establish a new Committee on Sustainability to bring priority attention to our company’s vision and responses to important matters of public policy regarding sustainability. Such committee should engage in ongoing review of corporate policies, above and beyond matters of legal compliance, to assess the Corporation’s response to changing conditions and knowledge of the natural environment, including but not limited to, waste creation and disposal, natural resource limitations, energy use, waste usage, water use and degradation, and climate change. Such committee should also at least meet annually and review, evaluate, and make recommendations.
The proponent believes it is important for an independent committee to be created with its fiduciary duties focused on representing shareholders for oversight of company sustainability policies and practices, including related public policy initiatives. Issues related to sustainability might include, but are not limited to: global climate change, emerging concerns regarding toxicity of materials, resource shortages, biodiversity loss, and political instability due to changing environmental conditions.
Adoption of this resolution would enhance our reputation and reinforce our company’s position as an industry leader in these areas of increasing and long term concern to investors and policy makers.