Contact: John Harrington – 707.252.6166
FOR IMMEDIATE RELEASE
May 25, 2005
Napa, California
Harrington Investments, Inc. continues its six-year campaign to protect Chinese workers' rights.
This month, shareholder proposals seeking to protect the rights of Chinese workers were presented before the annual shareholder meetings of three companies: Illinois Tool Works, Inc. (ITW), Cummins, Inc. (CMI), and 3M Company (MMM). With the help of its clients, Harrington Investments, Inc. (HII), a Napa, California-based registered investment advisory firm, called on these three companies to adopt the China Business Principles ("Principles").
"Almost daily, Chinese citizens are protesting violations of their civil, human and labor rights," said John C. Harrington, President and CEO of Harrington Investments, Inc. "Many of these abuses are perpetrated by American companies, their contractors or subcontractors. Amnesty International has indicated there is a risk that the public will conclude that U.S. companies are 'contributing to such abuses.' This kind of negative publicity could affect a company's reputation and stock value."
China exhibits every type of labor rights abuse ever catalogued, including physical abuse, forced labor, child labor, and dangerous working conditions causing death. The Chinese government does not enforce its labor law; therefore, HII argued that companies must undertake special measures to insure employees and suppliers' employees are not suffering labor rights abuse.
The Chinese government does not permit the existence of any group that could potentially challenge its authority, including independent trade unions and religious organizations. In China there is no freedom of association, freedom of speech, or freedom of religion. Workers advocating independent unions have been tortured, thrown into psychiatric institutions and forced-fed psychiatric drugs. If employees or a company's supplier employees attempt to form an independent union, they could be subjected to similar treatment.
New reports of serious human rights abuses in China occur weekly. Amnesty International reported that torture and ill treatment of prisoners is widespread and Chinese citizens have been sentenced to death for membership in "unauthorized" Christian churches. The New York Times reported that organs are routinely harvested from executed Chinese prisoners without their consent, in some cases when the prisoners were still alive. "China, essentially, is a terrorist government," said John Harrington.
The China Business Principles require companies to ensure their China facilities and those of their Chinese suppliers manufacture products in a manner that does not violate the rights of Chinese workers. It also requires the companies to promote freedom of association and assembly, freedom of expression, and freedom from arbitrary arrest or detention.
The proposal to adopt the Principles received different responses from the three companies:
1) At 3M's annual meeting the company claimed that its existing universal standards already protect worker rights in China; however, HII believes 3M's codes are too general to be effective in the unique situation in China. 3M refused to release the vote results.
2) Cummins, Inc. announced at its annual meeting that the company is developing a business code specifically for its China suppliers. The proposal received 9% of the vote.
3) HII withdrew the proposal right before Illinois Tool Works' annual meeting because ITW agreed to send an inspection team to China to determine to what extent its plants and suppliers are respecting human rights and labor laws.
The resolution was also filed this year at Dell, Inc., but was withdrawn before the proxy ballot was printed and mailed to shareholders. Dell agreed to work with HII over the next year to address concerns about the company's operations in China. The agreement includes progress reports on Dell's efforts to ensure compliance in China with its Supplier Principles and the Electronic Industry Code of Conduct (EICC), including inspection of the factories of both first and second tier suppliers.
HII's campaign has resulted in significant successes. After aggressively refusing to address the issue, and after the China proposal was brought before their shareholders three times, Hewlett-Packard Company began to seriously address labor and human rights problems in its China operations. The company hired a full-time Social Responsibility Manager and adopted a Supplier Code of Conduct that tracks the China Business Principles. NIKE, Inc. has also shown significant progress since HII filed the China proposal with the company in 2001. In exchange for withdrawal of the proposal, the company has worked with the China Working Group to implement its Code of Conduct in China. It has adopted a number of innovative strategies and recently became the first company to publicly disclose the names and locations of all of its suppliers.
"We will be monitoring the corporate conduct of all four of the companies that we filed with this year to determine if we will reintroduce the proposal at their 2006 annual meetings." Harrington concluded.
HII is a socially responsible investment firm managing approximately $170 million in individual and institutional assets. HII actively engages companies on social and environmental issues by introducing shareholder resolutions at annual corporate meetings. Human, labor and environmental rights have been a priority of HII and its investment clients for at least ten years. Other shareholder resolutions introduced by HII in 2005 included privacy protection, global warming, excessive CEO compensation, and the danger of exporting banned pesticides.
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