Wespath Benefits and Investments—through its Wespath Investment Management (Wespath) division—seeks to protect human rights through its comprehensive sustainable investment strategy. The Church has declared that “all persons [are] equally valuable in the sight of God,” and, therefore, calls for “the recognition, protection, and implementation of the principles of The Universal Declaration of Human Rights so that communities and individuals may claim and enjoy their universal, indivisible, and inalienable rights.” (The Social Principles, ¶162.)
Across the investments we manage, we seek to influence change to improve the lives of those affected by human rights abuses while helping our participants and clients meet their investment goals. The United Nations (U.N.) Guiding Principles on Business and Human Rights (Guiding Principles) provide the foundation for our activities.
UN Guiding Principles on Business and Human Rights
The United Methodist Church’s (UMC) General Conference 2012 adopted a resolution asking that “all United Methodist general boards and agencies prayerfully consider advocating that all companies formally recognize and adopt into their Codes of Conduct the United Nations Guiding Principles on Business and Human Rights (also known as the Ruggie Principles) and that boards and agencies prayerfully consider economic sanctions with companies that refuse to recognize and adopt the Principles.”
The Guiding Principles framework was developed by Professor John Ruggie during his tenure as the U.N. Special Representative on Business and Human Rights. The Guiding Principles are built on the principles of “protect, respect and remedy”:
The state has a duty to protect citizens from human rights abuses including those involving corporations and business enterprises.
Corporations have a duty to respect human rights.
Everyone should have access to remedies (both judicial and non-judicial).
In 2015, Wespath reviewed the human rights policies of its 100 largest global holdings (based on market valuation) for adherence to the Guiding Principles. Nearly one-third of the companies were found to be in alignment with the Guiding Principles. Wespath wrote to the remaining 67 companies that either lacked a policy, or whose policy did not reflect the “protect, respect and remedy” framework. The companies were encouraged to adopt a strong human rights policy based on the Guiding Principles.
See below for more information about:
Sustainable Investment Strategies
Wespath employs a comprehensive sustainable investment strategy with three core components:
Avoid: Our Ethical Exclusions reflect United Methodist concerns for human dignity, health and peace. Wespath avoids investing in companies with core business activities involved in producing and/or providing products and related services for: alcoholic beverages, tobacco products, adult entertainment, weapons, gambling and privately-owned correctional facilities.
Engage: In our role as Active Owners, we seek to improve company performance relating to material environmental, social and governance (ESG) issues (including human rights) through public policy and corporate engagement as well as proxy voting and the filing of shareholder resolutions.
Invest: Wespath’s Positive Impact Investments reflect the intent that our global investment activities have a positive impact on society and the environment. They currently focus on our Positive Social Purpose (PSP) Lending Program, which supports affordable housing, community development and microfinance projects.
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Active Ownership and Engagement: Bangladesh (Worker Safety); Oil, Gas and Mining Industries; Palestinian Territories
Wespath’s active ownership strategy addresses human rights through public policy and corporate engagement, as well as proxy voting. Our human rights engagements span the globe:
Bangladesh (Worker Safety)
In April 2013, more than 1,000 garment workers in Bangladesh lost their lives when the Rana Plaza factory building in which they were working collapsed.
Many apparel companies and retailers outsource to low-cost manufacturing facilities, many of which are overcrowded and unsafe. In 2013, Wespath co-signed a letter encouraging 27 companies to participate in the Accord on Fire and Building Safety in Bangladesh, which details how contractors can make industrial buildings safer. Signatories to the Accord commit to independent facility inspections and fire safety training.
Wespath led engagements with European retailers Adidas and Inditex; both ultimately signed the Accord.
By August 2015, more than 1,600 factories had been inspected in Bangladesh under the Accord.
The inspections revealed more than 67,000 issues (mostly related to fire and electrical systems). Approximately 3,000 corrections were completed, with another 18,000 pending verification. In addition, remediation to the families and victims of the Rana Plaza building collapse is nearing completion.
Oil, Gas and Mining Industries
Many of the earth’s resources are located in areas of political instability or civil unrest where human rights violations have been documented. Companies that operate in these areas face many business risks including:
Security of projects, workers and the local populations
Project delays and cost overruns related to community concerns
Disputes over land and/or water rights
Associations with bribery and corruption
Improper management of these risks and unclear policies and practices for managing human rights protections can paralyze business operations. In 2014 and 2015, as part of our engagement of oil, gas and mining companies, Wespath staff toured multiple sites where natural resources are extracted:
Copper mines in Chile (organized by Anglo American)
Gold mines in Peru (organized by Newmont Mining)
Oil sands mine in Canada (organized by Suncor and the U.N. Principles for Responsible Investment)
Each trip included meetings with company management, as well as local communities and civil society groups, to gain a perspective on corporate operations. Wespath shared expectations for the management of human rights risks with each company and why, as investors, these issues hold significant importance to us. Lessons learned, and information gained, from these trips inform our ongoing engagements with other companies on human rights and the implementation of the Guiding Principles.
We share the desire of fellow United Methodists for a just and lasting peace in the Middle East. The issues surrounding the conflict in the region are highly complex and the barriers to peace are influenced by a long history of mistrust and violence. In 2009, a group of Palestinian Christians called for churches to support boycott and divestment as tools for justice and peace in Israel and the Palestinian territories. In response, some groups within the United Methodist Church have urged Wespath to divest from companies they identify as supporting the Israeli occupation of Palestinian land—specifically focusing on three companies: Caterpillar, HP and Motorola Solutions. Many of these divestment calls refer to Resolution 6111, Opposition to Israeli Settlements in Palestinian Land, first adopted by UMC General Conference 2004. General Conference has never adopted a resolution calling for divestment.
Wespath’s general secretary and chief investment officer traveled to Israel and the Palestinian territories in 2012 and 2015 to meet with business, government and religious leaders in order to expand our understanding of the situation. We continue to closely follow events in the region and maintain dialogues with individuals representing a variety of viewpoints.
Through our engagement activities, we probe companies’ human rights policies and assess how those policies influence operations and decisions related to marketing and selling products. We also seek information and review companies’ sustainability strategies and philanthropic work to assess the degree to which they are actively supporting the Palestinian population.
Caterpillar—Wespath has engaged Caterpillar on human rights issues for a number of years. Our engagement activities have been increasingly productive and include the following:
Discussions leading to the publication of Caterpillar’s first corporate sustainability report. This type of report discloses corporate policies and performance on environmental, social, and corporate governance (ESG) issues. Increasingly, investors view these issues as essential to making informed investment decisions. Caterpillar identified “sustainability” as one of its five core values and appointed its first Global Director of Sustainable Development to lead its activities. Caterpillar has made notable improvements to its corporate governance policies and environmental performance.
Successfully persuading the company to issue a statement on the responsible use of Caterpillar products.
Encouraging the company to amend and strengthen its human rights policy. In 2015, in alignment with the U.N. Guiding Principles on Business and Human Rights, the company expanded its human rights policy, provided more detailed reporting on the implementation of the policy to its Board and conducted a human rights impact assessment across its entire value chain, including its suppliers and dealers.
Hewlett Packard (HP)—Wespath contacted HP in 2008 concerning the company’s human rights policies and practices in the Middle East. HP held a follow-up meeting to report it was conducting a global human rights impact assessment of its operations. Wespath led an investor dialogue with the company in 2011 to discuss the results of the assessment. During the meeting, investors offered specific examples of how the company’s products and operations have human rights implications in the Middle East, and urged the company to examine the extent to which its divisions are complying with the company’s human rights policy. The discussions continued with a follow-up meeting in 2013. HP is a signatory to the U.N. Global Compact and subsequent to the investor dialogue, was one of the first companies to incorporate the U.N. Guiding Principles on Business and Human Rights into its human rights policy.
Microsoft—Wespath participated in multiple dialogues with Microsoft to discuss how the company applies its human rights policy in areas of conflict, specifically in the Middle East. Microsoft has incorporated the U.N. Guiding Principles on Business and Human Rights into its policies and launched the Technology and Human Rights Center to “examine the social and cultural implications of information and communication technology on human rights, humanitarian action and social change.”
Positive Impact Investments in the Palestinian Territories—In addition to our engagement activities, Wespath is actively seeking positive impact investment opportunities in the Palestinian Territories.
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Human Rights and Investment Ethics Task Force
Wespath and the General Board of Global Ministries, in response to the resolutions passed at General Conference 2012, convened the Human Rights and Investment Ethics (HRIE) Task Force “to identify resources, principles and procedures that express our commitment to human rights taking into account fiduciary responsibility and ministry priorities consistent with the global mission of The United Methodist Church.” (Human Rights and Investment Ethics Task Force: Report and Recommendations, September 3, 2014).
Bishop Ken Carter (Florida Episcopal Area) chaired the Task Force, and participants included Wespath, the general boards of Global Ministries, Church and Society, United Methodist Women, the Georgia United Methodist Foundation, and several United Methodist seminaries and conferences. The Carter Center and Boston Common Asset Management LLC, a leading sustainable investment management firm, were also represented on the Task Force.
General Secretaries’ Working Group on Investing and Mission
As an outcome of the HRIE, a Working Group on Investing and Mission was formed, comprised of the four general secretaries who served on the HRIE Task Force. It continues the dialogue among these United Methodist Church general agencies that frequently are engaged in cross-missional and investing activities. The members are: Barbara Boigegrain, Wespath Benefits and Investments; Reverend Susan Henry-Crowe, General Board of Church and Society; Harriet Olson, United Methodist Women; and Thomas Kemper, General Board of Global Ministries.
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Managing Excessive Sustainability Risk Linked to Human Rights
As a long-term investor, Wespath favors investing in companies that have sustainable business practices. To assist in identifying and managing environmental, social and governance (ESG)-related risk in general, the board of directors (board) adopted a policy on the management of excessive sustainability risk in 2014.
The policy recognizes that there may be instances when a particular issue, set of companies and/or industries pose high levels of risk to investors. In such instances, the board will approve an investment guideline to inform the execution of Wespath’s active ownership strategy.
The policy, “Management of Excessive Sustainability Risk,” is found in Wespath’s Statement of Administrative Investment Policy, Section III.D.2.
ESG issues can present an excessive degree of sustainability risk to the General Board’s* funds due to their fiduciary implications and their importance to The United Methodist Church. When Wespath identifies such issues, it will develop a guideline regarding its company-specific engagement priorities. This guideline may also lead to the exclusion of certain companies until the risk of holding securities in the affected companies has been resolved, or if Wespath believes that it cannot reasonably mitigate the sustainability risk.
The Fiduciary Committee and UMC Principles Committee must approve all guidelines relating to the management of excessive sustainability risk.
* The General Board of Pension and Health Benefits of The United Methodist Church (General Board) is now Wespath Benefits and Investments—effective July 18, 2016.
In 2014, our board of directors approved an investment guideline for human rights, with a specific focus on high-risk operating areas.
Companies face many business risks when operating in regions torn by violence, conflict and the abuse of human rights. These risks include:
Difficulty in providing effective security to workers, local inhabitants and facilities
Operational disruptions as a result of violence and local actions
Legal challenges including charges of complicity and breaches of international law
Loss of reputation and brand value
In 2015, we implemented our human rights investment guideline, an element of our comprehensive sustainable investment strategy, which provides direction for corporate engagement actions and highlights human rights-related risks that could potentially affect the value of investment assets. This guideline fully aligns with our fiduciary obligations to our participants and also aligns with the many United Methodist Church statements on protecting human rights.
Read the full text of the human rights investment guideline here.
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Equity Social Values Plus Fund
The Equity Social Values Plus Fund (ESVPF) is a passively-managed fund investing in U.S. and non-U.S. publicly owned companies that fulfills investor preferences for a heightened focus on corporate environmental and social performance. ESVPF, in response to the concerns expressed in petitions approved by a threshold number of annual conferences, excludes companies with fossil fuel reserves used for energy purposes and specific companies that are the subject of annual conference resolutions concerning peace in the Middle East.
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Human Rights Resources
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