Below: Statements of Dawn Wolfe, Boston Common Asset Management and statement of Domini Social Investments LLC
Adam M. Kanzer, Esq., General Counsel and Director of Shareholder Advocacy, both as shareholders in Cisco.
Reporters Without Borders Press Conference
November 7, 2005
Overseas Press Club
New York, New York
Statement of: Dawn Wolfe
Social Research & Advocacy Analyst
Boston Common Asset Management, LLC
Actions that reduce the openness, safety and reliability of the Internet compromise the long-term business prospects of IT sector corporations.
Internet traffic creates demand for IT infrastructure and networks. An increased volume of Internet traffic thus benefits businesses that profit from demand for infrastructure and networking systems to support that traffic.
Stiffiling the openness, safety and reliability of the Internet inevitably reduces traffic. If we could credibly assume that our emails, blog entries and URLs visited were monitored by some 30,000 state security employees, and that expressing our opinions or criticizing authorities was grounds for imprisonment, as is the case in China, we would likely use the Internet less. Internet traffic would not be maximized and the demand for infrastructure to support it would be reduced.
Boston Common Asset Management recognizes that the long-term growth and viability of IT sector companies depends on the faith and perception of users that the Internet is open, reliable and secure. Our duty as active shareholders is to remind management of their obligations to safeguard the long-term interest of shareholders. In the case of IT sector corporations that includes fostering maximum connectivity and Internet traffic worldwide.
The Joint Investor Statement on Freedom of Expression and the Internet is a way for active shareholders to empower the management of our companies to not compromise on their commitment to human rights and long-term goals. It is also a reminder to management that a growing number of investors, including Boston Common and its clients, care not only about earnings, but how those earnings are generated. Engaging in short sighted business operations that undermine widely accepted human freedoms is simply not a sustainable practice. There is little excuse for such practice when it also reduces future business opportunity.
In January 2005 Boston Common initiated dialogue with Cisco Systems to learn more about its operating protocol when cultivating business in countries known to actively suppress Internet traffic through methods of surveillance, monitoring and cultivation of a self-censorship environment. In May Boston Common was joined by Domini in filing a shareholder resolution with Cisco Systems asking the company to report out on its development of a human rights policy. Our dialogue with the company is ongoing and I will be presenting our shareholder proposal at the Cisco Annual General Meeting of Shareholder on November 15th in Santa Clara, California.
We hope to remain engaged with Cisco and continue to remind management of their commitment to the long-term benefit of shareholders, which is inextricably linked to cultivating an open, safe and reliable Internet worldwide.
As investors, Boston Common Asset Management and our clients are concerned when management chooses to avoid today’s uncomfortable confrontation and bows to repressive government clients at the expense of tomorrow’s growth prospects and basic human freedoms.
Management is accountable to shareholders for these risks and we believe to society for any actions that further enable suppression of human rights and democratic values worldwide.
Statement of Domini Social Investments LLC
Adam M. Kanzer, Esq., General Counsel and Director of Shareholder Advocacy
Overseas Press Club, November 7, 2005
There has been extensive media coverage of Yahoo’s decision to provide Chinese authorities with the name and phone number of one of its users, resulting in the imprisonment of Shi Tao, a journalist, for the crime of sending an email. There have been numerous reports about censorship of the Internet in China, detailing the development of sophisticated surveillance technologies to stifle free speech, and monitor and jail dissidents. A range of U.S. corporations have been implicated in these abuses.
The U.S. State Department, Reporters Without Borders, Human Rights Watch, Amnesty International and others have documented the attempts of a number of governments to turn the Internet into a tool of repression.
A complex set of questions are presented by these developments, which will arguably set the stage for the next decade’s debate about the future of human rights, the importance of privacy and freedom of expression to human dignity, and the value of a free press in the establishment of democratic institutions. Internet technologies, and the companies that provide and develop them, sit at the center of this debate.
We are here today because we believe that investors have an important role to play in the protection of human rights, and a central role to play in this unfolding debate. Domini’s decision to take part in this Joint Statement is based on a number of premises:
• First, democracy provides the best environment for investment, and therefore investors and the companies they hold should seek to advance the development of democratic institutions wherever possible.
• Second, when corporations commit human rights abuses – or enable them – they act on behalf of their shareholders. This creates an obligation for shareholders to speak out, and an opportunity to shape corporate behavior. Because corporations have been speaking on our behalf, we are here today to make our position clear.
• Third, long term shareholder value cannot be advanced through the violation of basic human rights. Censorship and surveillance are destructive to the long-term business interests of internet sector companies. As AltaVista CEO James Barnett said in a 2002 Business Week story, “Censorship is not consistent with our vision for free global access to information.”
According to the Wall Street Journal, when Microsoft agreed to censor its portal in China to omit certain objectionable words including “freedom”, Colin Powell defended the decision, arguing that it is “best for them and better for Chinese citizens to get 95% of the loaf.” The premise is that China is fighting a losing battle, and the Internet will bring freedom and democracy in the end.
We believe in the promise of the Internet as a powerful tool for broad-based wealth creation, and for advancing democracy. But like any other tool, it can be used to build or to destroy. The imprisonment of Shi Tao presents the most direct challenge to Powell’s theory. He is serving a ten-year sentence for alerting the outside world that the Chinese government feared social instability on the 15th anniversary of Tiananmen Square. His imprisonment serves as a warning to pro-democracy elements in China. It should also serve as a warning that if the Internet is to live up to its promise, strong policies and procedures must be put in place to guide corporations when faced with these difficult decisions.
Boston Common Asset Management and Domini Social Investments are presenting a shareholder resolution on this topic at Cisco Systems’ annual meeting next week. Cisco has been accused of helping the Chinese government build their “Great Firewall” and other surveillance technologies. We are asking the company to adopt and implement a human rights policy to help the company avoid complicity in human rights abuses. Our dialogue with company officials is underway.
We are also here today to reach out to the broader corporate community to begin a dialogue on these critically important issues. These are difficult questions, and we do not have all the answers. We do believe that Internet sector companies – and their millions of clients – would be best served by strong, transparent policies and procedures designed to protect fundamental human rights in the very difficult environments in which they operate. Companies should go into these countries with open eyes, cognizant of all the risks presented to their brands, their shareholders, and the communities their products connect. As shareholders, we will be watching their actions closely, and looking for opportunities to work with them to find a responsible path forward.
It will be voted at the next Cisco System General Assembly, on November the 15th 2005
PROPOSAL NO. 6
Boston Common Asset Management, LLC, 84 State Street, Suite 1000, Boston, Massachusetts 02109, a beneficial owner of 67,001 shares of Cisco common stock, joined by another filer (whose name, address and shareholdings will be provided by Cisco promptly upon receipt by Cisco Investor Relations of any oral or written request), have notified us that they intend to present the following proposal at the meeting:
CISCO SYSTEMS, INC. HUMAN RIGHTS POLICY
We believe transnational corporations doing business with repressive governments face serious risks to their reputation and share value if they are seen as responsible for, or complicit in, human rights violations;
Cisco sells its products, primarily through resellers, to government agencies and state-owned communications or information technology entities in most of the countries of the world, including China, Maldives, Tunisia, Vietnam, Saudi Arabia and Turkmenistan;
Cisco’s business “is about connecting communities and helping them prepare for the Internet age.” Our company is committed to conducting its business “according to globally accepted ethical principles”;
Cisco’s long-term business prospects depend on a broadly connected, free Internet. Any actions by Cisco or its agents to ‘close’ the Internet, or to transform it into a tool of repression, harms long-term shareholder value;
State Department Country Reports on Human Rights Practices, Amnesty International, Reporters Without Borders and others have documented how various governments monitor Internet use, stifle free expression, and jail dissidents through manipulation of Internet technology, including those governments noted above with whom our Company does business. These actions may violate key articles of the Universal Declaration of Human Rights, including Article 3 (security of person), Article 10 (fair and impartial criminal hearings), Article 12 (privacy), Article 19 (freedom of opinion and expression), and Article 20 (freedom of assembly and association);
We commend Cisco for endorsing the United Nations’ Global Compact, which commits companies to “support and respect the protection of internationally proclaimed human rights” and ensure “that they are not complicit in human rights abuses.” The Global Compact’s ten principles, covering human rights, the environment and anti-corruption enjoy universal consensus and are derived from broadly endorsed international agreements, including the Universal Declaration of Human Rights (www.unglobalcompact.org);
Cisco’s products, however, may be used contrary to these lofty purposes;
Our company has a sophisticated system to certify and monitor resellers of its products around the world. Based on publicly available information the proponents of the resolution believe that the system does not appear to explicitly integrate human rights concerns (http://www.cisco.com/en/US/partners/pr11/pr193/partners_pgm_requirements.html). This omission places shareholder value at risk if resellers are using our Company’s products to commit, or help others to commit, human rights violations as has been alleged in the media and by Amnesty International and other organizations. We believe public availability of such standards is critical to protecting the Company’s reputation;
We believe significant commercial advantages may accrue to our company by adopting and implementing a comprehensive human rights policy based on internationally accepted human rights norms, including enhanced corporate reputation, improved employee recruitment and retention, improved community and stakeholder relations, and reduced risk of adverse publicity, consumer boycotts, divestment campaigns and law suits.
Shareholders request the Board to prepare a report to shareholders, at reasonable expense and omitting proprietary information, describing the progress toward development and implementation of a Company Human Rights policy and the plan for implementation with partners and resellers by May 31, 2006.
Cisco’s Statement in Opposition to Proposal No. 6
The Board of Directors believes this proposal does not serve the best interests of Cisco or its shareholders and recommends a vote AGAINST it.
We regard human rights issues seriously and strive to promote, among other things, the worldwide improvement of working conditions, personal freedoms and diversity. Our codes of conduct, employee policies and guidelines substantially incorporate laws and ethical principles including those pertaining to freedom of association, non-discrimination, privacy, collective bargaining, compulsory and child labor, immigration and wages and hours. We share the proponents’ ongoing concerns for human rights and are continually addressing these issues within our business practices and the communities in which we operate. We are committed to evolving and enhancing these practices. However, we believe that the preparation of the report requested by this proposal is unnecessary in light of our current efforts and established policies, practices and procedures relating to human rights.
In 2003, we created a Corporate Citizenship Council (the “Council”) consisting of an executive committee and a broad-based global membership of our management. The Council represents and serves our customers, employees, shareholders and partners by continuously improving our Corporate Social Responsibility (“CSR”) programs and by providing a better understanding of our performance relating to CSR. The Council fulfills these responsibilities by assessing social, ethical and environmental practices and policies and by driving change, where necessary, to enhance the performance of our core business operations. Information about the Council can be found on our Corporate Citizenship website at www.cisco.com, by clicking on “About Cisco,” and then on “Corporate Citizenship.”
We are in the process of preparing a Corporate Citizenship Report which is expected to address our performance in the areas of human rights generally, our progress towards the principles of the United Nations Global Compact specifically, employee welfare, diversity, training and development, supplier diversity and ethics, environmental impact of product design and lifecycle and our facilities and operations, and our social investments across the world. We are committed to publishing and making this report publicly available during the fall of 2005.
Additionally, we recently adopted a specific corporate policy on human rights, which is publicly available through our Corporate Citizenship website.
The policy states:
Cisco strives to treat employees, and the communities in which we serve, with respect and dignity.
A supporter of the United Nations Universal Declaration of Human Rights and Global Compact, Cisco’s codes of conduct, employee policies and guidelines substantially incorporate laws and ethical principles including those pertaining to freedom of association, non-discrimination, privacy, collective bargaining, compulsory and child labor, immigration and wages and hours. These codes, policies and guidelines are reviewed by Cisco’s Corporate Citizenship Council (the “Council”) consisting of an executive committee and a broad-based global membership of Cisco management.
Consistent with Cisco’s culture and applicable laws, employees are encouraged to:
• promote a safe, healthy and supportive work environment where employees can contribute their skills; and
• participate with local stakeholders in addressing community well-being, social and economic development and environmental preservation.
Employees shall respect the human rights and dignity of others as outlined in the Code of Business Conduct, employee policies, and guidelines or local laws applying and abiding within the scope of their individual roles and responsibilities to whichever sets higher standards.”
We have also adopted and implemented a Supplier Code of Conduct that is based on, among other things, various codes and standards of the United Nations International Labour Organization, the United Nations Global Compact, and the United Nations Universal Declaration of Human Rights, Social Accountability International and the Ethical Trading Initiative. Our Supplier Code of Conduct requires the protection of human rights by our suppliers. The Supplier Code of Conduct is also available on the Corporate Citizenship website.
In countries where significant human rights issues are believed to exist, we require third-party manufacturing certifications (e.g., Social Accountability International’s SA8000 standard and verification system). Further, our distributors, resellers and partners are screened against United States and certain foreign government lists for prohibited destinations and organizations.
As described above, we have implemented policies, practices and procedures relating to human rights which are publicly available to shareholders, and are continually in the process of further developing and implementing such measures. We believe that the Corporate Citizenship Report that will be publicly available in the fall of 2005 coupled with our existing, and continually evolving, policies, practices and procedures relating to human rights effectively address the request contained in this proposal. We believe that the preparation of an additional report as requested by the proponents is unnecessary and believe that the interests of our shareholders will best be served if we continue to focus our efforts on further developing and implementing our human rights policies, practices and procedures.
Recommendation of the Board of Directors
For all the reasons set forth above, the Board of Directors recommends a vote AGAINST Proposal No. 6.