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Global Community

In an economy where global transportation and communications, along with the international flow of funds, increase in ease and speed every day, corporations reap the benefits of international peace and security, free trade, and worldwide standards that allow them to move operations, resources, and assets quickly from region to region.

International bodies, including the United Nations, the International Atomic Energy Agency, the World Health Organization, the International Labor Organization, the International Organization for Standardization, UNICEF, and many others help maintain a peaceful and orderly world within which companies can pursue their business opportunities. Because these international bodies have some, but often limited, powers to regulate corporations, corporate cooperation is of great importance. By acknowledging and enhancing the role of these organizations in creating the network of global public goods upon which they depend for their prosperity, corporations not only help assure a just and equitable world order, but also increase their own ability to conduct business profitably.

Themes

The following are the five major themes by which we assess the strength of corporations’ relationships with their partners in the international communities within which they operate. While other issues are also important in this regard, these six are those which we believe we can most meaningfully and consistently assess.

Nuclear Power

Although advocates have extolled nuclear power as a safe and clean alternative to fossil fuels, the industry track record reveals major concerns in the areas of safety, transparency and storage. Nuclear power advocates often compare investments in nuclear with renewables, and tout the relative cost efficiency of nuclear power. However, these estimates rarely reflect the costs of the entire nuclear life cycle, including storage, frequent breakdowns, and the risk of catastrophic failures. Claims of nuclear power’s “carbon neutrality” also fail to take into account the carbon footprint of the full nuclear power life cycle, from uranium mining to waste storage. Taking these arguments at face value, however, we still believe the risks of nuclear power outweigh its benefits.

Safety and Transparency

Nuclear power companies have spent years trying to convince the public that nuclear power production is safe. Over the last thirty years, however, there is troubling evidence of cover ups, falsification of data, and near-catastrophic failures, many of which have been underreported. In addition to concerns relating to the operation of nuclear power plants, there are additional concerns relating to the potential impact of external events.

Waste

The issue of nuclear waste has never been solved. There are no safe, long-term options for the storage, processing, and disposal of spent nuclear fuel from power plants. Nuclear waste contains long-lived elements. Plutonium-239 has a half-life of 24,000 years. Strontium-90 and cesium-137 have half-lives of about 30 years (a 30-year half-life means that it would take roughly 200 years for radioactivity to decline to 1%). Nuclear fuel rods contain uranium-235, which has a half-life of 700 million years. When we think about the storage of nuclear waste, it is clear that short-term solutions don’t address the life cycle associated with nuclear power. Furthermore, the transportation of nuclear waste poses additional concerns.

Nuclear Weapons

In addition, nuclear power raises concerns about the proliferation of nuclear weapons, because the technologies involved in the enrichment of uranium for use in nuclear power plants are essentially identical to those involved in the enrichment of uranium for use in nuclear weapons. (See Domini’s policy on nuclear weapons described below.)

All of the above concerns will only be exacerbated by rapid growth in the nuclear power industry. As a result, Domini does not invest in companies that are significant owners or operators of nuclear power plants.

Geopolitical Stability, Weapons, and International Peace

Nuclear weapons, the international arms trade, and out-of-control spending on conventional weapons are all of concern to Domini. The achievement of international peace is among the most difficult tasks faced by government. We view the involvement of publicly traded corporations in the production of nuclear and conventional weapons as complicating this task, which should be left to government.

Nuclear weapons and the threat of a nuclear war are one of the greatest threats to humanity and the global environment. As of 2011, the U.S. has a total inventory of 8,500 nuclear weapons, Russia 11,000, France 300, China 240, and the United Kingdom 225. In addition, India, Israel and Pakistan have nuclear arsenals. North Korea and Iran have also reportedly taken steps to develop nuclear weapons technology. (Data is drawn from the Federation of American Scientists’ Nuclear Information Project.)

In addition, the thriving international trade in conventional arms fuels internal and regional conflicts around the world. In 2009 the international arms trade totaled an estimated $58 billion and there were more than 20 internal and regional armed conflicts in the world, including those in Iraq and Afghanistan.

Finally, out-of-control spending on military systems and conflicts also diverts funds from much needed investments on the range of domestic public goods and international aid that are essential for the creation of prosperous, stable nations.

For all of the above reasons, we do not invest in companies deriving significant revenues from the manufacture of military weapons.

Endorsement of International Norms and Standards

In an increasingly global economy, the role of international standards-setting and quasilegal organizations is of growing importance. Whether the issue is labor, health, climate change, ozone depletion, product quality, the environment, bribery, transparency, or children’s rights, these international bodies play an important role in raising the standards of conduct and in promoting the provision of public goods essential for growing economies. Companies that invest in their compliance with such norms help create a world of improved health, cleaner environments, more satisfying workplaces, and increased public and private goods. These investments accrue to the long-term benefit of all, including corporations. We view positively companies that recognize, support, and take concrete steps to adhere to these international standards.

Acknowledgement of Human Rights

As companies operate in an increasingly global economy, they face the challenge of accommodating their operations to the varying legal systems of the countries within which they operate. Where questions of human rights abuses by national governments arise, these challenges are particularly complex and may involve corporations in high-profile controversies — especially when the government is also a client. Whether the question is freedom of speech, the rights of minority groups, or abusive labor practices, corporations are often forced to make decisions that mix business and politics in complicated ways and for which few tested guidelines exist.

We seek companies that acknowledge the complexities of these situations and make concerted efforts to confront them in their operations, although we recognize that their decisions will not always leave them free of controversy.Not only can corporate actions make a substantial difference to the individuals their policies affect, but they can also set examples for others to follow. Corporations that neglect or remain indifferent to these questions, however, not only open themselves up to public controversy, but fail to help the societies in which they operate achieve the stable and just social systems that are the foundation for prosperity.

Respect for Indigenous Peoples and Local Cultures

Few controversies are as damaging to the long-term reputation of corporations as those involving the rights and cultures of indigenous peoples. Moreover, these controversies can complicate relationships with local governments and populations, and jeopardize a corporations’ ability to operate locally or regionally. Pitting large faceless corporations against often small and relatively defenseless communities, such confrontations can frequently be avoided if companies show initial and ongoing sensitivities to the cultures of those around them. The value of the diversity that these groups bring is incalculable and its loss is irretrievable. Responsible corporations can help preserve unique cultural riches in our world that are all too easily destroyed in a rush to short-term profit.

We evaluate such controversies with great care both because we respect the rights of indigenous peoples to preserve their cultures and because the effect of confrontations between companies and indigenous peoples can be so harmful to corporate reputations.

Antibribery, Anti-Money Laundering, and Anticorruption Programs

Corruption in international trade has been called the Achilles’ heel of capitalism. It costs hundreds of billions of dollars each year to governments in lost tax revenues, to honest businessmen in foregone opportunities, to whole economies in inefficient market operations, and to societies themselves in the loss of democratic freedoms and practices. Without honest and transparent markets, societies cannot reap the benefits that the business world is so efficient at creating — or spread them equitably among their citizens.

We consequently look for companies that have implemented strong ethics, antibribery, and anti-money laundering programs, paying particular attention to companies in industries with a history of such scandals, such as the construction, banking, and natural-resources extractive industries, and companies with a significant, or growing, presence in countries with a known history of widespread bribery and corruption.