14-03 MRTI Report of Its Engagement with Corporations Involved in Israel, Gaza, East Jerusalem, and the West Bank.
Source: Agencies Event:219th General Assembly (2010)
Committee:
[14-03] Middle East Peacemaking Issues
Sponsor:
Presbyterian Mission Agency
Topic:Unassigned Type:General Assembly Full Consideration
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Assembly Action
On this Item, the General Assembly, acted as follows:
Approve
Electronic Vote - Plenary
Affirmative: 418
Negative: 210
Abstaining: 9
Committee Recommendation
On this Item, the Middle East Peacemaking Issues Committee, acted as follows:
Approve
[Counted Vote - Committee]
Affirmative:45
Negative:7
Abstaining:1
Recommendation

The General Assembly Mission Council recommends that the 219th General Assembly (2010) approve the Report of the Committee on Mission Responsibility Through Investment (MRTI) of Its Engagement with Corporations Involved in Israel, Gaza, East Jerusalem, and the West Bank, and do the following:

1.   Renew the call of previous General Assemblies to all corporations doing business in the region to confine their business activity solely to peaceful pursuits, and refrain from allowing their products or services to support or facilitate violent acts by Israelis or Palestinians against innocent civilians, construction and maintenance of settlements or Israeli-only roads in East Jerusalem and the West Bank, the Israeli military occupation of Palestinian territory, and construction of the Separation Barrier as it extends beyond the 1967 “Green Line” into Palestinian territories.

2.  Continue to urge all corporations doing business in the region to seek proactive ways to promote respect for human rights, peace building, and equal employment opportunity.

     3.         Direct the General Assembly Mission Council, through its Committee on Mission Responsibility Through Investment (MRTI), to continue the corporate engagement process with identified companies doing business in the region, as follows:

a.         That the engagement with Motorola, ITT, United Technologies, and Hewlett-Packard be continued, together with ecumenical partners, as part of MRTI’s regular work plan, in accordance with the previously identified positions and priorities of the General Assembly, and subject to ordinary reporting to each General Assembly and report to the 220th General Assembly (2012) on its work including appropriate recommendations.

b.         Whereas the Spirit of Christ “… gives us courage to pray without ceasing, to witness among all peoples to Christ as Lord and Savior, to unmask idolatries in Church and culture, to hear the voices of peoples long silenced, and to work with others for justice, freedom, and peace” (The Book of Confessions, A Brief Statement of Faith—Presbyterian Church (U.S.A.), lines 66–71), we seek to fulfill this calling by continued engagement with Caterpillar in accordance with the following policy statement of the 219th General Assembly (2010):

Caterpillar, Inc. has produced, sold, and profited from equipment that has been and continues to be used—with or without modifications made by their exclusive dealers and by others—for clearly non-peaceful purposes. Caterpillar thus profits from continued actions by Israeli Defense Forces (IDF) and other government agencies (at times by private companies under contract with government entities or on construction projects approved by Israeli government bodies) that have been condemned by the international community and the Presbyterian Church (U.S.A.). These uses include (but are not limited to) the demolition of the homes of Palestinian civilians, the building of Israeli settlements and the separation barrier on Palestinian territory that is occupied illegally by Israel, and the provision of (and possible conscription in the future) of civilian employees of Caterpillar’s exclusive dealer to the Israeli military for the purpose of maintaining Caterpillar equipment for military purposes.

The inaction of Caterpillar in addressing the injustice and pain caused by its failure to monitor and take actions to prevent such uses by its Israeli dealer is inconsistent with our stated position calling on all corporations doing business in Israel, Gaza, East Jerusalem, and the West Bank “to confine their business activity solely to peaceful pursuits and refrain from allowing their products or services to support or facilitate violent acts by Israelis or Palestinians against innocent civilians, construction and maintenance of settlements or Israel-only roads in East Jerusalem and the West Bank, the Israeli military occupation of Palestinian territory and construction of the Separation Barrier as it extends beyond the 1967 ‘Green Line’ into Palestinian territories.”

Further, Caterpillar has been slow to engage the Presbyterian Church (U.S.A.)’s Committee on Mission Responsibility Through Investment and the broader ecumenical community in these shareholders’ earnest attempts to have constructive conversation about these concerns. For extended periods, the company was unwilling to meet. When they have met, they have denied any responsibility for how their products are used or for their knowledge of the clear purposes for which these products are acquired from Caterpillar’s dealers. Caterpillar’s representatives have been dismissive of the ecumenical community’s concerns, and their responses (or lack thereof) have stood in sharp contrast with those of other companies doing business in Israel/Palestine. While we might like to see greater progress in some of those other dialogues, Caterpillar’s unwillingness to engage with authenticity and openness is unique and disappointing. Their actions do not provide much encouragement about the possibility for real change coming through conversation and correspondence conducted “behind the scenes.”

In contrast to its unyielding stance on this specific issue, Caterpillar has in many ways provided positive leadership to its community, its state, and the nation. It has donated considerable resources and equipment in support of local development and disaster relief at home and overseas. It has significantly improved workplace safety, acted aggressively to reduce greenhouse gas emissions, and pursued environmental conservation within its production processes. In recognition of these accomplishments, Caterpillar has been listed for seven consecutive years in the Dow Jones Sustainability World Index. But these positive acts do not excuse the severity of the particular injustice that is being done to the Palestinian people through the use, in part, of certain Caterpillar products and from which Caterpillar profits directly or indirectly. This injustice undermines Caterpillar’s own stated commitment to human rights and positive global citizenship.

On the basis of Christian principles and as a matter of social witness, the 219th General Assembly (2010) strongly denounces Caterpillar’s continued profit-making from non-peaceful uses of a number of its products. We call upon Caterpillar to carefully review its involvement in obstacles to a just and lasting peace in Israel-Palestine, and to take affirmative steps to end its complicity in the violation of human rights. We hope that, by God’s grace, Caterpillar will come to exercise its considerable power and influence in the service of a just and lasting peace in Israel/Palestine.

Rationale

These recommendations are in response to the following referrals:

            2008 Referral: Alternate Resolution to Item 11-01. On Peace and Justice in Palestine and Israel, Recommendation 6. Instruct the Committee on Mission Responsibility Through Investment (MRTI) to Report Regularly to the General Assembly Council on Its Communication and the Compliance, or Lack Thereof, by Caterpillar, Motorola, and Other Corporations Involved with Regard to General Assembly Guidelines and Concerns for Justice and Human Rights—From the 218th General Assembly (2008) (Minutes, 2008, Part I, pp. 45, 46, 1137–39).

            2008 Referral: Item 11-27. Report of the Committee on Mission Responsibility Through Investment of Its Engagement with Corporations Involved in Israel, Gaza, East Jerusalem, and the West Bank. Recommendation 4. Direct the General Assembly Council, Through Its Committee on Mission Responsibility Through Investment, to Continue the Corporate Engagement Process, and Report on Its Status with Any Recommendations to the 219th General Assembly (2010)—From the Committee on Mission Responsibility Through Investment (Minutes, 2008, Part I, pp. 46, 47, 1223–25).

Report of the Committee on Mission Responsibility Through Investment of Its Engagement

with Corporations Involved in Israel, Gaza, East Jerusalem, and the West Bank

MRTI Report on Engagement with Corporations on Israel-Palestine Issues from 2004 to 2009

Historical Background: 2004-2006

The 212th General Assembly (2004) instructed the Committee on Mission Responsibility Through Investment (MRTI) to begin a process of “phased, selective divestment” related to corporations doing business in Israel. Following the assembly, MRTI initiated a process consistent with General Assembly (GA) policy. First, MRTI reviewed the 1984 GA policy on the use of divestment as a strategy for socially responsible investing, and the criteria for consideration of any recommendation for divestment. Also reviewed was the 1985 GA policy describing the process of phased, selective divestment.

At its first meeting following the General Assembly, MRTI identified GA policy positions on the obstacles to a just peace in Israel and Palestine. These included the ongoing violence perpetrated by Israelis and Palestinians against innocent people; the Israeli occupation of the West Bank, Gaza, and East Jerusalem in violation of the Fourth Geneva Convention and United Nations resolutions; the presence of Israeli settlements in the occupied territories; the construction of the separation barrier; and the need for a viable Palestinian economy to enhance the possibility of a successful Palestinian state. These GA policies were incorporated into criteria to focus the research into corporations that may be profiting from involvement in any of the obstacles to a just peace. The MRTI also adopted a clear statement on the process of progressive engagement of any such companies that affirmed the cycle of dialogue, shareholder resolutions, and proxy voting and more dialogue before MRTI would be in any position to consider recommending possible divestment action to the General Assembly. This was reported to the General Assembly Mission Council (GAMC), and publicized widely.

The MRTI conducted research to determine which corporations, if any, met the criteria. In August 2005, MRTI reviewed the research to select from among the identified companies an initial group to engage. These were Caterpillar, Citigroup, ITT Industries, Motorola, and United Technologies. The MRTI also maintained contact with various ecumenical partners that were committed to engaging companies on the issue of their involvement in Israel and Palestine. These included the Episcopal Church, the Evangelical Lutheran Church in America, the United Methodist Church, the United Church of Christ, and several Roman Catholic religious orders.

The MRTI began the process of contacting and meeting with the five companies (meetings were held with Citigroup, ITT Industries, and Motorola), communication with the presbyteries where the companies are headquartered, and continued interpretation of the process to the church and the general public. The MRTI also worked ecumenically on strategies for proactive investment in Israel and Palestine by churches and corporations in consultation with James Wolfensohn, special envoy for the Quartet (the United States, the European Union, the United Kingdom, and Russia), whose charge included helping to rebuild the Palestinian economy.

2006–2008

In 2006, the General Assembly responded to numerous overtures regarding corporate engagement on Israel-Palestine issues, and approved a statement urging that “… financial investments of the Presbyterian Church (U.S.A.), as they pertain to Israel, Gaza, East Jerusalem, and the West Bank, be invested in only peaceful pursuits, and affirm that the customary corporate engagement process of the Committee on Mission Responsibility Through Investment of our denomination is the proper vehicle for achieving this goal”(Minutes, 2006, Part I, p. 944.)

Ecumenical Activities

The MRTI continued its work with considerable time devoted to fostering ecumenical cooperation on engagement. To that end, an informal table called the Ecumenical Action Group: Investment for a Just Peace in Israel /Palestine (EAG) was created. As a result, corporate dialogues were expanded to include participation by representatives of other Protestant denominations and Roman Catholic religious orders. These have included the Episcopal Church, Evangelical Lutheran Church in America, United Church of Christ, United Methodist Church (General Board of Global Ministries, General Board of Church and Society, General Board of Pensions and Benefits, and the New England Conference), United Church of Canada, Mercy Asset Management, the Passionists, Ursuline Sisters, and the Dominican Sisters. Also participating has been KAIROS Canada and the World Council of Churches.

In October 2007, the World Council of Churches convened a meeting of U.S., Canadian, and European churches working on corporate engagement. As a result, there has been increased sharing of research, and broader participation in dialogues and shareholder resolutions. United States and Canadian churches continue to cooperate in the EAG.

In Europe, churches in the Netherlands reported on engagements with a Dutch company that subsequently moved its facilities out of the West Bank and back into Israel. Swedish churches were instrumental in convincing Assa Abloy, a locksmithing company, to move its facility out of the Barkan settlement in the West Bank to the other side of the Green Line. This ecumenical cooperation has helped identify several European and other companies with extensive ties to the Occupation including Veolia, AIG, Ahava, and Alstom.

Corporate Engagement

Additional dialogues were held with Motorola and Citigroup. These dialogues were the first step of the corporate engagement mandated by the 216th and 217th General Assemblies (2004 and 2006). Corporate engagement is a deliberate process outlined in the basic policies of the General Assembly on socially responsible investment, dating to 1971, 1976, and 1984. Elements of this process include research, correspondence, dialogue, proxy voting, and the possible filing of shareholder resolutions. Only after all other options fail to achieve the desired results, the committee on MRTI, through the GAMC, may recommend to the GA divestment from particular corporations.

Citigroup: The Citigroup dialogue was highly productive. The primary concern with Citigroup involved an allegation that Citigroup had provided insufficient controls to prevent the transfer of funds to Palestinian organizations supporting violence. In conversation with MRTI representatives, the company provided assurance that the bank had robust controls in place to monitor and prevent questionable money transfers. There have been no subsequent reports alleging inappropriate funds transfers by Citigroup. In addition, Citigroup expressed willingness to assist the religious community with exploring how to increase microcredit lending in the region to address the lack of adequate investment opportunities in Palestine. Therefore, in June 2007, MRTI removed Citigroup from its focus list of companies for corporate engagement.

Motorola: The dialogue focused on human rights standards and conventions, and explored the company’s involvement in the occupation through sales of military communications products, fuses for bombs, security technology for Jewish Israeli settlements on the West Bank, and operating a cell phone business in the West Bank. Motorola denied that any of its activities implicate it in the Israeli occupation, or raise human rights concerns. A shareholder resolution addressing broader human rights issues was filed by several religious shareholders in the fall of 2007. In response, Motorola requested a follow-up meeting, which occurred in January 2008. The company indicated its intent to review and amend its policies but would not specify the particular changes under consideration and made clear that its human rights policies would not be applied to their business relationships with foreign governments. This lack of clarity and limited scope led the religious investors, including MRTI representatives, to decline to withdraw their resolution, which went to a vote at the annual shareholders meeting on May 5, 2008. It received more than 12 percent of the shareholder vote, enough to be resubmitted in 2009. Although the conversation with Motorola has been less productive than hoped, religious shareholders agree that more in-depth dialogue on corporate social responsibility and human rights might potentially create a more productive arena for analyzing the Israel-Palestine conflict and other world situations and ought to be continued.

Caterpillar: The resolution at Caterpillar requested the board of directors to review the company’s human rights policies and amend them where applicable. Caterpillar also received a resolution on foreign military sales from a coalition of shareholders including several Roman Catholic religious orders and Jewish Voice for Peace.

There were two developments at Caterpillar. First, several religious shareholders sent a letter to the company requesting a meeting to discuss nonmilitary sales of company products in Israel and Palestine. The company replied by letter on December 13, 2007. While not responding to the request for a meeting, the company said for the first time that “As an industry leader, Caterpillar advocates responsible use of our equipment. We expect our customers to use the products they purchase from us in environmentally responsible ways and consistent with human rights and requirements of international humanitarian law.”

Secondly, the resolution submitted by the Presbyterian Church (U.S.A.) and the Dominican Sisters produced a dialogue on January 30, 2008. Caterpillar representatives reviewed their Worldwide Code of Business Conduct. Discussion focused on the human rights dimensions of the code, what it included or omitted, and who beyond the company’s employees it affected or not. Religious shareholders, including MRTI representatives, raised the need to address the end-use of company products, particularly in countries with human-rights challenges. After further discussions, the shareholders agreed to withdraw the resolution from consideration at the 2008 annual meeting in exchange for an ecumenical dialogue with the company on human rights and the end use of Caterpillar products.
The dialogue was held in July 2008 on the subject of the end-use of Caterpillar products in light of the company’s statement on its expectations for the use of its products. The dialogue included the Episcopal Church, Mercy Asset Management, United Church of Christ, Evangelical Lutheran Church in America, and three Boards of the United Methodist Church. The discussion focused on human rights and humanitarian law and conventions, and the company’s expectation that its customers would abide by these standards. The company considers its dealers as its customers. While it meets with its dealers regularly, and would terminate this relationship if it learned that a dealer was offering bribes, it has no mechanism for enforcement of its human rights expectations. The church representatives also requested information from Caterpillar on the customers of its Israeli dealer, particularly major construction companies that are involved in building the illegal settlements and Israeli-only roads in the Occupied Territories, the construction of the separation barrier, and the demolition of Palestinian homes. Caterpillar did say it had retained a consultant to advise them in making philanthropic grants in the region.

ITT Industries: The resolution at ITT Industries requested a report on foreign military sales. On March 4, 2008, religious shareholders, including MRTI representatives, met with ITT Industries. The company wanted to discuss its new corporate ethics program rather than foreign military sales. ITT’s position is that it will not disclose its foreign military sales claiming that all the information is publicly available. ITT had challenged the resolution at the Securities and Exchange Commission. The SEC’s decision upholding the shareholders was announced later in March. The resolution was voted on at the ITT Industries annual meeting on May 13, 2008, receiving more than 7 percent of the proxy vote.

United Technologies: The resolution to United Technologies requested that ethical criteria be applied to foreign military contracts, and, with the Episcopal Church as the primary filer, was supported by 23.8 percent of shareholders voting at the annual meeting; a very strong showing, considering resolutions of this nature submitted to major defense contractors routinely receive 3 to 5 percent of the shareholder vote. The vote was sufficient to qualify the resolution for automatic reconsideration at next year’s annual meeting. The Episcopal Church had a brief phone conversation with company officials, and received a commitment to a dialogue on developing a human rights policy.

2008 General Assembly

Regular reports on the corporate engagement process were made to the GAMC. The 218th General Assembly (2008) received a comprehensive report on MRTI work that included the committee’s belief that more engagement was the appropriate course of action at that time. It also called upon corporations doing business in Israel, Gaza, East Jerusalem, and the West Bank “… to confine their business activity solely to peaceful pursuits, and refrain from allowing their products or services to support or facilitate violent acts by Israelis or Palestinians against innocent civilians, construction and maintenance of settlements or Israeli-only roads in East Jerusalem and the West Bank, the Israeli military occupation of Palestinian territory, and construction of the Separation Barrier as it extends beyond the 1967 “Green Line” into Palestinian territories” (Minutes, 2008, Part I, p. 1223).

The GA also directed MRTI “to continue the corporate engagement process, and report on its status with any recommendations to the 2010 General Assembly” (Minutes, 2008, Part I, p. 1223).

2008–2010

In accordance with this directive, the corporate engagement process continued in late 2008 and 2009.

Caterpillar: A second dialogue was held on September 10, 2009, to continue the discussion of the previous year. Additional information had become public that was added to the agenda for discussion. An article in Haaretz, an Israeli newspaper, dated March 11, 2009, reported on the close relationship between Caterpillar’s Israeli dealership and the Israeli military. This includes selling the Caterpillar D-9 bulldozers to the Israeli Defense Forces who has them weaponized by an Israeli company. The article notes that the IDF has used these bulldozers from the mid 1980s, and has hundreds of them in its arsenal. After that, the Caterpillar dealer provides maintenance work. The dealership’s mechanics provided maintenance in the recent Gaza war (These dealership employees maintained and serviced Caterpillar equipment during the Gaza War of January 2009, when more than 1,300 civilians were killed and the entire civilian infrastructure of the territory was destroyed) and the Second Lebanon War. The dealership noted publicly its close working relationship with the Israeli Defense Forces, according to Haaretz in an article dated March 17, 2009, the IDF also “is planning to draft civilian bulldozer-maintenance personnel for reserve duty, marking the first time the army will be conscripting the staff of a private firm in wartime.”

The dialogue clarified several issues, but did not produce any progress. Company officials made it clear that the company took no responsibility for the use of its products even by its dealers (the only party considered to be a customer), had no procedure in place for monitoring or ensuring compliance with Caterpillar’s stated expectations even in a situation with a documented historic pattern of the equipment being used in human rights violations, and no desire to develop such a procedure. Further, they indicated that Caterpillar, although a global company doing business in virtually every country except where prohibited by U.S. law, had no capacity to evaluate whether particular actions are in accord with human rights conventions or international humanitarian law. Finally, Caterpillar did not provide information on whether its dealership was selling equipment to major construction companies building the illegal settlements, the separation barrier, or the Jewish Israeli-only roads in the occupied territories as requested. It also did not provide an update on the effort to expand its philanthropic activities as announced at the 2008 meeting.

Meanwhile, a shareholder resolution requesting a report on foreign military sales was refiled by Jewish Voice for Peace and several Roman Catholic religious orders for consideration at the 2009 stockholders meeting in June. The resolution garnered slightly less than six percent of the shareholder vote, and failed to requalify automatically for the 2010 meeting. Whether they will switch to another resolution is unclear. (Note: A new CEO has been appointed to take office at Caterpillar, July 22, 2010.)

Motorola: A shareholder resolution similar to the one from 2008 was filed with Motorola requesting that the company amend its human rights policies “to conform more fully with international human rights and humanitarian standards…” The resolution was co-filed by the General Board of Pensions and Health Benefits of the United Methodist Church, Mercy Investment Program, and the Episcopal Church. The company did not respond to a request in the filing letter for a meeting to discuss the resolution. When the filers tried to set one up following the annual meeting, the company declined, but offered to answer written questions. The stockholder meeting was held on May 4, 2009. Speaking in support of the resolution, which received 9.7 percent of the vote, were representatives of the United Methodist Church and the Presbyterian Church (U.S.A.).

Meanwhile, the involvement of Motorola in the occupation has lessened in some important ways. The sale of armaments work by Motorola Israel means that it no longer makes bomb fuses for the Israeli military, or the wide area sensing surveillance system being deployed around the illegal settlements. Motorola also announced its intention to sell its Israeli cell phone company, and has sought bids from potential buyers. The company supplied cell phones to the Israeli soldiers operating in the Occupied Territories, and built cell towers in the illegal settlements.
ITT Industries: The company has supplied the Israeli military with night-vision and communications equipment. Following up on the resolution from last year, an updated version was filed requesting a report on the company’s foreign military sales (ITT Industries derived 46 percent of its fiscal 2007 revenue from military business). The resolution was co-filed by the Dominican Sisters of Hope, the Mercy Investment Program, and the Episcopal Church. A meeting was held on March 4, 2009, at the company’s offices. The company was represented by its senior corporate counsel, the counsel for its defense division, and its public affairs official. The MRTI staff was joined by a representative of the Presbytery of Hudson River and Sr. Valerie Heinonen of the Mercy Investment Program. ITT Industries continues to maintain, however, that it cannot discuss specific sales, even in countries with serious human rights challenges. However, as the company is currently barred from military contracts unless a special exemption is given, there does not appear to be recent sales to the IDF. ITT Industries is interested in developing a more specific human rights policy, but has ruled out that it would stop future sales to the IDF.

The resolution received nearly 7 percent of the shareholder vote at the May 2009 annual meeting. It can be refiled for the 2010 meeting.

United Technologies: The Episcopal Church filed a resolution with United Technologies asking for a report on the ethical criteria for its foreign military sales. The company agreed to develop the report, and a meeting was held on August 17, 2009, to discuss how the report and a policy on sales would be implemented. This was the first meeting with company officials, and was a productive session according to the participants.

Hewlett-Packard: On March 5, 2009, several religious shareholders were scheduled to hold a conference call with Hewlett-Packard, and had submitted a detailed list of questions for the discussion. The company then cancelled the call saying it would respond in writing, and only then consider a meeting. The shareholders reviewed the company’s written answers, and noted that they were vague or incomplete. The General Board of Pensions and Health Benefits of the United Methodist Church contacted the company to renew the request for a dialogue. Hewlett- Packard again declined saying they would only respond in writing. Two rounds of letters produced only vague answers to the shareholders’ questions.

The company sells hardware to the Israeli Navy that is used for its operational communications, logistics, and planning including the ongoing naval blockade of the Gaza Strip. This blockade has included interdicting humanitarian supplies by attacking or turning back international vessels carrying the supplies, and attacks on Palestinian fishermen. The company also is involved through its ownership of Electronic Data Systems in providing electronic biometric identification scanning equipment to monitor Palestinians at several checkpoints inside the West Bank.

Soldiers in the IDF are issued a Tadiran Communications ruggedized personal digital assistant (RPDA) based on the Hewlett-Packard IPAQ . This RPDA has been selected for Israel’s Anog soldier modernization program. Its use enforces the occupation. In July 2009, HP won a contract for the installation of software products in a three-year IDF virtualization tender offer valued at an estimated $15 million, with a two-year option to extend. Further, Hewlett-Packard’s HP Invent subsidiary outsources information technology services to Talpiot, a subsidiary of Matrix. Talpiot’s main outsourcing center is in the illegal West Bank settlement of Modi’in Illit. By using Talpiot’s services, clients of the company are profiting from the company’s relationship with an illegal settlement, and are helping solidify the occupation. Finally, as with Motorola Israel, HP’s Israeli subsidiary does not disclose its equal employment opportunity record of its hiring practices.

A shareholder resolution was developed requesting a review of HP’s human rights policies, and a report on their implementation. It was filed by the PC(USA), United Methodist General Board of Pensions and Benefits, and four Roman Catholic religious orders. The filing letters requested an opportunity for dialogue, and prompted a positive response by the company. On October 28, 2009, several religious participants met with company officials by conference call. The discussion reviewed HP’s policies and procedures, and identified issues of concern for further discussion. Participants were grateful for the positive atmosphere, and willingness to cooperate. As the company agreed to initiate a board of directors level review of its human rights policy, and committed to positive follow-up to the issues identified in the dialogue, the shareholders decided to withdraw the resolution.

Summary: While progress might not be as complete or as rapid as we might hope, the committee believes there has been progress in our dialogues with four of the five current companies we have been intentionally engaging in the process that began six years ago:

1.   Motorola has taken positive steps, though some of these steps were likely motivated by business decisions rather than engagement with investors. In any case, the effort has seen positive results as the company has reduced its involvement in obstacles to a just peace.

2.   ITT has seen a decrease in sales to conflicted regions, largely due to restrictions on sales to the U.S. Department of Defense. The company has been willing to meet with MRTI, and local Presbyterians have contributed in positive ways to establishing opportunities for dialogue. Continued engagement would focus on the company’s human rights practices.

3.   United Technologies was always less involved in the region than some others, with most of their involvement coming as a subcontractor for companies with larger financial stakes. The company is open to further conversation.

4.   HP had expressed some hesitation about meeting with ecumenical investors but following the filing of a shareholder resolution has apparently received the dialogue with openness and sincerity. The company has committed to continued conversations.

The Committee on Mission Responsibility Through Investment is deeply disappointed that the dialogue between the Caterpillar corporation and our committee (together with ecumenical partners) has not borne more fruit. Caterpillar continues to accept no responsibility for the end use of their products. Over many years, the company has not indicated a willingness to review its policies for distribution or sales in conflicted areas like Israel/Palestine, and does not acknowledge a responsibility for its dealers’ adherence to human rights law in these areas.

Caterpillar’s own high standards of global citizenship are being undermined by its unwillingness to critically self-assess its own conduct in Israel/Palestine. It is the conclusion of MRTI that further efforts to engage Caterpillar through ordinary means (including shareholder resolutions, and written and oral communications) are unlikely to be successful.

While not all of Caterpillar’s operations are involved in non-peaceful pursuits, a significant portion of them are. Thus, the company does not measure up to the General Assembly’s stated position that the church’s investments in companies doing business in Israel, Gaza, East Jerusalem, and the West Bank be in companies involved in only peaceful pursuits.

The committee calls upon all potential customers and investors to carefully review the human rights records of Caterpillar and any other companies doing business in the region as they make their own decisions as consumers and investors. The committee stands ready to take whatever steps going forward as the assembly may direct.

Comment
ACREC Advice and Counsel

      Item 14-03 is the report from GAMC from its committee MRTI, Mission Responsibility through Investment, on its engagement with corporations involved in Israel, Gaza, and East Jerusalem.

      The Advocacy Committee for Racial Ethnic Concerns advises that Item 14-03 be approved.

Rationale

      The ACREC commends the committee’s work over a six-year period of corporate engagement with U.S. companies involved in the Occupied Palestinian Territories. According to this report, of the four companies on the original list from 2004, Caterpillar, Inc., is the only one that has not been willing to change its corporate practices when it comes to human rights failures. The report states that the committee is “deeply disappointed” that their talks with Caterpillar did not bear “more fruit” and says they “stand ready to take whatever steps going forward as the assembly may direct.”

      The ACREC is disappointed that MRTI has not called for divestment when Caterpillar’s own Chairman, Jim Owens, is reported to have said in a shareholder meeting on June 16, 2009, that “If you don’t like how we do business, you don’t have to hold your shares.” When MRTI takes corporate engagement as far as it can go but does not take the final step of recommending divestment, it does two things:

      1.   The MRTI limits its future power to change corporate behavior by demonstrating that it will not in fact recommend divestment from companies that continue human rights abuses.

      2.   The MRTI fails to live up to its own definition of faith-based investing: “God’s call for justice, compassion and humility requires Presbyterians to respond. We believe a faithful response requires the whole of our lives, including our financial investments. It is more than a practical question. It gets to the very essence of our faith.”1

      This failure to go all the way “with the whole of our lives” weakens MRTI’s and the PC(USA)’s position for future corporate engagement.

Endnote
1.             www.pcusa.org/mrti.
ACSWP Advice and Counsel

Item 14-03 calls for the 219th General Assembly (2010) to approve the Committee on Mission Responsibility Through Investment (MRTI)’s Report on Its Engagement with Corporations Involved in Israel, Gaza, East Jerusalem, and the West Bank.

The Advisory Committee on Social Witness (ACSWP) advises the 219th General Assembly (2010) to approve Item 14-03 with the following amendments: [Text to be deleted is shown with brackets and with a strikethrough; text to be added or inserted is shown with brackets and an underline.]

“3. b. … we seek to fulfill this calling by [continued engagement with Caterpillar in accordance with the] [completing six years of corporate engagement efforts through the public witness of divesting all Caterpillar, Inc. securities and requesting church investment bodies to refrain from re-investing until the Committee onMission Responsibility Through Investment of the Presbyterian Church (U.S.A.) is satisfied that Caterpillar no longer profits from the non-peaceful uses of its equipment, as described in] the followingpolicy statementof the 219th General Assembly (2010)…

“…This injustice undermines Caterpillar’s own stated commitment to human rights and positive global citizenship.

“[On the basis of Christian principles and as a matter of social witness, the 219th General Assembly (2010) strongly denounces Caterpillar’s continued profit-making from non-peaceful uses of a number of its products. We call upon Caterpillar to carefully review its involvement in obstacles to a just and lasting peace in Israel-Palestine, and to take affirmative steps to end its complicity in the violation of human rights. We hope that, by God’s grace, Caterpillar will come to exercise its considerable power and influence in the service of a just and lasting peace in Israel/Palestine.]

“[As a Reformed Christian body, the Presbyterian Church (U.S.A.) seeks to engage with and not withdraw from the world, and hence seeks to apply Christian principles of integrity, justice, and solidarity in its life as a community, including its investments. This focused action of divestment is a positive, non-violent act of solidarity with Palestinian Christians and Muslims in the quest for justice, peace, and equal human rights for both Palestinians and Israelis. It is a matter of integrity that the church’s words and actions be consistent; thus this act of divestment does not claim purity for the church, but recognizes that a more effective witness for justice at this time can be achieved by standing with those who suffer rather than with those who profit from a situation of suffering. This act of divestment says that there is a limit to how much endurance we ask of others. This is a way to give voice to those long silenced; and it says, no investment is an idol.

The 219th General Assembly (2010) commends the Committee on MRTI for its sustained engagement with Caterpillar and other firms described in supporting documents, and recommends continued corporate engagement with other corporations significantly involved in the maintenance of or profit from the occupation of Palestine, with appropriate ecumenical and interfaith engagement and dialogue. Similarly, MRTI should continue to monitor church investments to ensure that no support is given to terrorism by any party, affirming that just economic activity should not support violence in any form. Corporations involved in the continued militarization of all countries in the region, democratic and non-democratic, are to be addressed in consultation with the U.S. government (which authorizes foreign military sales) and directly with companies involved, in accordance with the recommendations of the Report of the Middle East Study Committee, “Breaking Down the Walls.” In accordance with the distinction made in that policy statement, this action is not to be construed as divestment from Israel, but rather an action focused on the occupation and its enforcement.

In conclusion, we call upon Caterpillar and all corporations doing business in Palestine and Israel to review carefully their involvement in obstacles or possible obstacles to a just and lasting peace, and to take affirmative steps as necessary to end complicity in any violation of human rights. We look forward to a time when the situation in Israel/Palestine no longer requires corporate engagement, but with this action indicate that such engagement necessarily includes the possibility of divestment when significant ethical matters are at stake.

“[4.      Direct the Stated Clerk to inform our ecumenical partners of this action along with the Middle East Study Committee Report, both nationally and globally—particularly within Israel and Palestine—encouraging them to hear this witness and consider their own application of social responsibility and human rights criteria to companies represented in their financial portfolios with operations in Israel/Palestine, and to communicate this action to appropriate officials of the United States government, the United Nations, Caterpillar, Inc and other corporations named in this action.”]

Rationale

Commissioners face a basic question: is the MRTI Committee’s recommendation of “denouncement” enough of a response to what they describe as an effective refusal by Caterpillar management to reconsider its full scope of engagement with the Israeli government. Denouncing Caterpillar’s unrestricted sales of armored bulldozers is in fact part of any act of divestment, but divestment gives substance to the mere words of denunciation. The General Assembly, since the 1970’s, has in fact phased out the term, “pronouncement,” as statements without actions were seen as weakening the church’s voice rather than strengthening it. The terms policy statement and resolution are terms that involve recommendations for action that shape the church’s life. Thus to focus on denouncing Caterpillar’s activity is at best half of the task before the church as an ethical investor.

Three developments since MRTI’s recommendation back in November support the moral logic of divestment at this time: the call by a brave and very ecumenical group of Palestinian Christians for economic pressure to end the occupation, and the decision of Caterpillar to end sales in Iran, based on political considerations, short of official sanctions. Whether the sale of unarmored bulldozers to Iran would actually be illegal, it was also learned that in Israel Caterpillar employees maintain the armored bulldozers in combat and have official recognition by the Israeli military. Thus the role of Caterpillar is not neutral or at a distance in aiding Israeli government policy.

In 1984, the General Assembly approved a theological and ethical study of divestment in relation to trusteeship, The Divestment Strategy: Principles and Criteria, accompanied by the study paper, The Divestment Strategy: Ethical and Institutional Context. This policy has been followed carefully by MRTI. Its criteria include all of the steps MRTI has taken with Caterpillar, plus an analysis of the importance of the ethical issue and the objective sought by this form of non-violent economic pressure, an end to the occupation. Clearly the financial impact of divestment by any single investor are limited, but the witness impact of the action is effective—as in the case of South Africa—and as understood by the opponents of divestment.

The commissioners will already be aware of the controversy and criticism that would be attached to their action. This is why the ethical focus needs to be on the realities of occupation and the danger to the Christian community in the Palestine (including East Jerusalem). Divestment of securities in Caterpillar is due to the company’s de facto support for the occupation and its enforcement, which is oppressive on all Palestinians, illegal under international law, injurious to US security, and is accelerating the disappearance of Christians in the Middle East. This action does not threaten the security of Israel, nor is it a denial that Israel has genuine security concerns, though we believe that many of these are integrally related to the continued occupation. The PC(USA) reiterates its commitment to two nations of Israel and Palestine, secure, at peace, and respecting full human rights, with internationally recognized borders.

The fact that an action is controversial does not make it any less timely, courageous, or necessary for the integrity of the church itself, given the careful process in which MRTI has engaged for six years, during which the situation for Palestinians has worsened, particularly in Gaza. Clearly, the people at Caterpillar do many good things, but in this case the primary corporate goal of profitability conflicts with the aspirations for freedom, dignity, security, and hopes for a two-state solution.

The last recommendation, that this action be publicized with the Middle East Study Committee report, would complete the treatment of investment issues that committee itself left undone. Here is what it said, as part of its discussion of “A Moment of Truth:” “While Kairos Palestine calls for divestment and boycott of everything produced by the occupation as an act of conscience and a method of nonviolent resistance, it lifts this up as part of the Christian affirmation of speaking truth in love. We struggle with its call for solidarity in this area and confess we have not fully answered it” (Item 14-08).

By approving this overture, the General Assembly would more fully answer the Orthodox, Roman Catholic, and Protestant communities in Palestine with, “Yes, we stand with you. We do not wish to profit from the bulldozers that demolish your homes.”