April 21,
2009
Vote
“FOR” on Berkshire Hathaway Sustainability Report Resolution
Dear
Berkshire Hathaway, Inc. Shareholder:
Trillium
Asset Management Corporation encourages fellow Berkshire Hathaway shareholders
to vote “FOR” this resolution1 which requests that the
company issue a Sustainability Report. The annual general meeting is May 2, 2009.
As the
recent “FOR” recommendation
from PROXY Governance, Inc. confirms (“we see [Berkshire’s] level of
disclosure on these issues as relatively poor and believe that additional
disclosure in this area would help shareholders”),2 this report is needed
because we believe Berkshire has failed to disclose risks from environmental and
social issues that could affect shareholder value.
In
the past two years, we have seen clear evidence that sustainability-related
risks have the potential to affect the bottom-line performance of Berkshire
Hathaway’ investments – and that Berkshire has apparently neglected to
adequately manage or inform shareholders of these liabilities:
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As
noted by PROXY Governance, Berkshire’s Russell Athletic
subsidiary, “a key supplier of college athletic apparel, has faced
backlash from major universities over its association with allegations of
poor labor practices in Honduras.”3 Since January,
nearly thirty top U.S. universities have severed their licensing
relationships with Russell over labor rights violations.4 Russell’s loss of
these valuable licenses, which has been extensively covered in the
media,5 raises
significant reputational and competitive risk for Berkshire’s apparel
business, a division which suffered a 34% decline in earnings last
year.
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PROXY
Governance also observed that PacifiCorp, a division of Berkshire’s Mid-American Energy
Holdings, “agreed to contribute up to $200 million for the removal
of four hydroelectric dams by 2020, after toxic blue-green algae blooms
(behind the dams) had cause[d] significant environmental damage.”6 The agreement comes
as PacifiCorp is under increasing pressure from regulators to comply with
water quality laws and protect threatened runs of Pacific salmon.7
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Berkshire
suffered, in the eyes of many, extensive reputational damage from its
investment in PetroChina. According to
PROXY Governance, PetroChina “has been at the center of … campaigns
pushing for companies to sever business ties with [Sudan] because of
genocide in Darfur.”8 Before Berkshire
divested in late 2007, it experienced serious reputational impact from
PetroChina, including Warren Buffett having to publicly justify the
investment.9
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We
encourage you to read the detailed memorandum sent to PROXY
Governance and other proxy advisory services by the International Labor
Rights Forum and the International Rivers Network,10 which discusses how
Berkshire’s refusal to report on sustainability puts it out of step with the
world’s top companies – over 80% of which provide such reports to
investors.11
Now more
than ever, investors need to have a clear and comprehensive picture of risks –
including those related to sustainability issues – that have the potential to
negatively impact shareholder value. I urge you to join Trillium Asset
Management Corporation in voting “FOR” this proposal.
Sincerely,
/s/
Shelley Alpern
Shelley
Alpern
Director
of Social Research and Advocacy
For
More Information:
Shelley
Alpern, Trillium Asset Management Corporation, 617-292-8026 x. 248,
salpern@trilliuminvest.com
Bama
Athreya, International Labor Rights Forum, 202-347-4100,
bama.athreya@ilrf.org;
Patrick
McCully, International Rivers, 510-848-1155,
patrick@internationalrivers.org
Please Note: The cost of this
communication is being borne entirely by Trillium Asset Management Corporation.
This is not a proxy solicitation and Trillium Asset Management Corporation is
not asking for your proxy card. Please do not send us your proxy card but return
it to Berkshire Hathaway before the May 2, 2009 annual meeting.
1
The resolution was submitted by Berkshire Hathaway shareholder Joseph G.
Petrofsky. Mr. Petrofsky has no relationship to Trillium Asset Management
Corporation.
2
PROXY Governance, Inc. “Berkshire Hathaway” (Apr. 15, 2009). Citation and
quotations with permission.
3
Ibid.
4 Universities acting to terminate
licensing relationships with Berkshire’s Russell Athletic subsidiary as of April
15, 2009 include Columbia, Cornell, Duke, Georgetown, Harvard, Houston,
Maryland, Miami, Michigan, Minnesota, NYU, North Carolina, Penn State, Purdue,
Rutgers, Stanford, University of Connecticut, University of Pennsylvania, and
Wisconsin.
5
For media coverage of universities terminating licenses with Russell Athletic,
see: http://www.workersrights.org/MediaCoverage-Russell.asp.
6
PROXY Governance, supra,
n. iii.
7
Mid-American’s Pacificorp division made the commitment as an Agreement in
Principle with the California Resources Agency, the State of Oregon and the U.S.
Government; a final agreement on the dam’s removal is expected later this
year. See “Agreement in
Principle” (Nov. 13, 2008), referenced in U.S. Dept of
Interior, “Agreement in Principle Marks First Critical Step on Presumptive Path
to Remove Four Klamath River Dams” (Nov. 13, 2008), http://www.doi.gov/news/08_News_Releases/111308.html.
8 PROXY Governance, supra, n. iii; see, also, e.g., Sudan Divestment Task Force, "PetroChina, CNPC, and Sudan: Perpetuating Genocide" (Apr. 15, 2007), http://www.sudandivestment.org/docs/petrochina_cnpc_sudan.pdf.
9
See, e.g., Charlie
Rose, “A Conversation with Warren Buffett” (May 10, 2007), http://www.charlierose.com/view/interview/8520.
10
Available at: http://laborrights.org/files/BerkshireHathaway_Memo_041309.pdf.
The International Labor Rights Forum (ILRF), http://www.laborrights.org, and
International Rivers Network (IR), http://internationalrivers.org, own no
Berkshire Hathaway stock and have no relationship to the proponent, Mr.
Petrofsky, or Trillium Asset Management Corporation. ILRF and IR are nonprofit
organizations which are leading international advocates on the issues,
respectively, of the environmental impact of large-scale dams, and labor and
human rights issues in global supply chains.
11
In 2007, 80% of Fortune 250 companies released sustainability reports under the
guidelines of the Global Reporting Initiative (GRI), see GRI, “Who Is Reporting,”
http://www.globalreporting.org/NR/rdonlyres/E033E311-68E7-41F9A97F9F3B94F3FE40/2623/19992009GRIlist_April8.xls.