Weak Commitment to Human Rights Leads to Divestment from Cisco

Brethren Benefit Trust (BBT) uses Boston Common Asset Management as one of its investment managers. BBT also is a long-time shareholder of Cisco Systems and active participant in the investor-driven human rights campaign.

Boston Common Asset Management, LLC, has divested of its holdings in Cisco Systems, Inc., stock due in part to the company’s weak human rights risk management and poor response to investor concerns. Cisco’s deceptive announcement of vote results on proxy items at the 2010 annual shareholder meeting has raised further alarm about the company’s commitment to transparency.

Boston Common is one of the investment managers for Brethren Benefit Trust (BBT) and the Brethren Foundation. Since 2005 it has led a growing coalition of investors, representing over 20 million Cisco shares, in asking Cisco management to ensure its products and services do not stifle human rights. Cisco has testified before federal lawmakers twice since 2006 over questions on its human rights record, including its marketing of equipment to the Chinese Ministry of Public Security.

“Boston Common’s decision to divest comes after years of campaigning Cisco for greater transparency and accountability on key human rights and business development concerns,” stated Dawn Wolfe, associate director of environmental, social, and governance research at Boston Common Asset Management. “Freedom of expression, privacy, and personal security are all critical elements in maximizing network traffic. Politically and socially repressive policies related to speech and privacy has a chilling effect on users and violates universally recognized human rights. When pressed for details on how Cisco addresses these risks, they come up short.”

At the Nov. 18, 2010, annual meeting of shareholders, Cisco did not answer yet another request for engagement with shareholders. This followed a Sept. 30, 2010, letter to independent board member and Stanford president John Hennessy requesting his assistance in establishing a meaningful dialogue between Cisco and shareholders on human rights. Similar to previous attempts to engage the board as a whole, Hennessy did not respond to the request.

“As technology becomes more prevalent in the world, we expect human rights-related concerns will become more, not less prominent,” said Nevin Dulabaum, president of BBT, a long-time shareholder of Cisco Systems and active participant in the investor-driven human rights campaign. “For all its talk about the ‘human network’ and adherence to the United Nations Universal Declaration of Human Rights, Cisco has not demonstrated in any concrete way that it fully recognizes its potential impact on human rights around the world.”

Boston Common’s ESG Team recommended the removal of Cisco Systems from its portfolios because of strong reservations about its human rights performance and poor shareholder engagement on the issue.

“The voice of shareholders fall on deaf ears at Cisco,” stated Wolfe. “About a third of Cisco Systems shareholders voting their proxies have supported our proposal over the years, voting in favor of greater disclosure on issues of censorship and privacy. Cisco’s deceptive tallying practices in 2010 do not change that. The investor coalition will march ahead, and perhaps one day Cisco will wake up and realize how dedicated these shareholders are to the company’s success. Until then, significant questions remain about its ability to manage risks it is reticent to recognize.”

(BBT provided this release from Boston Common Asset Management.)