Pfizer is set to face a shareholder vote this proxy season on a proposal regarding human rights after it unsuccessfully sought SEC no-action relief to omit the resolution.
The measure urges Pfizer’s board ‘to oversee conduct of human rights due diligence (HRDD) to produce a human rights impact assessment covering Pfizer’s operations, activities, business relationships and products… The [assessment] should describe actual and potential adverse human rights impacts identified in the course of HRDD, identify rightsholders that were consulted and discuss whether and how the results of the [assessment] will be integrated into Pfizer’s operations and decision-making.’
Mercy Investment Services (Mercy), the investment program of the Sisters of Mercy of the Americas, filed the proposal. Mercy notes in its supporting statement that Pfizer has adopted a human rights policy statement in which it commits to ‘respecting internationally recognized human rights throughout [its] operations.’
Mercy also points to language in different international policies or statements regarding health as a human right. For example, the Universal Declaration of Human Rights states: ‘Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including… medical care.’
According to Mercy, Pfizer’s policy recognizes the importance of the right to health, stating that its ‘core focus areas underpinning the right to health are: access and affordability, intellectual property protection, clinical trials, disease awareness and health literacy.’ The proponent also quotes the UN Guiding Principles on Business and Human Rights as stating that companies should have an HRDD process through which human rights impacts can be identified, prevented, mitigated and remedied.
‘Pfizer does not appear to have conducted any HRDD regarding its own operations or those of its suppliers,’ Mercy writes. ‘HRDD would go beyond the ‘routine evaluations and on-site assessments’ mentioned on Pfizer’s responsible sourcing web page, since HRDD engages rightsholders and digs deeper to understand root causes, enabling companies to prevent further impacts. Conducting HRDD would also enable Pfizer to identify impacts of its own operations, such as shortcomings in programs aimed at fulfilling Pfizer’s commitment to access and affordability.’
Pfizer’s argument
Pfizer had sought SEC relief to exclude the proposal from its proxy materials on the grounds that, per Rule 14a-8(i)(10), the company has ‘substantially implemented’ it.
‘Given the extensive disclosure in Pfizer’s human rights statement, modern slavery statement and ESG report, it is demonstrably evident that [the company] has already conducted [HRDD] and produced a human rights impact assessment of [its] operations, activities, business relationships and products,’ the company writes. ‘Therefore, Pfizer has satisfied the proposal’s essential objective – obtaining disclosure from Pfizer regarding its human rights impacts – and thus its public disclosures compare favorably with those requested.’
Pfizer says its 2023 human rights policy statement describes its commitment to ‘respecting internationally recognized human rights throughout [its] operations.’ The company adds: ‘As part of its ongoing efforts to honor this commitment, Pfizer has already conducted human rights impact assessments and related due diligence and has made available in its existing disclosures the results of such initiatives, including the processes by which the company continues to identify, prevent, mitigate and remedy adverse human rights impacts.’
Among other things the company points to its ESG report, which it says ‘provides a comprehensive overview of Pfizer’s global environmental and social impact, including with respect to its human rights initiatives.’
The SEC did not agree, writing that ‘[i]n our view, the company has not substantially implemented the proposal.’
Pfizer filed its 2023 proxy statement on March 16 ahead of its AGM on April 27.
A request for comment from the company was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
