Campus Israel-Gaza Protests Invigorate Company Disclosure Bids

Student protests over the Israel-Hamas war and its effect on Palestinians are reawakening a divestment push not just in colleges but in corporate America.

Investor advocates have lost traction in the last five years on seeking greater disclosure and divestment by targeting military suppliers in particular. The latest example—a pair of similar proposals urging RTX Corp. and Lockheed Martin Corp. to provide a human rights impact assessment of their operations, including those on Palestinians—both failed Thursday by a wide margin.

But those investor groups see the emerging push at Israel divestiture and disclosure and student protests as a complementary way to leverage the pressure on companies to change. Instead of a short-term gain of winning a specific shareholder vote, it feeds into a campaign to convince shareholders to care about social change as part of a corporate mandate.

“As somebody coming from the investigator side that looks at these different advocacy strategies, filing a shareholder resolution is a very powerful strategy,” said Dov Baum, director of corporate accountability and research at the social justice advocacy group American Friends Service Committee. “It allows a lot more people to learn about these risks, especially among the shareholders of the company that are unaware of these risks.”

Jillianne Lyon, leader of Investor Advocates for Social Justice’s shareholder advocacy campaigns organization, represents the Catholic groups that presented and proposed the shareholder resolutions at the companies and consulted with them on the proxy process. Lyon said the groups have pushed defense contractors Lockheed Martin, General Dynamics and Northrop Grumman for years to issue human rights impact assessments. But this year, she said, has been different because of the sheer amount of attention the campus protests have garnered.

The proposal presented at RTX received exempt solicitations from JLens, a Jewish investor group opposing the bid. An exempt solicitation is an appeal to the Securities and Exchange Commission to solicit shareholders on a proxy proposal in a quiet way. It’s the first time in IASJ’s history that one of its proposals received such opposition.

“It definitely has received heightened scrutiny this year, even though we’ve filed the same proposals with the same references over the past year or so,” Lyon said. “It is something that’s definitely escalating in investor conversations as well.”

‘Impractical and Inappropriate’

RTX said in its proxy statement that its internal human rights council “periodically reviews” the products and countries that are subject to a heightened “human-rights screening.” Sometimes the company takes measures “where appropriate and feasible,” to mitigate its products’ misuse.

“The focus of the proposal appears less about Company conduct and more about risks from our doing business with the governments of the U.S. and its allies, and how those government customers might potentially use our products, notably in conflict,” RTX said in its proxy statement. “To require the Company somehow to anticipate, assess and disclose the risks to human rights of such potential government conduct would be impractical and inappropriate.”

The proposal received almost 5.5% of the vote at the meeting. A spokesperson for RTX declined to comment beyond the proxy statement.

The parallel resolution at Lockheed Martin also failed with nearly 10% of the vote, according to a spokesperson.

Lockheed Martin similarly said in its proxy statement that the impact report is “unnecessary” because the company’s political activities “fully align” with its human rights policy and that it already discloses everything required by regulators and the law.

“We expect final results to show that nearly 90% of votes cast supported the board’s recommendation on the proposal, which is based on the view that our business supports human rights and that we already comprehensively disclose our political activities and spending,” a Lockheed Martin spokesperson said in a statement to Bloomberg Law.

Previous proposals have received higher support than this year, Lyon said, because of the highly sensitive nature of the conflict. Even though it’s the first time the organization’s clients filed a resolution at RTX, 5.5% is low, compared with the performance of resolutions at peer defense contractors in prior years.

However, there’s evidence that enough public pressure can amount to significant change. Cereal giant General Mills sold its stake of a joint venture in Israel in 2022 after intense calls to divest. At the time, however, the company said its decision was purely a business strategy.

“We see a sea change right now,” Baum said. “I think that the change is really with the push towards more institutional divestment.”