Shareholder Engagement Brings Microsoft into Leadership Position on Prison Labor

Shareholder Engagement Brings Microsoft into Leadership Position on Prison Labor

Boston, MA (October 9, 2018) – NorthStar Asset Management, Inc., a socially responsible investment firm based in Boston, announced that it has reached a groundbreaking agreement with tech giant Microsoft regarding its policy on prison labor.

“Microsoft has agreed to adopt an industry-leading policy which not only commits the company to an annual screen for prison labor in its supply chain, but prioritizes the well-being of the inmates should Microsoft find itself connected to prison labor,” stated NorthStar’s CEO Julie Goodridge.

The shareholder proposal NorthStar filed at Microsoft last June pointed at the potential risks of company association with prison labor and asked the company to produce an annual report to shareholders summarizing the extent of known usage of prison labor in the company’s supply chain. The proposal detailed what NorthStar views as significant issues with association with an industry that (as the proposal notes) “is often deployed in a manner that involves prisoner mistreatment and is frequently compared to modern slavery.”

“Prison labor that reaps profit for businesses is a very concerning issue that can affect a company’s reputation as well as its financial bottom line. There are clear indications that customers aren’t comfortable with a company being connected to prison labor, and that they are growing increasingly uncomfortable with our country’s mass incarceration issues overall,” Goodridge explained.

But suppliers using prison labor are generally not very forthcoming about their labor pool, explained NorthStar’s Director of Shareholder Activism and Engagement Mari Schwartzer. “Through years of research, our firm has uncovered a number of instances where a supplier has used inmate labor to produce a product, but few disclose that information proactively. If companies don’t actively screen their supply chain for instances of prison labor, they won’t know where their exposure lies,” continued Schwartzer. NorthStar published a paper on its research in prison labor in the corporate supply chain last April, which can be found on the firm's website.

The new policy at Microsoft includes a heightened review of all suppliers (current or future) that are found to use prison labor for Microsoft products or services. This review will include not only assurances of adherence to the Microsoft Supplier Code of Conduct, but also additional criteria specific to protecting and promoting the well-being of participants in prison labor programs such as career education training, job matching programs for post-release employment, and sensitivity training for supervisors given the unique responsibility of working with such a vulnerable population.

Schwartzer continued, explaining how this policy differs from others. “This is the first policy of its kind, as far as we know. It starts with diligence in the supply chain but also seeks solutions to some of the harmful problems with prison labor. Microsoft has also committed to collaborating with rating and research providers to encourage the development of improved lists to identify companies using prison labor, which should lead to increased visibility of this issue.”

Microsoft’s new policy is expected to be implemented and described on the Responsible Sourcing website no later than the company’s next annual meeting in November of this year.

NorthStar Asset Management, Inc. is a wealth management company based in Boston with a focus on socially responsible investing.  At NorthStar, creative shareholder engagement is a positive force for change.