ICCR Press Release: Nearly one third of Northrop Grumman shareholders voice support for improved human rights due diligence

Northrop Grumman, a government contractor that produces weapons used in conflict and technologies that are enabling the militarization of the U.S.-Mexico border and increased surveillance of immigrants, has largely flown under the radar of public scrutiny as attention is focused on Palantir and Amazon for their role in the US immigration context. Alongside Northrop Grumman’s contracts with the Saudi government to train troops which are accused of war crimes in Yemen, it is working with the Department of Homeland Security (DHS) to build the largest database to track immigrants. Next week, shareholders have a chance to challenge this weapons maker on its human rights failures.

On May 15th, shareholders will vote on whether Northrop must publicly report on implementation of its human rights policy. This is the ask of the shareholder resolution filed by the Sisters of St. Dominic of Caldwell, Sisters of St. Francis of Philadelphia, and School Sisters of Notre Dame Cooperative Investment Fund. These faith-based investors, each members of the Interfaith Center on Corporate Responsibility (ICCR), are using their leverage as shareholders to elevate human rights concerns to Northrop’s executive leadership, its Board of Directors, and fellow shareholders at the company’s annual general meeting. This is a resolution which the company’s board of directors strongly opposes.

Northrop adopted a human rights policy in 2013 following shareholder engagement led by ICCR members. However, given its recent business actions, it’s hard to see how, if at all, the policy has been implemented. Investors are not only concerned about Northrop’s core weapons and defense businesses which have obvious human rights implications, but are also focusing on its lesser known business in surveillance technologies and how they may be used to target immigrant communities and enable discrimination in criminal justice settings.

Northrop is the fourth largest defense contractor in the United States, with revenues of $21.7 billion in 2018. The company has four business segments, including Aerospace Systems, Mission Systems, Technology Services, and Innovation Systems, yet defense technologies ultimately account for 84 percent of the company’s sales. Northrop Grumman’s largest customer is the U.S. Government, accounting for 82 percent of sales in 2018. The company’s sales to international governments are also growing.

Northrop’s portfolio of products include missiles, bombers, drones, chain guns, automatic cannons, ammunition, and nuclear weapons — all of which directly contribute to the militarization of society as the company profits from war and conflict. Vinnell Arabia, a subsidiary of Northrop Grumman, has provided military training, logistics and support to the Saudi Arabian Ministry of the National Guard (MNG) for over 35 years. Saudi Arabia-led coalition airstrikes have killed and wounded thousands of civilians in Yemen, yet Vinnell Arabia continues to train Saudi troops. Under international law, it is very difficult for State or international bodies to hold defense contractors accountable for their role in enabling governments to carry out harm: shareholders argue that this does not mean they are exempt from assessing the potential human rights implications of their contracts and acting to mitigate them.

Northrop also plays a significant role in the current U.S. immigration agenda in ways that have a chilling effect on immigrants’ ability to participate freely in everyday life. Northrop has a contract with the DHS to develop technology for the Homeland Advanced Recognition Technology (HART) database, which will collect, store, and share sensitive biometric and biographical data on immigrants as well as citizens entering and leaving the United States. While the public policy is controversial, the company must address its decision to participate in it by developing a technology that may enable the U.S. Government to increase targeted surveillance of vulnerable groups, including immigrants, people of color, and activists.

Northrop Grumman’s existing policies and practices are insufficient to manage their risks and their activities have had human rights impacts. Good management systems as called for in the resolution would include assessing the human rights impacts of their business activities, considering human rights risks when vetting potential contracts, mitigating potential harm when carrying out contracts, consulting with potentially impacted stakeholders and providing remedy when rights are violated.

There is a strong case for investor support of the shareholder resolution at Northrop Grumman given the legal, financial and reputational risks associated with its business practices, and large proxy advisory firm ISS has recommended a vote in favor of the resolution. This resolution aims to raise awareness among investors and civil society about the role of corporations in the militarization of society, and to remind companies that, regardless of their industry, they have a responsibility to address the human rights impacts of their business activities. This is an opportunity for shareholders to send a clear signal to the company’s board and executive leadership that it cannot operate without respecting the human rights of the people directly impacted by their products.

By Mary Beth Gallagher

Executive Director of the Tri-State Coalition for Responsible Investment, a coalition of Catholic institutional investors which led the shareholder resolution. For more information, contact Mary Beth at mbgallagher@tricri.org.

Additional coverage of the Northrop Grumman shareholder resolution:
1. Northrop Grumman shareholders demand rights report over DHS biometric database contract, Biometric Update, May 9, 2018
2. Shareholders Demand To Know How Northrop Grumman Will Protect Human Rights While Building Massive DHS Database, Electronic Frontier Foundation blog, May 8, 2019
3. Shareholder Resolution Asks How Northrop Grumman Implements its Human Rights Policy, Just Security, May 13, 2019
4. ICCR Press Release on the Northrop Grumman resolution and vote May 15, 2019