Investor Advocates for Social Justice

Shareholders Denied Opportunity to Vote on Human Rights Impacts of Weapons

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Shareholders will be denied the opportunity to ​vote on important human rights issues​ at the 2021 General Dynamics annual meeting of shareholders. Using a procedural technicality, General Dynamics is making a clear attempt to evade accountability for severe human rights risks that expose investors to legal, financial, and reputational risks. ​The Franciscan Sisters of Allegany, NY filed a proposal on Human Rights Disclosure, addressing critical human rights impacts of nuclear weapons, potential war crimes associated with international weapons sales, and controversial immigration enforcement. ​Shareholders ​regret that in spite of this important subject matter, General ​Dynamics refused to operate with any flexibility to its shareholders, even in the midst of a global pandemic which has resulted in almost 2 million deaths, increased risks of public activity, and caused delays in mail. General Dynamics wrote to the SEC seeking to remove the proposal, which was filed on time by email and was sent by priority mail, because it arrived two days late​ when the filing deadline fell on Thanksgiving, a national holiday. In spite of the SEC guidance related to the proxy rules issued in the spring about the need​ for companies and shareholders to demonstrate flexibility and work collaboratively with one another, acknowledging the possibility of mailing delays due to the COVID-19 pandemic, the SEC has granted General Dynamics’ request for No Action. 

The impacts of General Dynamics’ business are severe, including linkage to a 2018 school bus bombing carried out by the Saudi Arabian Armed Forces in Yemen, which resulted in the deaths of dozens of children and has been recognized as a war crime. Shareholders should have the opportunity to vote on whether ​the company should report on its human rights due diligence processes to address risks associated with high-risk products and services, including those in conflict-affected areas. Shareholders are disappointed by General Dynamics’s attempt to omit the proposal on procedural grounds and the SEC’s concurrence on the company’s No Action Request.  

Human rights risks highlighted in the proposal include conducting business in conflict-affected and high-risk areas, connection to war crimes, violations of rights to privacy and seeking asylum, and worker health and safety, including exposure to COVID-19. Failure to carry out effective human rights due diligence exposes General Dynamics and its shareholders to legal, financial, and reputational risks. The company should be seeking to encourage shareholder review and dialogue on material issues, rather than seeking procedural exclusions during a time of public health and economic crisis due to the COVID-19 pandemic. Shareholders should have an opportunity to vote on human rights issues that present significant risks and irremediable harms to impacted stakeholders.