TEXAS INSTRUMENTS INCORPORATED | Due diligence to trace company produce misuse (Russia-Ukraine Invasion) at TEXAS INSTRUMENTS INCORPORATED

Status
23.05% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
TXN
Resolution ask
Report on or disclose
ESG theme
  • Social
ESG sub-theme
  • Conflict and/or violence
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Technology
Company HQ country
United States
Resolved clause
RESOLVED: Shareholders request that the Board of Directors commission an independent third-party report, at reasonable expense and excluding proprietary information, on Texas Instruments’ (TI) due diligence process to determine whether its customers’ use of its products or services contribute or are linked to violations of international law.
Whereas clause
WHEREAS: The United States and EU have imposed extensive sanctions and export controls against the  Russian state and its owned and affiliated businesses in response to the invasion of Ukraine.[1][2] On September 21, Vladimir Putin announced a “partial mobilization,” requiring all public and private organizations to assist in the conscription of eligible employees and provide material means to support the war effort[3];
The Royal United Services Institute (RUSI) reported that TI and Analog Devices were the original manufacturers of approximately 25% of the dual-use items found in 27 Russian weapons systems used in the invasion, including cruise and ballistic missiles, precision munitions, and electronic warfare. RUSI notes that “US exporters of these products [had] a due-diligence obligation to make sure they were not destined for a prohibited end user, or to be used in prohibited end use.”[4]
Iranian “kamikaze” drones, governed by export restrictions and used by Russia against Ukraine, contain circuit boards with TI processors.[5] Reports indicate these drones are being used against civilians and energy infrastructure, exacerbating the humanitarian crisis. [6]
The use of TI’s products during the Russian invasion of Ukraine may result in heightened human rights and financially material risks through potential violations of American and EU sanctions and export controls, the United Nations Guiding Principles (UNGP) on Business and Human Rights, and TI’s human rights policies, as well as complicity in Russia’s war crimes.[7]  
Because human rights risks can be particularly acute in conflict-affected and high-risk areas (CAHRA), characterized by widespread human rights abuses and violations of national or international law, the UNGPs call for heightened due diligence. The International Finance Corporation states that companies in CAHRA “face business risks . . . much greater than those in other emerging markets,” including destruction of assets, deaths and injuries, weak state control, lack of security, and supply-chain disruptions.
To mitigate risks associated with customer conduct, companies undertake “Know Your Customer” (KYC) due diligence coupled with sanctions compliance programs. 
Supporting statement
SUPPORTING STATEMENT
Shareholders seek information, at board and management discretion, through a report describing TI’s:
Sanctions and export control compliance program to ensure dual-use items are not used by proscribed users or for proscribed uses;Plans to address increased risks associated with Putin’s partial mobilization order;  Board of Directors’ role in overseeing the identification and management of risks associated with Russia’s invasion;  Determination if a KYC due diligence process is needed to address risks across CAHRA, or if a KYC exists, whether it is sufficient; andAssessment of legal, regulatory, and reputational risks to shareholder value posed by the use of TI products across CAHRA.[1] https://home.treasury.gov/news/press-releases/jy0608
[2] https://www.theguardian.com/world/2022/sep/23/russia-has-committed-war-crimes-in-ukraine-say-uninvestigators
[3] https://base.garant.ru/136945/
[4] https://static.rusi.org/RUSI-Silicon-Lifeline-final-updated-web_1.pdf  
[5] https://euromaidanpress.com/2022/09/27/iranian-shahed-131-drones-have-us-made-components/  
[6] https://www.nytimes.com/2022/10/18/world/europe/ukraine-russia-blackout-water.html
[7] https://www.ft.com/content/8537a252-2f2c-4058-9313-f5e7e28eb56d  

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
EFG Asset ManagementForWe will be voting FOR, as the requested report would improve the company's existing
disclosure, could help the company more effectively manage associated risks to its business operations, and
could be prepared at a reasonable cost and omitting any proprietary information.
Rothschild & co Asset ManagementFor
Kutxabank Gestion SGIIC SAU.For

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