The Presbyterian Church (U.S.A.), through investments of the Board of Pensions has submitted a proposal to Microchip Technology Incorporated (MTI) requesting its board of directors commission an independent study \u201cto determine whether its customers\u2019 use of its products contribute or are linked to violations of international humanitarian law (IHL).\u201d<\/p>\n
Specifically, the PC(USA) is concerned that the chip maker\u2019s products are being used by Russian forces to target civilians in Ukraine.<\/p>\n
The proposal was fled with the Securities and Exchange Commission (SEC) by Katie Carter, director of Faith-Based Investing and Shareholder Engagement, on behalf of the denomination\u2019s Committee on Mission Responsibility Through Investment (MRTI) group. It was co-filed by Portico Benefit Services, the benefit arm of the Evangelical Lutheran Church in America, and Friends Fiduciary. The proposal<\/a> is entitled \u201cIndependent Third-Party Report on Due Diligence Process to Determine Whether Customers\u2019 Use of Products Contribute or are Linked to Violations of International Law,\u201d and asks shareholders to approve the creation of a report at their August 20, 2024 meeting that includes:<\/p>\n The United States Government (USG) banned the sale of weapons systems technologies to Russia through sanctions and export controls following its annexation of Crimea in 2014 and extended these sanctions following its invasion of Ukraine in February 2022.<\/p>\n An August 2022 report<\/a> by the Royal United Services Institute (RUSI) and Ukrainian government showed Microchip\u2019s products were \u201camong the most prevalent of the 208 dual-use components recovered from 26 Russian weapons systems.\u201d<\/p>\n While Microchip halted sales of defense-related components<\/a> to Russia as a result of sanctions, an estimated $83 million of its products were imported into Russia from January to October of 2023<\/a>. This same report shows that of the 2,797 foreign components found in Russian weapons in this period, 2,007 (72%) were supplied by the United States.<\/p>\n In some cases, U.S. companies may have been able to avoid sanctions by selling their goods to an authorized foreign entity that subsequently redirects the components to Russia in a process known as transshipments. The report \u201cSilicon Lifeline: Western Electronics at The Heart of Russia\u2019s War Machine\u201d states<\/a>:<\/p>\n Transshipment through third countries is a more important, but difficult, case. Microelectronic third-party distributors and wholesalers often operate from intermediary jurisdictions such as Hong Kong, meaning that components bound for Russia are sometimes legitimately supplied through trading entities domiciled outside of Russia itself. However, third countries are also often exploited by procurement agents looking to move sensitive and controlled goods by obscuring the real exporter or end user.<\/p>\n In other cases, microchips and other components may have multiple uses and can be exported with one designation and subsequently deployed into weapons systems.<\/p>\n The report acknowledges it can be a difficult process to track transshipments and repurposing of technologies for military uses, but a growing list of semiconductor companies is taking steps to prevent or mitigate the use of their products in human rights violations.<\/p>\n\n