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Qualcomm Water Supply Chain 2012

 
Resolved:  
Shareholders request that by September 2012, the Board of Directors provide a report to shareholders (at reasonable cost and excluding confidential and proprietary information) on how Qualcomm is assessing water risk in its supply chain and action it intends to take to mitigate the impact of water scarcity on long-term shareholder value.
 
Supporting Statement: 
At a local and global level, there is increasing awareness that water is a scarce and valuable resource. This realization is subjecting water use to greater regulation, increased commoditization, and conflicting ownership assertions. Likewise, global population growth, agricultural and industrial demands, changing climatic patterns, and point source water pollution are creating water scarce regions around the globe. 
 
Hence, water management, including potential risks associated with water scarcity, is increasingly a strategic business issue. The Securities and Exchange Commission in its 2010 “Commission Guidance Regarding Disclosure Related to Climate Change” acknowledges that company operations and supply chains may be exposed to significant physical effects of climate change.  Specifically, the SEC states: “Changes in the availability or quality of water, or other natural resources on which the registrant’s business depends… can have material effects on companies.” (http://www.sec.gov/rules/interp/2010/33-9106.pdf)
 
Increasingly, institutional investors are asking companies for information on water management. The Principles for Responsible Investment (PRI) is a United Nations initiative whose 900 members believe that the integration of environmental, social and governance (ESG) factors in investment decision-making enhances shareholder value long-term. Members, who collectively represent $30 trillion in assets, require information on ESG factors, such as water management, to analyze fully the risks and opportunities associated with existing and potential investments. 
 
Carbon Disclosure Project, representing 551 institutional investors globally with $71 trillion in assets, has for years requested greater disclosure from companies on their climate change management programs. CDP has recently extended its work by launching CDP Water Disclosure Project. Currently, 137 institutional investors globally with a combined $16 trillion in assets have signed the CDP Water request for information. In contrast to a majority of companies in its sector, including Nokia and Texas instruments, Qualcomm declined to participate in CDP Water. 
 
A 2008 JPMorgan Global Equity Research report entitled “Watching Water - A Guide to Evaluating Corporate Risks in a Thirsty World” states that the cost and availability of water are important considerations for semiconductor companies when choosing sites for manufacturing facilities and operations. Increasingly, companies extend this risk assessment to suppliers. 
 
Given that semiconductor development, Qualcomm’s main revenue source, requires high volumes of clean, high quality water, we believe Qualcomm would benefit from expanding its supplier assessment to include water risk.  Overall, Qualcomm’s sustainability reporting is commendable, but investors do not have sufficient information to assess how the company evaluates and manages water risk associated with its manufacturing partners.
 
We believe the adoption of a sound water risk management plan will offer Qualcomm competitive advantage and enhance opportunities for long-term sustainability for the company and its shareholders.