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March 25, 2008
ICCR Defines the Past, Present, and Future of Shareowner Activism
by Bill Baue and Francesca Rheannon
Interfaith Center on Corporate Responsibility Executive Director Laura Berry speaks with
SocialFunds.com about transformative changes in shareowner activism.
SocialFunds.com --
The Interfaith Center on Corporate Responsibility (ICCR) essentially invented modern shareowner activism, and
continues to define new directions in the practice of engaging corporations in dialogue and filing
shareholder resolutions on environmental, social, and governance issues. For example, the
coalition recently launched a campaign opposing genetically modified beets, the source of sugar for
thousands of food products in the US, through the DontPlantGMOBeets.org website. A similar campaign,
entitled Don't Get Burned, encompassed a report and presentations to the New York Society of Securities Analysts on the risks of investing
in new coal-fired generating facilities.
SocialFunds.com writers Bill Baue and Francesca
Rheannon recently spoke with Laura Berry, ICCR’s executive director, about the coalition’s history,
present, and future. In this edited excerpt from the interview, Berry discusses transformations
she sees taking place in the corporate social responsibility landscape, and clarifies common
misconceptions about the ins and outs of shareowner activism.
Bill Baue: Who is ICCR, and
what is its history until the present?
Laura Berry: ICCR is a coalition of about 300
faith-based institutional investors. We have somewhere north of $100 billion in invested capital.
We like alliteration, because it helps people remember things, so we think of ourselves as working
to bridge the divide between morality and markets. ICCR members challenge themselves to challenge
the corporate sector to think about how to contribute to a more just and sustainable global
community.
ICCR was founded in 1971, when a group of primarily Protestant denominations
looked at their invested portfolios and started to ask the questions, are some of the assets we
hold contributing to the unjust regime in South Africa? And is there something we can do as
corporate owners to encourage the US-based corporations we own to behave differently? This group
filed the first advisory resolution with GM asking the company to consider no longer doing business
in apartheid South Africa. When you look at the history of the fall of apartheid leading up to
1994, most historians will credit the flight of capital initiated by faith-based investors as one
of the factors that accelerated the process and probably created a platform where this could happen
with less bloodshed.
BB: Nelson Mandela himself credited the shareowner activism movement
with a significant role in helping end apartheid. And since then, ICCR and shareowner activism in
general have had a huge impact on the transformations we're seeing in the business sector towards
recognizing the obligation and necessity from a financial perspective of adopting more sustainable
practices socially and environmentally. You see shareowner activism heading in new directions in
the future. What are these transformations that you foresee happening?
LB: There is
something that has clearly gone on, dating back to the 1970s, but it's becoming more and more
sophisticated as time goes by. ICCR members are guided by the prophetic voice of faith--and I
don't use that expression in italics at all, I sincerely mean that when you look at corporate
behavior through eyes that are guided first by notions of justice and sustainability, you see
things differently. I'm not saying you see them better or worse, just differently than looking
through the lens of mere wealth creation. That has given faith-based investors regular moments of
bringing issues to the table with C-level executives for major global corporations, and being
right.
For example, ICCR investors filed the first resolutions on global warming back
in the early 1990s, in the day when major policy wonks still weren't absolutely convinced that
climate change was happening. We've been filing resolutions for well over ten years on predatory
lending, addressing issues that could evolve from subprime lending or from the monetization of huge
irresponsible risk.
As new generations of leadership start to rise up in the corporate
context, we're starting to see that people recognize how our members and investors are providing
arbitrage opportunities: looking at markets differently and allowing them an opportunity to take
advantage of market differentials.
Francesca Rheannon: ICCR reports that 313 shareholder
resolutions with 208 companies throughout the US and Canada have been filed in this past year. As
of press time, 20 of the resolutions were withdrawn, mostly in response to agreements reached with
companies and shareholders. What does this mean? Is this an indication of a change in corporate
attitudes?
LB: I think it's an indication of efficacy and more cooperative dialogue. We
see withdrawals as real victories. And it's not a victory in the sense of, somebody wins and
somebody loses, because that's really not what the dialogue game, if you will, is about. These are
victories because we have seen corporations that are willing to push themselves further to think
about their own business practices and how justice and sustainability plays out. In a typical year
our members file about 250 to 300 resolutions, so when we have an opportunity to withdraw, it is
almost always worth celebrating.
BB: And that's something that is not particularly well
understood in the broader society, especially in the media coverage of the shareholder resolution
process and shareholder activism. It's often framed that a withdrawal is some kind of defeat for
the shareholder activists when in fact, what you're saying is that it's the exact opposite: it
often means that the terms have been met, and met in a way that is mutually agreeable. The other
thing that is often mischaracterized by media accounts is the voting on shareholder
resolutions--specifically, it's often framed that a less-than-majority vote is a defeat of some
sort, suggesting that a more than 50 percent vote is somehow a victory. Could you clarify this?
LB: Your question goes to the heart of the matter, framing a really important issue. And
I think it also goes back to the transformative nature of some of the work of the next generation
of shareholder activism. When this work began, the idea that activist shareholders who were
viewing through this more complex lens of both fiduciary responsibility and social and
environmental justice was in-and-of-itself a revolutionary thing. There is, though, a simplistic
perception of winning and losing, kind of a digital or binary approach to this work.
Winning is not about getting a majority. Winning is about raising issues that are absolutely
important to how we as human beings treat each other, one of the fundamental precepts of every
faith tradition I know about, and also, how we take care of our planet. Is 51 percent a "win" and
49 percent a "loss"? Neither answer is appropriate.
What is appropriate is firstly to
raise the issue, document the dialogue, bring the concerns to the attention of the board of
directors and the governance structure of these major corporations, and also to bring media
attention to issues around justice and sustainability, to act as that leading edge, that vanguard
around issues that might emerge.
Take my earlier examples of climate change and
predatory sub-prime lending. We were looking at those issues through a very different scope. We
were not getting “wins” in terms of majority shareholder votes, but in fact our voices helped to
raise these issues in powerful ways.
FR: ICCR has a number of different issue
areas--corporate governance, enabling access to capital, environmental justice, human rights.
Could you talk about one of these issue areas and the sub-areas within it--for example, health
care?
LB: Some of the big issues on health care revolve around access. And on the
domestic scale, the access issues are primarily driven by access to health care because of lack of
health insurance. Our working groups file resolutions and engage corporations on questions such
as, what health insurance is provided to the employee base? What companies provide insurance? Is
health insurance is affordable? Do people have universal access? These issues are absolutely
essential to a thriving democracy.
And then on the global scale--and please know I am
grossly oversimplifying--access is more an issue of access to medicine. Some of our key allies are
organizations like Oxfam, which is doing some brilliant work in thinking about how major
pharmaceutical corporations can respect intellectual property rights, respect their market and
their fundamental driving wealth-creation mechanism, while at the same time making sure that people
on continents like Africa have access to the medicine they need to keep healthy. These are issues
that are huge and that ICCR's corporate dialogues are wrestling with in concert with allies every
single day.
You can listen to the complete interview by Corporate Watchdog Radio hosts
Bill Baue and Francesca Rheannon with Laura Berry at the Corpo
rate Watchdog Radio website.
©
SRI World Group, Inc. All Rights Reserved.
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