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November 28, 2001
Shareowners Increase Social Activism Significantly in 2001
by William Baue
Research released by the Investor Responsibility Research Center reveals upward trends for
shareowner activism on social issues.
SocialFunds.com --
This year has been the busiest in a decade for shareowner social activism, with 158 social issues
proposals going up for proxy vote. In addition, average shareowner support per social policy
resolution has increased significantly, rising an entire percentage point over last year to 8.6
percent in 2001. And the number of proposals receiving more than 10 percent support also increased
substantially, with almost 28 percent of the results so far this year topping this important
benchmark.
 The Investor Responsibility Research Center (IRRC), a Washington
D.C.-based independent organization that researches corporate governance, proxy voting and
corporate responsibility issues, reported these statistics as of November 15, with results for 147
of the 158 proposals. Even with some of the results still outstanding, the percent of votes
garnering more than 10 percent support already surpassed last year’s results, rising from
almost 17 percent in 2000 (25 proposals of 150) to almost 28 percent so far in 2001 (41 of 147.)
While 10 percent support may seem minimal, it represents the dividing line between life
and death for proposals. The Securities and Exchange Commission established this percentage as the
benchmark for continued resubmission of a proposal, regardless of how many times it has appeared on
a company’s proxy statement in the past. A 10 percent vote may not effect corporate change,
but the continuing presence of social issues on proxy ballots may exert an accretive effect,
reminding companies that shareowners do not ignore the social bottom line.
Indeed, many of
the issues responsible for this current rise of shareowner interest in social policies have been
around for several years, slowly gaining support. Whereas previous highs correlated specifically
to concern over the apartheid regime ruling South Africa in the early 1990s, the factors
responsible for the current highs are more diffuse, according to IRCC Director of Social Issues
Service Meg Voorhes.
Voorhes considers global labor standards, genetically modified
organisms (GMOs), and board diversification the hot topics fueling this recent rise in shareowner
activism. But if these issues have been around for several years, why are we seeing such
significant increases now? Voorhes relates this effect to the educational process, like a
collective learning curve—we have now reached a critical mass of understanding about how to
advance these causes.
For example, Voorhes points out that institutional investors are
more comfortable tracking global labor standards now that more monitoring mechanisms, such as the
Social Accountability 8000 program, exist. And socially responsible investors have adopted, in
Voorhes’ words, a “more achievable and more reasonable” goal of simply labeling
GMOs, as they came to understand the economic impossibility of phasing them out altogether. And
the diversification of boards is now considered not only a social issue but also a governance
issue, as more representative boards are seen as a key to business success.
Three of
this year’s most popular social policy proposals resolutions called for board
diversification: it was supported by 28.2 percent of shareowners at Affiliated Computer Services
(ticker: ACS), 27.5 percent atAmerican
Power Conversion (APCC), and 27.2 percent at Bed Bath and Beyond (BBBY). As for global labor
standards, 23.4 percent of Unocal
(UCL) shareowners voted to implement International Labor Organization (ILO) standards.
Of
the fifteen social issues IRCC tracks, 12 increased in the percentage of their average vote from
2000 to 2001. The only three categories experiencing decreases were banking/insurance, charitable
contributions, and military. As more and more resolutions top the 10 percent mark, socially
responsible investing is becoming a permanent fixture on proxy ballots and in the minds of
shareowners, not to mention the increasingly diversified boards of directors.
©
SRI World Group, Inc. All Rights Reserved.
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