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Public Radio's Environmental News Magazine (follow us on Google News)

Shareholder Activism

Air Date: Week of

Living On Earth’s Anna Solomon-Greenbaum takes an inside look at the shareholder activism movement. Shareholders are pressing companies to step up their social and environmental performance, and a group of nuns is leading the way.


CURWOOD: This is Living on Earth. I'm Steve Curwood. Doing good by doing well. A growing number of environmental and social activists are using the booming stock market to tug on the levers of change at some of the nation's largest corporations. Nearly a trillion dollars worth of common stock is owned by individuals and institutions such as pension funds, who are on the record seeking to influence corporate behavior beyond the pursuit of profit. They're called shareholder activists. Typically, they will file resolutions at a company's annual meeting. The resolutions rarely win, but that's not the point. The very debate creates a legal record, and the scrutiny can be a catalyst for change. As Living on Earth's Anna Solomon-Greenbaum reports, at the forefront of this movement are some Catholic nuns.

WOMAN: I've never been to one of the GE shareholder meetings. Can somebody who has gone sort of tell me what to expect?

SOLOMON-GREENBAUM: Richmond, Virginia, in the social hall of a church. General Electric stockholders are preparing for the company's annual meeting.

DALY: And then two years ago, of course, there was the famous argument about who reported to God. "I answer to God." "No, sister, I answer to God," said Jack Welch.

SOLOMON-GREENBAUM: They come from all over the country. They're GE employees and retirees. They are trade proponents, environmentalists, and nuns.

DALY: I'm Pat Daly . I'm a Dominican Sister of Caldwell, New Jersey, and I coordinate the work of this Tri-State Coalition for Responsible Investment...

SOLOMON-GREENBAUM: Sister Pat Daly is the one who had that famous argument with Jack Welch, GE CEO. She's been showing up at corporate meetings for 23 years, using her position as part owner to lobby for changes in their business practices. This year she's pressuring GE to clean up toxic PCBs that it dumped in the Hudson River years ago.

DALY: Primarily, religious organizations got involved because poor people were eating the fish without knowing that it was contaminated. And we have two shareholder resolutions tomorrow...

SOLOMON-GREENBAUM: To file a resolution, shareholders need to own at least one percent of a company's stock, or $2,000 worth, whichever is less. Then, if the proposal meets a stringent list of federal requirements, it's eligible for a vote at the company's annual meeting. One share gets one vote. Sister Pat's order owns 400 shares in GE. Like many other religious communities, they started buying stocks in the 60s to support their elder members. But their religious values and commitment to working for the common good taught them that they couldn't just be passive owners, making money without addressing the consequences of how it was being made.

(People milling at a restaurant)

SOLOMON-GREENBAUM: Over lunch at a busy nearby restaurant, Sister Barbara Aires says for her, the issue is simple.

AIRES: Corporations have tremendous power, even more so than governments today. And we ask who's making the decision? Why are they making it? Who benefits from those decisions, and who loses?

SOLOMON-GREENBAUM: The nuns and other religious investors soon realized they could use their investments. They could use the power of their ownership to push corporations to be more socially responsible. What they started grew into a movement. By one recent measure, these investment activists now control close to a trillion dollars in stock, and file more than 100 shareholder resolutions a year.

AIRES: We've looked at military issues and its effect on the use of natural resources. We've looked at environmental issues and its impact on human development and the Earth. We've looked at the workplace and equality.


SOLOMON-GREENBAUM: The morning after the church meeting, police are staked out in front of the site of the GE meeting. There had been talk of trouble, but the scene here is mellow. Shareholders filing in pass students beating drums, anti-nuclear power protesters, and a long line of GE retirees pushing for a pension increase. The company distributes its own message: colorful brochures with pictures of sunsets and herons lunching on fish from the Hudson.

(People milling indoors)

WELCH: Hi Pat, how are you?

SOLOMON-GREENBAUM: Inside, Jack Welch, GE's chairman, is signing copies of the latest issue of Fortune magazine. He's featured on its cover. He's known for being an affable guy, and he speaks politely about the nuns and other shareholder activists.

WELCH: Well, they come and bring up issues that are of concern to them. So we enjoy listening to them. They haven't changed what we're doing. Some of their views are not consistent with ours. But we like to listen to them, and see if they do have ideas.

DALY: Good morning, Mr. Welch. My name is Pat Daly. I'm a Dominican Sister of Caldwell, New Jersey...

SOLOMON-GREENBAUM: Reporters aren't allowed into the meeting, but the sound is piped through a scratchy line into the press room.

DALY: This is not simply about a PCB spill in the Hudson River. It's not simply about a New York Superfund site. This is also a financial issue.

SOLOMON-GREENBAUM: The sister's resolution calls on GE to report just how much money the company has spent trying to avoid cleaning up the PCBs, highly-toxic chemicals once used in electrical insulation.

DALY: Our company has been expending untold amounts of money on the legal, public relations, and lobbying efforts, as well as the medical studies, all of which have only served to delay what we hope is inevitable: the clean-up of the Hudson River.

WELCH: We invested in good science to make sure remedial decisions are based on sound facts. We have not always agreed with the government on remedial risk.

SOLOMON-GREENBAUM: Jack Welch says the company has already spent more than a hundred million dollars to clean up the river. He insists the government's clean-up standards are too strict, and that it would be safer and cheaper to leave the contamination where it is, locked up at the bottom of the river, rather than digging it up and mixing some of the chemicals back into the water.

WELCH: I can tell you I care personally about GE's environmental reputation...

SOLOMON-GREENBAUM: The shareholder resolutions are debated, and finally the votes are tallied.

MAN: Shareholder proposal number eight, relating to the report on PCB clean-up costs. In favor: 8.6 percent of shares voted. Against: 91.4 percent. Shareholder proposal number nine...

SOLOMON-GREENBAUM: The entire slate of shareholder resolutions has failed.

MARSHALL: You have to see it from the perspective of the long haul. We're in it for the long haul.

SOLOMON-GREENBAUM: In a Richmond park after the meeting, Sister Pat Marshall says she isn't discouraged by the numbers. She's been here before, and she and her colleagues will be back again.

MARSHALL: And if you see it in that light and the historic perspective, you might say, from past to way in the future, it kind of clarifies things.

SOLOMON-GREENBAUM: Sister Pat says the votes don't tell the whole story. The goal of shareholder activism is to break through the walls that surround corporate managers. Sponsors of a shareholder resolution only need three percent of the vote to bring their proposal up again, and essentially make themselves recurrent pests. And resolutions are usually part of a broader campaign: mass mailings to shareholders, public education efforts, even protests and boycotts. Eventually, some companies want to quiet the fuss, and they agree at least to talk. One such firm was the Sun Oil Company, or Sunoco.

BANKS: They knocked on our door probably in the early 1990s.

SOLOMON-GREENBAUM: Bob Banks is Sunoco's vice president of environment, health, and safety. He says shareholders wanted Sunoco to sign on to a set of sustainable business practices called the CERES Principles.

BANKS: The formal shareholder initiative would not be our preferred way of interacting with shareholders, but there are times when formal shareholder initiatives come in, and that was the case in the course of the CERES issue here.

SOLOMON-GREENBAUM: That first resolution was defeated, 94 percent to six. But Mr. Banks admits it started a dialogue.

BANKS: And certainly, that resulted in us having very meaningful interaction and discussions, ultimately leading to our endorsement of the CERES Principles.

SOLOMON-GREENBAUM: The principles Sunoco adopted include measures to reduce waste, conserve energy, and complete an annual environmental audit.

VAN BUREN: Sun Company has been a tremendous success.

SOLOMON-GREENBAUM: That's Ariane Van Buren of the Interfaith Center on Corporate Responsibility, an umbrella group of religious investor activists like Sisters Pat Daly and Barbara Aires . She says that pressure from shareholders brought quick changes to the way Sunoco does business.

VAN BUREN: Within the first year, Sun was looking for every possible opportunity to involve us shareholders and environmental groups, as well as the state regulators, in how they were making their environmental decisions. Since then, when they've had accidents, they've contacted us first and said, "Look, this is happening. What's your advice on how to deal with it?"

SOLOMON-GREENBAUM: And Ms. Van Buren says there have been other high-profile successes.

VAN BUREN: This year, shareholders have gotten six major companies, from Ford Motor Company to Texaco, to withdraw from the Global Climate Coalition. In the Okefenokee Wildlife Refuge, DuPont agreed not to strip-mine titanium. Home Depot agreed to stop using virgin forest in its wood products that it sells in the stores.

SOLOMON-GREENBAUM: These are incremental changes, of course, but shareholder activists say they are slowly nudging corporations back toward their original purpose: to channel private wealth into doing public good. Bob Massie directs the Coalition for Environmentally-Responsible Economies, the group that created the CERES Principles.

MASSIE: One of the things that was clear in the early days of the corporation is those goals were not just economic. They were also social goals. That is, the company was asked to do something that was a benefit to everyone. In the 21st century, there is a debate as to how do human and environmental issues get introduced into corporate decision-making. So what's happening now is the reassertion of democracy in the corporate realm.

WOMAN: (On speaker) Ladies and gentlemen, we are in the boarding process of Continental Flight 1424, with service to Newark...

SOLOMON-GREENBAUM: The Richmond airport. Sister Barbara Aires is waiting for her plane. It's been a long week. The day after the failed resolutions at General Electric's meeting here, she and her colleagues moved on to the annual meeting of the Phillip Morris Company, also in Richmond, where six more shareholder resolutions were filed and also failed. Today, she's on her way to Houston to help teach another community of nuns the ropes of shareholder activism.

AIRES: I believe the Scripture roots call me to work very hard for a just world order. I'm not going to change the world, but I keep working to say what I think I was taught, and I don't believe in being silent about it.

SOLOMON-GREENBAUM: For Living on Earth, I'm Anna Solomon-Greenbaum in Richmond, Virginia.



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