The (R)evolution Will Be Computerized: Web 2.0 Technologies Will Make “Shareholder Democracy” a Reality
Just as doctors at dinner parties hear about fellow guests’ medical dilemmas, people tend to confess to me that they throw out their shareholder proxy ballots. They’re too jargon-filled and arcane, and who’s got the time to evaluate whether the auditor is a good choice or whether a shareholder resolution is as preposterous and costly as management says it is? Besides, they only own 50 shares of the company.
Estimates range widely, but all agree that the vast majority of individual investors regularly toss their ballots into the circular file. Economists call this “rational apathy,” but while it may be rational for an individual to conserve his or her energies for more effective pursuits, there are consequences. Ninety percent of institutional investors do vote, so when individuals don’t, we cede control of corporate behavior to private and public pension funds, mutual funds, universities, and other large actors.* The problem is that these organizations frequently vote without regard to the preferences of their beneficiaries. Further, they are arguably irrational in their voting, tending to cast votes in favor of management far more often than not. As a result, directors are regularly elected with 99% of shares voted, and reasonable, timely shareholder proposals on urgent matters like climate change rarely, if ever, receive a majority vote.
What if someone stepped in and made proxy voting less of a bore and a chore for the individual investor, providing advice from multiple sources on how to vote, and making voting as easy as a few mouse clicks? Could the retail shareholder vote be roused into action to hold corporations accountable? This is the experiment currently underway using the new generation of interactive, information-sharing technologies often dubbed “Web 2.0.”
Fifty-one percent of individual households hold stock, including direct ownership of stock (so-called “retail” shareholders) and indirectly through vehicles like mutual funds, 401(k)s or IRAs. These households collectively own 41 percent of outstanding U.S. equities. Until this voice is mobilized, corporations will never be held accountable for their impacts. In this article, we highlight some promising new Web 2.0 efforts that aim to give individual investors a new voice.
Help for the Rationally Apathetic Retail Investor
Are you overwhelmed with ennui when your corporate ballots arrive during the spring proxy season? Stricken with guilt by June? Banish that forever with TransparentDemocracy.org, the brainchild of Kim Cranston, a longtime progressive activist and former president of the Social Venture Network. Transparent Democracy makes it simple to learn more about ballot questions (and not just for shareholder ballots but electoral questions as well). From the home page, the user selects a company and is directed to a list of all the ballot questions,alongside advice on how to vote. The advisors include recognizable names (prominent unions and nonprofits), shareholder proponents who file many resolutions, and corporations themselves. For example, if one visits the page for IdaCorp.’s ballot, recommendations in favor of Trillium Asset Management Corporation’s climate change proposal are proffered by the environmental coalition Ceres, the actor and activist Ed Begley, Jr. Visiting the ExxonMobil page, you can view advice from the Pride Foundation, the Sisters of St. Dominic of Caldwell, NJ, the Responsible Endowments Coalition and several more.**
The startup MoxyVote.com, set to launch this fall, will provide a similar service with a leg up – shareowners will be able to upload their brokerage accounts, enabling them to vote their shares directly on the site. Users will also be given the choice to automatically vote all their proxies as a particular advisor does; as one (humbly suggested) example, one could set proxies so that they are automatically cast according to Trillium Asset Management Corporation’s (“Trillium”) guidelines.
Help for Mutual Fund Shareowners, Too
Existing options for mutual fund shareowners who are uncomfortable with their fund’s proxy voting practices are few. They can complain to fund managers (about as effective as it sounds) or move their assets to another fund that shares their values.
Backing up a moment, however, how does one even determine how a mutual fund votes on corporate ballot questions? Since 2003, mutual funds have been required to disclose their proxy votes (thanks to a Securities and Exchange Commission rulemaking change petitioned by our colleagues at Domini Social Investments). Two web sites have since sprung up to monitor mutual fund voting patterns.
ProxyDemocracy.org was inspired by its founder’s “personal experience of being a confused shareholder.” Writing case studies for Harvard Business School, Andy Eggers’s interest was piqued by his research into the important role shareholders should play (at least in theory) in keeping boards of directors and corporate managers honest. But even with his background (Eggers is a Ph.D. candidate in Government at the university), he found it difficult to know how to vote on ballot questions, and was stumped by the lack of information available to individual investors. (Proxy research analysis is available, but it is affordable only to institutions.) So in his spare time, he created ProxyDemocracy. Like TransparentDemocracy.org, the site offers users a look at how responsible institutional investors (nine to date, including Trillium) plan to vote their proxies. But ProxyDemocracy’s added contribution is its exposure and analysis of mutual fund voting patterns. It assigns scores based on the funds’ records in key areas such as director elections, executive compensation, and environmental and social issues. (For example, Green Century Capital Management‘s overall activism score for 2008 was 66 of 100 possible points, placing them in the 95th percentile. By way of comparison, Fidelity’s funds averaged a 22.8 activism score, placing them in the 48th percentile. Goldman Sachs’s score was a respective 32.7 and 73rd percentile.)
FundVotes.com, the brainchild of Canadian Jackie Cook, also aggregates mutual fund voting records. The site’s data set consists of 12 million voting decisions from 450 mutual fund companies spanning five years of public records to date. Suppose you own shares in an Oppenheimer mutual fund. The site reveals that between 2004 and 2008, Oppenheimer’s fund managers voted against management only 2, 0.6, 0, 1.3 and 1.6% of the time in each of those years, respectively. FundVotes also prepares studies based on the data. Its most recent report, co-authored with Ceres, is Mutual Funds and Climate Change: Growing Support for Shareholder Resolutions (March 2009).
Cambridge, Massachusetts consultant Glyn Holton, an expert on trading and risk management, is spearheading an out-of-the-box experiment to test whether mutual fund shareowners might be able to “take back the vote” from mutual fund managers. Holton envisions a web-based database wherein mutual fund shareholders can place their proxy voting rights. Using a feature similar to MoxyVote’s, they could then designate a third party to vote their shares. Holton’s project, iSuffrage.org, is also serving as a formal clearinghouse for investors to network with others who can present shareholder proposals at stockholder meetings that the proponents themselves cannot attend, making it possible for activists to expand their filings. If Holton’s scheme succeeds in liberating voting rights from mutual fund managers’ absolute control, it will be a game changer. While we are skeptical that mutual fund companies will cooperate, it is worth every effort to try.
Something For Everyone
No matter what kind of shareholder you are, you should be bookmarking Shareowners.org, an action-oriented news and blog site “educating shareholders about their rights and duties.” The site was developed to provide “what was missing in the corporate governance debate – the voice of the average investor,” as Rich Ferlauto, one its developers, told BoardMember.com recently. Ferlauto is director of pension policy for the American Federation of State, County and Municipal Employees; he blogs on the site along with corporate governance activist Jim McRitchie and other members can post their own commentary through the site’s use of Ning social networking technology. Ferlauto continued, “it was the coming together of the need in terms of people were outraged and upset and, frankly, had lost confidence in the markets. We wanted to use a vehicle that would help organize their voices, and also provide them with education and background information to begin to build investor self-confidence, or confidence in the markets….[W]e also think shareholders need to be able to communicate better with their financial intermediaries and financial professionals- brokers and mutual funds-and make sure that those institutions put their client interest, rather than their own particular interest, first and we think that’s the way that they can build market share.”***
A Shareowners.org poll found that 17% of investors (24 million people) would be interested in joining an organization that would educate them and give them a voice. This site, with its nonpartisan tone and friendly design, is well poised to do just that.
* Clients of Trillium Asset Management Corporation typically authorize us to vote proxies on their behalf. Our proxy voting guidelines and voting record are posted on our web site.
** Beginning in 2010, the site will include Trillium Asset Management’s voting recommendations.
***”It’s Time for Directors to Step Up to the Plate,” BoardMember.com.
Trillium Asset Management Corporation Celebrates 25 Years
We’re 25!
This year marks the 25th anniversary of Trillium Asset Management Corporation (“Trillium”). We’ve done a lot of learning and experimenting, had some adventures and even birthed some offspring (spinoff organizations, that is). As part of our ongoing celebration, in this issue we’ve pulled together excerpts from the last 25 years of Investing for a Better World® and its earlier incarnation, Franklin’s Insight, from the days when we were known as Franklin Research & Development Corporation. We hope you enjoy this trip down the memory lane of both Trillium and the social investment industry. We extend our deep thanks to the many writers who contributed over the years, including columnists Milt Moskowitz and Elliot Sclar, and former co-workers Steve Lippman, Simon Billenness and Patrick McVeigh.
Editor’s Notes: Some of the material has been edited from the original version. Dates indicate when we reported on events, not necessarily when they occurred. Due to space limitations, authors are credited only when the first person voice is used.
In our first issue (Winter 1983), in “Our Intent,” we wrote:
There is a growing need to rethink the process of investment in this country. We are in an age of jet-propelled, satellite-transferred, and computerized legal tender. Light years removed from the barter system, employers, producers and owners conduct business immersed in a glowing avalanche of statistics and CRTs. Efficient as this system might be, human it is not. The question we pose is this: In these times of electronic transfers and VisiCalc, who protects the people? In a multi-billion dollar company whose shares are bought and sold with lightening speed for numerical reasons by proxies in the names of “owners” who never see their stock, what motivation is there for the company to care whether it intrudes or destroys in the name of profit? To divest or not to divest is a question to be answered by the investor, but to fail to make a statement is to allow the power of ownership to lie untapped.
August 1989
As far back as 1989, ESG (environment, social and governance) analysis, a now-popular version of social investing in which social advocacy is entirely optional, was an emerging trend. We were wary. Social investing argues for something more than opportunistically profiting from social ills. As social analysis increasingly enters the mainstream of money management, it is increasingly important to reclaim the movement’s roots in social change. To invest in a firm simply because it will profit from a particular social issue is not enough. Corporations have the ability and the resources to respond to major social ills. Those that respond with creative positive solutions to these problems will help to bring about a healthy future from which all can benefit.
December 1989
The unthinkable has happened. The Wall has come down. The Cold War is over. History has changed. And the party in Europe has begun. Change in Eastern Europe strikes us as the most bullish of all possible events for our society and financial markets. We’re ready to party if our defense budget is cut. July 1990 And they’re still in business. Only read this if you need to. In what is surely a first, the clothing manufacturer Esprit (ESH) has begun to run ads and attach labels to its apparel asking consumers not to buy these products unless it is something they really need. The company believes that unless we become more responsible consumers and stop over-buying, we will exhaust the resources of the Earth.
December 1993
I had the honor of attending a reception for Marland Mold in Pittsfield, Massachusetts. We helped the company’s employees to purchase the company. About 40 jobs were saved in the short run and it is hoped that many more will be created. The investment made by a union pension fund and other parties is groundbreaking, risky, and very unconventional. But last night I looked into the faces of the workers, mostly over 40, whose jobs had been saved. It was everything to them; the pride of ownership and hope of the future success was palpable. Directly in back of this decision to invest money were families, human dignity, self-sufficiency, hope, and last, but by no means least, a Happy Holiday Season with bread on the table. ~Joan Bavaria
April 1993
It was a public relations nightmare for Wal-Mart Stores (WMT). Shown a videotape of children working in a Bangladesh factory that made Wal-Mart shirts, CEO David Glass appeared dumbfounded. These allegations made by Dateline NBC illustrated dramatically the fact that corporate responsibility includes not just a company’s own operations but also the operations of its suppliers. One U.S. company has already shown the Dateline NBC story to its Asian buyers and suppliers.
May 1995
I was falling asleep with the news on when my husband shook me and said, “It’s that kid, that kid you wrote about.” In the morning I thought I had been dreaming until I saw the news. Iqbal Masih had been shot and killed. Iqbal was last year’s recipient of the Reebok Human Rights Youth in Action Award. Iqbal was fighting for the rights of children held in bonded labor in Pakistan. Millions of Pakistani children are chained to looms in carpet factories, as Iqbal was from the age of four until he escaped at age 10. Their small hands are prized for their ability to tie tiny tight knots in the carpets they export to the West.
We all feel sadness at the loss of human life. When a child dies somehow the sadness is magnified. When a child is murdered it is almost incomprehensible. Iqbal has left his mark. He helped to open the eyes of the world to the appalling conditions in which some children are forced to live. He died with a fire in his belly and the belief in his heart that children have a right to a childhood, a right to education, a right to be free. ~Holly Davenport
April 1996
In the midst of frenetically filing last-minute resolutions to address corporate complicity in the death of the Nigerian dissident Ken Saro-Wiwa, I discovered that the pension funds of the three trade unions were also filing similar resolutions. Initial efforts to coordinate proved difficult. A Teamsters official cut short our initial conversation with the comment: “Sorry, I have to leave now for a demonstration outside the Nigerian embassy. I will try to call you back this afternoon if I don’t get arrested.” ~Simon Billenness
July 1998
Years before 9/11, Trillium protested Unocal’s courtship of the Taliban as the oil company pursued a contract to build a gas pipeline through Afghanistan. At the mic at Unocal’s annual meeting, I noted its pledge “not [to] conduct business with any party in Afghanistan until peace is achieved and a government recognized by international lending agencies is in place.” The Chairman tried to cut me off (actually addressing me as “young lady”), but I entreated him to pledge right then and there that Unocal wouldn’t lay the pipeline until women’s rights were fully restored in addition to the advent of something that passes for peace. My request was not honored. ~ Shelley Alpern [Unocal dropped its plans in January 1999, citing the need to cut costs. We observed that "the real story is that feminists and human rights advocates have made Afghanistan too hot to touch for American companies."]
November 1999
In a conference room overlooking Lake Louise in the Canadian Rockies, Cherokee leader Rebecca Adamson made a desperate appeal to a conference of socially responsible investors. “You are our last hope,” she said. Governments and businesses had betrayed the world’s indigenous peoples time and again, and if concerned investors couldn’t make a difference, she explained, they and their lands were doomed to extinction sometime in the next century. Her maps displayed clearly how the lands nurturing the world’s remaining fossil fuel, timber and mineral resources are one and the same with the lands that nurture the last of the world’s First Peoples. Her words moved the attendees deeply.
December 1999
The hot ticket in London last March was the first conference of the Global Reporting Initiative (GRI), an offspring of the U.S.-based CERES environmental coalition. As the name suggests, the enthusiastically embraced draft guidelines aim to do internationally what CERES has done so effectively in the U.S. – promote a widely recognized standard framework for corporate environmental reporting. The GRI Guidelines extend this concept to include social and economic elements of sustainability.
Spring 2001
The memory of warrior and spiritual leader Tasunke Witko – Crazy Horse to most of us – is so sacred to the Lakota Nation that his descendants and admirers wouldn’t even think about naming one of their children after him. That commercial enterprises appropriate his name for profit is galling. Wrote his descendant Seth Big Crow about Crazy Horse Malt Liquor: “The ploy here is to romanticize the life and death struggle of a Lakota Warrior, as a macho-myth appealing primarily to young urban men. The message is DRINK THIS PRODUCT AND BECOME ‘CRAZY HORSE.’ In reality, this strategy promotes both stereotyping and alcohol abuse. Our young people can be particularly vulnerable.” [In April 2002, Stroh Brewery settled with the estate of Crazy Horse and offered a public apology; two years later, a settlement was reached with Hornell Brewing.]
Fall 2001
In 2001, our columnists reflected on American resilience in the aftermath of the World Trade Center attacks. Milt Moskowitz wrote: In many cases within the workforce, the impetus to do something – to help the victims of families – was so strong that individuals came forward with actions on their own, not prompted by any corporate directive. The best example is probably the drive at Southwest Airlines (LUV) for employees to donate part of their pay to the New York relief effort. This was a campaign that originated in the employee ranks – and in the end every single Southwest employee participated. …Farnum Brown wrote: Sadly, it seems our country is at its best in times of crisis. Stranded in Tucson after 9/11, I spent the last few days driving back home to Durham. I ate in a lot of truck stops and stayed in a lot of motels. I found civility, diversity, humor, helpfulness and an expansiveness of spirit you have to call “heart.” I hope that spirit guides our leaders in their awesome deliberations. I hope they show the world that we as a nation are not only strong, but also wise.
Summer 2007
What is the social responsibility of media? Is there a civic dimension of social responsibility distinctive to media companies? And does a media company’s social or civic performance have any systematic impact on its bottom line? Trillium Asset Management has created a special research and advocacy vehicle to explore these questions. It’s called the Open Media and Information Companies Initiative (Open MIC). Before the internet, one could argue that what was good for the business of media was bad for democracy: consolidation of ownership and a corollary loss of diversity in media. Going forward, what’s good for the business of media appears to be just what democracy requires: the expansion and amplification of individuals’ ability to create and share information – our ability, in a word, to communicate.
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Scenes from a Shareholder Meeting
May 2001
In Indonesia, ExxonMobil has security arrangements with the military and police, a relationship blamed for civilian massacres and other human rights abuses. In May 2001, Radhi Darmansyah traveled from Aceh, Indonesia to confront ExxonMobil CEO Lee Raymond directly at the stockholder meeting. We printed excerpts from the transcript.
RD: While you made $26 million last year Mr. Raymond, more than one thousand six hundred of my people were killed, maimed, or tortured around your facilities in Aceh. I am here to ask for your help. We, the Acehnese, are asking that ExxonMobil stop working with the Indonesian military for its security forces, because the Indonesia military is murdering its citizens in Aceh. They are murdering my brothers and sisters. They are raping and keeping schoolgirls as sexual slaves. I ask you today to please issue a public statement that you will not return to Aceh until my land is free of human rights abuses, and until my people are free….
LR: I believe your time is up. (Radhi continues.) I’m sorry you’ll have to come back another time. Sister Pat, I think we’re about to move on to the next item. You have three minutes. (Radhi continues.) Sister Pat, he’s using your time….I think you should turn off the light of Number 1, please. You understand you’re out of order? (Radhi still continues.) Sister Pat, please! I’m getting ready to move on to the next item. (Deliberately not calling on Bianca Jagger, who is at the microphone.) Sister Pat has the floor for three minutes [to continue her remarks concerning her shareholder resolution]. Thank you.
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South Africa
How to leverage the influence of corporations to bring about the end of apartheid was the main preoccupation of the social investing movement in the 1970s, 80s, and into the early ‘90s.
April 1984
Au contraire! On March 23, 1984 the Wall Street Journal published an editorial, “Playing with Africa.” The writer insinuated that the divestment movement is improper strategically and self-righteous morally. Au contraire! Divestment is one of the three major strategies currently used by investors to oppose one of the great moral blots on western civilization. (The other strategies are shareholder action and the Sullivan Principles.) The divestment movement in legislatures represents a grassroots concern. It has emerged in part due to the ineffective policies of our current administration towards the Afrikaaner power structure. Feeling blocked by the administration, Americans are turning to the legislative branches. It must be time to become optimistic about the investment movement. To earn such negative notice in America’s largest business daily’s lead editorial is a fairly solid indicator that success is being scored.
June 1985
It is heartening to note that over the past month the South African divestment movement has garnered
an equal share of the headlines. Public leaders, organizations, college students and investors have raised a tumultuous outcry over the immoral nature of apartheid and corporate participation in its continuance. It is important to note that what divestment advocates are fighting for is not only the establishment of human rights in South Africa, but also an acceptable level of morality from American corporations.
August 1986
The first shareholder resolution ever regarding South Africa passed. With the support of 68% of shareholders, Pizza Inn has been told to sign the Sullivan Principles.
June 1987
Reverend Leon Sullivan called for all American firms to pull out of South Africa within the next nine months. Sullivan is the author of the Sullivan Principles, a code of conduct that has directed the employment practices of U.S. firms in South Africa since 1977. In announcing his decision to abandon the doctrine that bears his name, Sullivan noted the increasing atrocities within South Africa.
March 1990
Let freedom sing! We, along with the rest of the world, rejoice in Nelson Mandela’s release from prison after 28 years of captivity. Now is not the time to consider slowing divestment pressures or easing economic sanctions lest the apartheid forces in South Africa think they have gone far enough already. When political democracy comes to South Africa, the time for divestment to end will be at hand.
June 1993
The African National Congress is now encouraging investment in South Africa, asking companies to support the “Platform of Guiding Principles for Foreign Investors.”
June 1994
The miracle is not the overthrow of the white supremacist rule. That, we have agreed for years, was inevitable. But many of us used to think that the only way it would happen would be through bloody black revolt, poorly armed and kamikaze-like, with massive numbers of deaths, as the disenfranchised youth of the black tribes, with nothing left to lose, simply overwhelmed their elders and acted out a primal scream. History and the forces of justice seem to have had another end in mind. If the current of today’s events continues on course, black South African leaders have written an amazing, miraculous story of human dignity, forgiveness and heroic tenacity. ~Joan Bavaria
March 1998
In Robert K. Massie’s new book, Loosing the Bonds, a blow-by-blow account of the dismantling of apartheid in South Africa, he concludes that “the most striking aspect of this story is that our seemingly rigid and material world is so influenced by ideas.” It was certainly the force of ideas that got corporations to change the way they did business in South Africa. Or, as Massie put it so eloquently: “We have control over our ideas, our ideas have material consequences, and, in the end, as a people, we become what we believe.”
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Burma
April 1994
Advocates for corporate withdrawal from Burma recently scored a major victory. In March, Amoco announced its exit from the country before mid-year. Although Amoco states that it withdrew for “economic” reasons, there is little doubt that the continual public pressure from activists and shareholders was also a factor in the firm’s final decision to withdraw from Burma.
August 1996
In a recently smuggled video, Aung San Suu Kyi, the Burmese opposition leader whose election victory six years ago was annulled by the military, called for international sanctions to be imposed on Burma.
June 1999
The Free Burma Coalition announced a boycott of Suzuki and targeted the San Diego marathon and a post-marathon concert, both sponsored by Suzuki. Quite by chance, the band scheduled to headline the concert was Hootie & The Blowfish, a money management client of ours. We approached the band to brief them on Suzuki’s involvement in Burma and see if they were interested in working with us to apply leverage on the company. For the concert, the band invited Free Burma Coalition activists to distribute information. Many of Hootie’s band and crew sported stickers and T-shirts that proclaimed “Suzuki Out of Burma.” Before they would play, the band had the organizers remove the giant Suzuki banner at the back of the stage. To cap the evening, Hootie gave an interview to VH-1 denouncing Suzuki’s ties to the Burmese military.
December 2000
In March, I sat in the public section of the U.S. Supreme Court to watch the justices hear oral arguments in the case of the Massachusetts Burma Law. It is not every day that you witness the Supreme Court debate the constitutionality of a law you helped write and enact. Three months later, the Supreme Court struck down the law as unconstitutional. While unanimous, the Supreme Court’s ruling was very narrow in its scope. The Free Burma movement faces a new challenge: how to re-launch the campaign to enact local Burma laws despite the political and legal obstacles thrown up by the Supreme Court ruling. ~Simon Billenness
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Championing Lesbian, Gay, Bisexual and Transgendered Rights
Starting in the 1990s, Trillium played a leading role in organizing shareholders to press corporations to implement more progressive policies for their lesbian, gay, bisexual and transgendered employees, resulting in numerous policy changes.
May 1988 An anonymous corporate respondent to the National Gay Rights Advocates survey on AIDS in the workplace illustrates [homophobic] hostility all too well. In response to the question “Does your company have a policy that forbids employment discrimination against workers with AIDS?”, the company replied: “We shoot gays – much less gays with AIDS.” The question “Does your company’s employee medical plan cover AIDS-related medical expenses?” elicited the reply, “Just enough to cover the cost of the bullet.”
June 1991
In a press release, Cracker Barrel Old Country Stores (CBRL) crowed that “it is inconsistent with our concept and values… to continue to employ individuals whose sexual preferences fail to demonstrate normal heterosexual values which have been the foundation of values in our society.” We have written that the company recently eliminated this policy and chose to have no policy at all. Actually, decisions about hiring gays and lesbians are now made on a store by store basis. Such persons are not hired in areas where it would “disrupt” business. [In November 2002, a shareholder resolution calling for a nondiscrimination policy received 58% of the vote - the first social issue shareholder proposal to win a majority vote since the anti-apartheid campaigns of the 1980s.]
September 1991
In what is the first such move by a major U.S. company, Lotus Development announced that it has begun to offer a full range of family benefits to the “spousal equivalents” of gay and lesbian employees.
April 1996
Kudos from Johnson & Johnson Employee. I want to thank you for influencing my employer to adopt a written policy which bans workplace discrimination based on sexual orientation. Such a policy has been a long time coming. Here’s to the power of socially responsible stockholders! ~Name withheld.
March 1997
Chrysler’s CEO Bob Eaton released a simple statement declaring that the company would not tolerate harassment or discrimination on any basis, including sexual orientation. It took a full-blown national protest campaign, the lobbying of the United Auto Workers, internal lobbying from employees, pressure from shareholders such as ourselves, considerable media coverage, and scores of letters from concerned consumers who’d decided now was not the time to buy a Jeep Eagle.
July 1996
We testified before the U.S. House Committee on Small Business Subcommittee on Government Programs in support of a federal bill to ban sexual orientation-based discrimination in the workplace. The fairness and simplicity of this bill is one of its most compelling features. Affirmative action is not mandated by this bill. It contains no reporting requirements, and imposes no regulation. It does not compel employers to grant spousal benefits. The Employment Nondiscrimination Act (ENDA) simply embodies the principle of nondiscrimination that already enjoys the wide support of the American people. Americans have mixed feelings about homosexuality, but there is little confusion about where the public stands when it comes to job discrimination. In repeated surveys, Americans support laws protecting gay men and lesbians from discrimination in the workplace. [ENDA has yet to pass.]
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Climate Change Blues
December 1990
If we only knew then what we…oh wait, we did. You do not wait for unemployment to reach 10% before you adjust portfolios for a recessionary environment. Similarly, it makes little sense for the government to wait for the greenhouse effect to be causing massive problems before reacting to it. We continue to ignore early warning signs rather than aggressively promote energy conservation… as our government stays committed to allowing the “market” to find the answers.
April 2000
How long ago it seems… At some point, however, the overwhelming evidence and public concern about global warming will reach critical mass. When this happens, only the companies that diversified into alternative energy sources and worked with the scientific and environmental community to mitigate environmental problems will survive.
Summer 2004
Ten years ago, members of the Interfaith Center on Corporate Responsibility began serving companies with shareholder proposals calling for action to reduce greenhouse gas emissions. As the science of global climate change has become more certain, support for these resolutions has steadily increased. The average level of support in 2001 was 9.3%. This year, a new high was reached at 37.1%. Resolutions at Ford (F) and General Motors (GM) received only single-digit votes of support. Somehow the automakers have managed to convince investors that dragging out the life of the internal combustion engine for as long as possible is sound environmental policy.
Spring 2008
The Investor Network on Climate Risk is a coalition of 60 institutional investors (including many state pension plans and Trillium) with a combined $5 trillion in assets. It has partnered with major corporations to call for federal legislation to curb greenhouse gas emissions, and also asked the Securities and Exchange Commission to oversee corporate disclosure on climate change. This is a rare situation indeed, where both corporations and investors are calling for more government regulation, not less.
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Ceres
September 1989
At a press conference in New York City began another major campaign to alter corporate behavior. Under the banner of the Coalition for Environmentally Responsible Economies (the acronym is CERES – the Roman goddess of agriculture), co-chairs Joan Bavaria and Denis Hayes, founder of Earth Day, announced a new coalition of environmentalists and social investors. Ceres’s goals are multifold. To begin, the coalition has issued a set of environmental standards called the “Valdez Principles.” [On March 24, 1989, the tanker Exxon Valdez spilled 10.7 million gallons of oil, which, while not the world's largest spill, appears to be the most significant in terms of environmental damage. More than 1,100 miles of beach have been contaminated and more than 90,000 birds and 1,000 sea otters have already died. Delays on the part of Exxon and the Alyeska Pipeline Company allowed the damage to intensify. Emergency crews did not even reach the Valdez for ten hours.] A shareholder campaign, led by the Interfaith Center for Corporate Responsibility and the New York State Controller’s Office, will ask corporations to become signatories to the principles.
January 1990
Exxon (XOM) has received nine shareholder proposals dealing with environmental issues, including a proposal to sign the Valdez Principles.
April 1990
I will never forget the experience of touring Prince William Sound. Emotions ran high in Alaska last week. Captain Hazelwood’s verdict was handed down days before the anniversary, and since he was staying in our hotel, the press was omnipresent. Third World organizers pleaded for compassion, progressive companies urged cooperation, old institutions defended archaic policies, and environmentalist choked with emotions when describing animal rescue operations and serious economic and cultural chaos that followed the spill. Above it all, the majestic and awe-inspiring beauty of Alaska gave us a sense of our place.
July 1991
An unexpected benefit so far of the Valdez Principles is the large number of companies that have drafted environmental policy statements or conducted environmental audits as a way to halt the groundswell of support for the Principles. General Motors (GM), for example, wrote and introduced its first environmental policy statement in time for its annual meeting. While deficient in comparison to the Valdez principles, it is still an improvement for the company. Waste Management (WM) issued a 160-page environmental audit that largely reflected the goals of Valdez Principles.
May 1992
Two days ago, Ceres sponsored the first conference for the 42 companies who have signed the Valdez Principles. I was privileged to be the person to introduce Senator Al Gore. I am a real neophyte at Washington politics, so I was hyper-aware of all that happened. What struck me the most about the experience was intensely personal, though, since I relate on a very small scale to a quasi-political life by traveling and meeting with lots of people. When Senator Gore entered the room, with all the usual charisma, poise, and flawless grooming, I recognized in his eyes the effort to focus (“Where am I?”), the veneer of calm (which may in this case be real), and the aura of impermanence (he was only passing through). But he was gracious, appropriate, eloquent, and very much in the moment. I was impressed, as I have been in earlier meetings with him. ~Joan Bavaria
February 1993
Corporate America is beginning to see the light. Sun Company (Sunoco – SUN) has just become the first major corporation to become a signatory to the Ceres Principles.
Turn Down the Heat – It’s Getting Warmer
With all the talk out there about energy efficiency and reduced use, I can’t help but think of my mom, telling us kids to put on a sweater, the heat would not go up. I laugh at the person I’ve become, as I tell my own kids the same thing, adding the environmental commentary that it’s one little thing we can do and if we don’t, climate change will turn up the heat more than we’d like – before we know it.
So what’s a shareholder to do, in this day and age of climate change, when a company in your portfolio is arguing to a utilities commission that their predicted power demand requires them to build a coal-fired power plant to meet it? Since a request to turn down the heat in an Iowa winter probably wouldn’t go very far, we took a more productive approach: we filed a shareholder resolution asking Alliant Energy to report on their efforts to curb future demand through incentives to increase energy efficiency for their customers.
Last May, a Standard & Poors report indicated that energy efficiency is likely to emerge as a major part of the solution to climate change, and warned that “utilities may be affected, if revenues and profits decline with consumption,” unless policies are changed to provide incentives for utilities to reduce consumption of electricity. “Decoupling” revenues and profits from consumption (making a utility volume-insensitive) has emerged as one of the more effective ways to reduce carbon emissions, and as more states consider the option, we wanted to be sure that a company whose returns make a difference to our clients was working on the same issue where they do business.
Our concern included the impact upon shareholder value that could be brought about from the reputation risks associated with their proposal to build a 630 megawatt coal-fired power plant in Iowa that would emit several million tons of carbon dioxide a year. No one across the political spectrum doubts that carbon trading and other kinds of carbon constraints are increasingly imminent, meaning that cost estimates for a plant like this can easily rise as carbon starts to trade. We hoped to see a serious commitment to efficiency as a solution to reducing demand, and thereby reducing carbon linked risks, be taken by the company. Through our negotiations around our resolutions, we think we’ve gotten closer.
Working with Ceres, we were pleased to agree to withdraw our shareholder resolution when Alliant agreed to publish a report on their energy efficiency efforts. They were willing to talk with us at some length, and made available many of their experts on policy, efficiency and demand projections to answer our questions. Alliant management was clear that they’d rather work with us than against our resolution, and agreed to honor our request to publish a report to shed some light on their plans to mitigate demand as a method to build shareholder value.
Of course, it’s too soon to conclude, “problem solved.” Citizens in Iowa dispute Alliant’s demand projections, which the company has agreed to explain in this report. We’re starting to see coal-fired plants cancelled in places like Kansas, Nevada and even the fossil-fuel loving Idaho because of the mounting carbon costs and concerted citizen efforts to stop them. We’d like to see Alliant and other utilities take more proactive steps to curb their demand in the near term, and to propose more renewable energy projects for the demand that just won’t go away. Because let’s face it – not every mom wants to wear hats and sweaters at home in the winter just to keep the thermostat hovering at 60 degrees.
From the President
One of the most amazing days of my professional life was the day more than a decade ago that I spent as keynote speaker for a conference of the people in charge of General Motors’ environmental policies and procedures in plants around North America. There were hundreds of them, many of whom had Ph.D.’s. They were very interested and supportive when faced with an unedited speaker advocating stronger environmental policies and complete disclosure of results. On another day, a visit with the General Motors’ crash test dummies, watching steering wheel columns hurtle into the surrogate humans in car seats at various speeds, became a memorable experience. It was pretty ugly and very sobering. Those of us on the Ceres dialogue team probably all changed our driving habits that day.
In dealing with General Motors through Ceres, the people we met were often second or third-generation, really terrific, farsighted GM people who would retire from the company on what used to be generous benefits.
But I have also watched the top management of this giant company veer from one policy to another, clumsily, in an effort to survive the serious global transportation and energy questions that seemed to surprise many of them. Their reactions have often seemed primitive and shortsighted or even, at times, mean-spirited. General Motors is a company of contradictions.
The latest weird, attention-getting gaffe came from one Robert Lutz, Vice Chairman of Global Product Development, who recently called climate change a “crock of shit.” He has had a reputation of ignoring environmental concerns; years ago, at the 2004 Detroit Auto Show, Lutz had said that the hybrid did not “make environmental or economic sense.” In the past few days, the company has attempted to paper over these statements through an aggressive campaign claiming that Lutz’s opinion about climate change “doesn’t count” and, from his own blog, “my goal is to take the automotive industry out of the debate entirely. GM is working on just that – and we’re going to keep working on it – via E85, hybrids, hydrogen, and fuel cells, and the electrification of the automobile.”
But piling right on this annoying verbosity from Lutz was the announcement that GM is rearranging the duties of the three top managers in part to give CEO Rick Wagoner more time for “environmental lobbying,” which would include defeating clean air legislation. Wagoner was quoted in the Wall Street Journal last week as saying there’s more “advocacy work” to be done with regard to California’s attempt to implement its own tough tailpipe emissions rules.
GM lost their place as the number one automobile manufacturer in the world to Toyota in 2007. Toyota is no angel company (see Susan Baker Martin’s cover story), with a fleet that includes some huge cars, but they scored with the Prius and helped move the public to accept hybrid cars on the road. I have no idea, after years of working around General Motors, what makes them tick – or not tick! I know one thing, though. I hope the smart women and men with imagination and foresight at GM prevail because I don’t want to see this company disappear.
Ceres is a coalition of institutional investors, environmental, religious, and social justice organizations, and a network of over 50 corporate endorsers of the Ceres Principles from a multitude of industries. Trillium Asset Management Corporation President Joan Bavaria played a leading role in convening Ceres in the wake of the Exxon Valdez oil spill in 1989.
