Ethel Howley, SSND, Resource Person SSND CIF FUND
Arlene Flaherty OP, JPIC Director
These days, there is much discussion about whether divesting the ownership of stocks in a company with troubling practices is an effective tool in changing corporate culture and practices. Divestment has had success in some situations. For example, divestment helped to dismantle apartheid in South Africa, but it is often the case, that investment in corporations can be a more effective strategy. How can this be?
Investing in a company, owning shares in the company, means you are part owners. So, you have an opportunity and responsibility to recommend/demand changes in corporate policies as well as introduce new policies/practices at shareholder meetings. By contrast, if you divest from a company, then you have no opportunity to dialogue with the company’s representatives, raise concerns, make recommendations or help bring about social responsibility and change at the corporate level.
SSND is a member of ICCR— Interfaith Center on Corporate Responsibility. ICCR recommends holding a small number of shares in order to have the opportunity to stay engaged through dialogue with companies. To remain in this dialogue, it is necessary to own a minimum of USD $3000 worth of shares. As shareholders interested in seeing more just and socially responsible behavior on the part of corporations, groups like SSND can then file resolutions and request participation in dialogues with company management, executives, persons mainly responsible for environmental practices or human rights policies and practices. At these dialogues it is not unusual for many ICCR members speak of “our company” or “my company.”
After many years of dialogue between ICCR investors and corporations, we are finding that most of the companies have great statements on their websites about the policies they have enacted in order to address social and environmental concerns such as climate change, forced labor, child labor, lobbying and political spending. Now our work with them involves posing the question—do their practices match their policies. Today these are key points of discussion in the dialogues.
With financial or big banking institutions, such as J P Morgan Chase and Citi Group, we question the banks’ policies that guide their decisions regarding requests for financial banking. For example, what is the impact of their decision to finance oil pipe lines? What is their level of engagement in political lobbying and/or political spending? SSND has co-filed resolutions on concerns such as these.
With SSND CIF, our portfolio managers (about 6), make decisions on purchasing shares based on our guidelines. In this way, we continually strive to change corporate culture for the better. In the past two years, SSNDs have noted that as soon as we file resolutions with some corporations, they quickly call for dialogue with us in hopes we will withdraw the concern we are raising in the resolution. Sometimes we do, depending on their responses; sometimes we do not. In other words, the resolutions we file as SSND shareholders, alert corporations that their policies and practices are being scrutinized and there is a call for change.