Tools for Corporate Behavior Change
The Role of Investors in the Global Economy
Many people remember the work of investors, along with many others, on bringing down the apartheid government in South Africa. Many investors, including many faith-based organizations such as Catholic women’s religious communities, Protestant churches and others filed shareholder resolutions asking companies to refrain from doing business in South Africa, specifically because the taxes paid by such companies were one of the main sources of income for the apartheid government in South Africa. That divestment was a major force, joined with work or of many others, that finally ended governmental apartheid in that country.
Since that time, many groups, religious bodies, individuals and NGOs have continued to look at their investments to bring about positive change in the behavior of corporations.
Socially Responsible Investing (SRI) functions in 5 major ways:
1. Some investors apply screens to their investments, naming specific issues as ones in which they choose not to invest. These screened portfolios allow the investor to know that they are not benefitting from the specific issues in which they do not want to be involved.
2. Investors choose to vote their proxies, the documents which express the vote of the shareholder on issues to be brought up at the Annual Shareholder Meeting. Some large investors hire a company of organization to vote their proxies, which usually means that the vote will be cast in favor of the company management’s stance on the issue.
3. Investors file shareholder resolutions. Shareholder resolutions can be filed by any shareholder who has held $2000 of stock in the specific company for a year. With any shareholder resolution, there is usually a primary filer, the investor, whether a person or organization, who takes the lead in communications with the company. The other filers usually agree to follow the leadership of the primary filer.
4. Shareholders engage in dialogue (discussion) with companies and industries on specific issues. Dialogues can be for one or more meetings, for a specific set of time or for a long term commitment to work on an issue with the company.
5. Some shareholders choose to support their shareholder work by changing where or from whom they are willing to purchase items, both personally and institutionally. This builds on the power of consumers to boycott as a means of affecting what a company does on a specific issue.