Posts tagged with: shareholder activism

The progressive politicization of certain religious orders hurries apace, especially as we enter the season of shareholder activism, proxy ballot initiatives and “corporate social responsibility” lectures from religious groups and churches. This year may generate even more activity as a result of the left’s renewed efforts to undermine Citizens United vs Federal Election Commission.

Because many religious organizations are also shareholders in public corporations, their investments grant them a proxy voice in corporate policies. Unfortunately, this voice too often is used to promote policies that are often indistinguishable from secular-left political causes and may have little connection to the tenets of their respective faiths.

One oft-stated goal of these activists is “transparency.” They claim to rectify the perception the Supreme Court ruled erroneously in Citizens United when it declared unconstitutional the placing of limits on corporate and union political spending. But these attempts to pass transparency rules and regulations extend far beyond mere campaign funding by requiring that all corporations publicly divulge the recipients of their charitable giving. (more…)

The Manhattan Institute’s Proxy Monitor project is aimed at “shedding light on the influence of shareholder proposals on corporations.” It provides a thorough analysis of proposals made from 2008 – 2011 by activist investors — and believe it or not, only 35 percent of those proposals were related to corporate governance. Most of the shareholder proposals that these companies deal with are attempts to direct the company in a more green or pacific or fair direction, and they come from small shareholders who do this to dozens of companies.

A new report from Manhattan summarizes the trends — the growing social proposals, and how Dodd-Frank has playing into activists’ activities — and the proxy monitor website allows you to look at any shareholder proposal from the last few years. The proposals are enlightening. The Sisters of Mercy of the Americas have submitted proposals to the stockholders of Lockheed Martin and General Dynamics stating,

WHEREAS: Space has served as a sanctuary where, over the years, nations cooperate rather than confront one another. Satellites save lives…

RESOLVED: Shareholders request that, within six months of the annual meeting, the Board of Directors provide a comprehensive report on Lockheed Martin’s involvement in the space-based weapons program, at reasonable cost and omitting proprietary and classified information.

The well-meaning Sisters of St. Francis of Philadelphia, in a proposal to McDonald’s shareholders that made the news earlier this year, requested that,

WHEREAS,

The Affordable Care Act, signed into law on March 23, 2010, included federal menu-labeling legislation requiring the posting of calories on fast food menu boards….

RESOLVED: Shareholders ask the Board of Directors to issue a report, at reasonable expense and excluding proprietary information, within six months of the 2011 annual meeting, assessing the company’s policy responses to public concerns regarding linkages of fast food to childhood obesity, diet-related diseases and other impacts on children’s health.

Many other equally well-intentioned proposals have been filed, including repeated requests by the Sisters of Charity of St. Elizabeth that various pharmaceutical companies restrain their prices to “reasonable levels.” The Unitarian Universalists have requested that Pepsi Co. “create a comprehensive policy articulating our company’s respect for and commitment to the Human Right to Water.”

This is not to mention the numerous environmental proposals made by religious groups, requesting that the Rights of Humanity and of Mother Earth not be violated by carbon emissions and by the use of genetically engineered plants. Take, for instance, this statement from a proposal to Du Pont’s shareholders, concerning genetically engineered crops:

The right to food requires that we place the needs of the most marginalized groups, including in particular smallholders in developing countries, at the centre of our efforts

One might think the Sisters of Charity of St. Elizabeth were unaware that it has been the genetic improvement of crops that has saved millions of the world’s poor from starvation.

We’ll keep you posted on further developments, and the effects these proposals may have on companies’ performance.

Over the years, Acton commentators have had reason to criticize religious groups that try to influence corporate policy through shareholder resolutions and similar activities. The criticism has revolved around two points. One, Christian shareholder activism has often focused on issues that are matters of prudential application of moral teaching (e.g., environmental practices) rather than non-negotiable moral evils (e.g., abortion). Two, such activism often seems to imply, if not explicitly proclaim, that the normal operation of business is not adequately “good,” and that business must promote a series of programs extrinsic to its enterprise in order to prove its commitment to the common good.

But there may be a valid sort of shareholder activism, which does focus on non-negotiable moral evils. This kind of activism, far from obstructing the profitable operation of a beneficial enterprise, challenges businesses to practice trade in ways that promote rather than detract from the building of a healthy moral culture. Companies that provide or promote abortion or pornography, for example, while furnishing legally permissible services to customers, are not satisfying “genuine human needs” (see Robert Kennedy, The Good That Business Does). It is reasonable for Christians to exhort such businesses to shift from the provision of harmful products to the provision of “goods,” in the full sense of the term. That seems to be the motivation behind this recent press release, for example.

Via Slashdot, news comes today that Google’s next shareholders meeting will feature a vote on a shareholder resolution to protect free speech and combat censorship by intrusive governments.

According to the proxy statement, Proposal Number 5 would require the recognition of “minimum standards,” including, that “the company will use all legal means to resist demands for censorship. The company will only comply with such demands if required to do so through legally binding procedures,” and that “the company will not engage in pro-active censorship.”

Part of the basis cited for the proposal is the United Nations Universal Declaration of Human Rights, which declares that the “advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people.”

One of the specific provisions of the declaration related to freedom of speech is Article 19: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

It’s pretty clear that China’s censorship practices, which include a so-called “great firewall,” violate this provision.

I’m curious to see how this resolution fares and how the directors, especially considering that Google co-founder Sergey Brin has said that the company’s cooperation with China “a net negative.” External considerations might also be at play, given the potential for legislation like the Global Online Freedom Act of 2007 to regulate the activities of companies like Google.