CHAPTER
8
What Kind of People Engage with Corporations?
Many activists came of age in the 1960s, first with the civil rights movement and then with protests against the Vietnam War. Watch any episode of Mad Men to get a taste of the stifling social and political structure of the period, and you’ll understand why a rejection of authority was also a component of the protest period. If you are a millennial, you may have seen a movie set in that time when expressions like “Never trust anyone over 30” were common. In the wake of the civil rights and anti-Vietnam war movements, the focus then turned to what became the environmental movement with the publication of Rachel Carson’s pioneering Silent Spring80 in 1962 and the first Earth Day in 1970.81 For many, distrust of authority came along with these movements.
Distrust of the establishment isn’t misplaced. Many giant corporations are not instruments of social good. They are instruments of profit. In the past several decades, with the escalating globalization of the economy, corporations have grown far more powerful and far more remote from the concerns of ordinary people. The pressure for short-term profits drives decisions to externalize their pollution at no cost to companies’ bottom lines but at a huge cost to society at large.
However, to negotiate with them, to learn about how they think, to speak their language, and to find common ground does not mean that you have succumbed to their values or compromised your own. It represents, instead, a recognition of reality: while we may not like it, large corporations do exist, and it’s not likely that they’ll disappear any time soon. After all, they wield an enormous—and increasing—amount of power. As shareholders, you are part of this power structure. To engage with companies is to direct some of that power toward creating sustainable businesses that benefit not only shareholders but also the world in which they operate.
SAY IT AIN’T SO, JOE
It goes without saying that a chorus requires more than one voice, so allying yourself with an existing community of like-minded people has obvious advantages. For years, churches and faith-based organizations have been very active in issues of social justice, and those issues have often touched upon corporate behavior. It was through his religious order that Reverend Michael Crosby took on the tobacco industry starting in the 1970s.
Reverend Crosby probably doesn’t fit the expected profile of a shareholder advocate. He’s a Catholic priest at the Province of St. Joseph of the Capuchin Order. In the late 1970s, Crosby was visiting Nicaragua, where his order had a mission, and he couldn’t help but notice how the countryside was plastered with billboards extolling the glories of the revolution and its leader, Daniel Ortega. “I had kind of a distinct reaction,” Crosby said. “How can people be so influenced by such propaganda?”
Soon after his visit to Nicaragua, Crosby was at another mission in Costa Rica. The road to the airport there was lined with billboards, too, but these were quite different. “One billboard after another advertised this and that, and a huge number were cigarettes,” said Crosby, a recovering three-pack-a-day smoker.
The billboards in both countries touted different things, but the campaigns were similar. “All of a sudden it hit me that both were propaganda. In the United States and throughout the world in the market economy, it’s ‘buy, buy, buy.’ What is the difference between one revolution and the other?”
Crosby decided to start something of a revolution of his own. When he returned to the United States, he asked his treasurer to buy ten shares of R.J. Reynolds Tobacco and ten shares of Philip Morris. The small ownership stake was enough to give the order standing to attend the corporations’ next annual general meetings and to file shareholder resolutions if necessary.
When he studied the demographics of smoking, it became clear to Crosby that the majority of smokers begin the habit when they were in their teenage years—just as he had. Father Crosby refined his focus and efforts on addressing the impact that cigarette advertising had on young people.
The Marlboro Man, the peppy models for Virginia Slims with their slogan “You’ve come a long way, baby,” and the defiant Tareyton smokers who would rather fight than switch, were arguably created by Madison Avenue “Mad Men” in the 1960s to appeal to adults.
But what about Joe Camel, the lovable cartoon dromedary who touted R.J. Reynolds’s Camel brand in magazine and billboard ads? Created in 1974 and first used in French ad campaigns, Joe Camel appeared in the United States starting in 1988. Although he lacked a hump, Joe Camel had attitude to spare, and he had lots of leisure time, too. He rode a motorcycle, played pool, and hung out in a hot tub with bikini-clad babes. In short, he did everything an adolescent boy longed to do. Oh, and a Camel cigarette always dangled from his lip.
Talk about swagger. Did he have a face that could pretty easily be confused with parts of the male anatomy? Would advertisers stoop so low? It’s a matter of debate. Google “Joe Camel images” (as we could not get the rights to publish a picture of Joe in this book), and you decide.
Of course, only a cynic would suggest that Joe Camel’s mission was to recruit younger smokers to take the place of the ones dying by the thousands of lung cancer and emphysema.
Crosby focused particularly on R.J. Reynolds, and unfortunately for them, the barrage of publicity, lawsuits, and the shareholder resolution brought by Crosby’s group and by others brought a lot of attention to the matter of youth smoking, including a 1991 study in the Journal of the American Medical Association that showed that as many six-year-olds knew that Joe Camel was linked to tobacco as knew that Mickey Mouse was tied to Disney.
R.J. Reynolds doesn’t inspire the same affection as Disney, and Crosby had it out for Joe Camel, just as he would for a drug dealer hanging around the candy store.
“We generated a tremendous amount of publicity about Joe Camel and its appeal to youth,” said Crosby. “Ultimately, we were one of the voices that got Reynolds to stop. Then we found out they were doing it abroad, and so we filed shareholder actions internationally, and they stopped. That was a big campaign with a significant result.”
Crosby’s campaign against the detrimental health effects of tobacco continues to the present day and has included shareholder resolutions, negotiations, public demonstrations, legal action, political lobbying, and more.
Crosby’s engagement with tobacco companies brought other issues to Crosby’s attention. “About ten years ago … I happened to be giving a retreat to some nuns in Louisville and learned about some migrant workers who got green tobacco sickness (acute nicotine poisoning). It comes when you touch the leaf in the morning, when there is dew on the leaf. It won’t kill you, but it sure gives you a rough time; there is vomiting, nausea, and it’s very, very painful. So I filed a resolution on that, and Louis C. Camilleri, the president of Phillip Morris, said he never had heard of it.”
Crosby was stunned by the revelation. “Here this priest is telling a company whose whole business is around tobacco procurement about a huge problem connected with labor’s harvesting of the product, and he said on the record that he’d never heard of it.”
The field workers knew about it, and until Crosby came along, no one had given them a voice. At least, no one had given them a voice loud enough to be heard in the board room. Fueled by a desire to address green tobacco illness among field laborers, Crosby’s order has gone on to file numerous resolutions on the issue of green tobacco sickness, human rights, and the exploitation of workers. It turns out there’s a strong association between youth viewing characters in movies who smoke and their own initiation of smoking. So Crosby and ICCR, along with As You Sow, initiated a shareholder engagement o get Hollywood studios to reduce risk to their brand by removing smoking from youthrated movies. Companies were encouraged to pressure the Motion Picture Association of America (MPAA) to require an “R” rating for all movies with smoking imagery—a practice that would save 1,000,000 lives, according to a 2012 Surgeon General report and backed up with CDC data.82
A “MINOW” SWIMMING WITH SHARKS
The Occupy movement, commencing in New York’s Zuccotti Park on September 17, 2011,83 focused the nation’s attention on income inequality and brought into the lexicon a new and potent phrase, “the one percent,” which became shorthand for all manner of corporate greed and excess.
Fighting that battle on the inside has been Nell Minow, known as “Movie Mom”84 on beliefnet.com for reviewing films with a kid-friendly eye. So it’s no surprise that film references often find their way into her observations about corporate governance. “Have you seen The Solid Gold Cadillac?” she asked. Produced in 1956, the film stars Judy Holiday as a minority stockholder who takes on a crooked board of directors at a corporate annual meeting. “The CEO in the film earns a whopping $150,000 per year,” Minow said. “Just add three zeroes to that, and, really, nothing has changed.”
Nell also is very concerned with corporate governance and has been working on this issue for decades as the editor of The Corporate Library, an independent research firm that rates boards of directors of public companies and compiles research, study, and critical thinking about corporate governance.
Her business partner Robert Monks was a founder of Institutional Shareholder Services (ISS), which provides governance research, data, and recommendations as well as various proxy and securities services. Minow joined him in that firm and then in two others. She credits her business partner with inventing the idea of the proxy adviser. “His great insight was that there was a massive collective choice problem that was preventing effective shareholder engagement,” Minow said.
ELEVATOR PITCH
In the early nineties, Minow and Monks started the Lens Fund, a $100 million investment firm dedicated to shareholder activism. Their objective was to buy stock in underperforming companies and use various shareholder initiatives to try to get them to improve their environmental, social, and governance policies. The first real initiative involved Sears, where Monks ran for a seat on the board. Sears responded to Monk’s bid by shrinking the size of the board, which made his election mathematically impossible. At the time Sears had several divisions: the stores, which were the worst performing of the various parts of the company, but also an insurance company, a real estate company, and other units.
It was Minow’s objective to get the company to break out the individual operations. “I think my favorite moment in the history of my life in corporate governance was when Bob went to a meeting with the CEO of Sears in what was then the Sears Tower,” Minow recalled. “The CFO came to meet him in the lobby and they rode up in the elevator together, just the two of them.” At the time, the Sears Tower was the tallest building in the world, so the pair had several minutes “just standing there listening to the Muzak as they’re going up and up and up to the 78th floor,” Minow said. As they climbed higher, the CFO turned to Monks. “This is the first time bad news has gone above the 72nd floor,” he quipped.
To Minow, that remark “is corporate governance in a nutshell. You want to make sure the bad news gets up to the 78th floor.”
Their demand that the board break up the company into its constituent parts grew heated, to the extent that Minow took dramatic and public action: taking out a full-page ad in the Wall Street Journal, calling the Sears board of directors “non-performing assets” and publishing all their names in the ad. Those names included Donald Rumsfeld, who later was Secretary of Defense. The ad has become legendary in the annals of corporate governance advocacy. The company was eventually broken up.
Figure 7: This 1992 full-page ad in the Wall Street Journal brought governance issues at Sears into stark focus and proposed ways to reinvigorate the company’s sinking reputation, urging stockholders to vote in favor of shareholder proposals. Used with permission of Nell Minow and Bob Monks.
Minow may swim with sharks, but she isn’t afraid of them and is devoted to making corporate boards more responsive and more accountable to shareholders. Her particular targets are the boards of poorly governed corporations. One board of directors that got into the crosshairs of Minow and Monks was Stone & Webster, a large engineering and construction firm. How badly was it governed? “It was trading at under the value of its real estate,” Minow said.
Minow is renowned for her blunt assessments. In the case of Stone & Webster, she said, “You could have shut it down, told everyone to go home, and just sold the real estate, and you would get your money back. That’s what a disaster it was.” The company had used accounting tricks to make it look profitable: thanks to a booming stock market, the company’s pension fund had a surplus, which was improperly combined with earnings.
From Minow’s point of view, blame for the company’s moribund performance fell squarely on the shoulders of its board of directors. She was determined to do something about it. Minow and Monks attended Stone & Webster’s annual meeting on behalf of clients. They were among perhaps a total of 25 people at the event. Early on, the Chairman announced that they had a busy agenda and would cap shareholder comments to three minutes.
Monks objected. “I’m sorry,” he said. “Do you have someplace else you have to be?”
Routine business was quickly dispatched, and then it was time for the election of directors. If Minow hadn’t been there, the election would have been done in moments, she said. But she had a question: “I’m trying to decide whether I want to vote for these directors or not, so I would like each of them to get up and explain to all of us here why the stock of this company is a bad investment.”
The Board was flabbergasted by the question. “Well, what do you mean it’s a bad investment?”
“Well, we’ve got five million dollars’ worth of stock on behalf of our clients, and nobody on the board has more than 200 shares, so if you don’t think it is a good place for your money, what am I missing?”
One of the directors said, “I make it a policy never to discuss my personal investments.”
Minow was ready for her. “According to Forbes you are a billionaire, so you can afford to invest more. You’ve been on the board of this company for ten years; you have 100 shares. I’m going to come back every year until you buy some stock.”
Another board member said, “I’m Canadian and it is very complicated for me to have property in the United States.”
“That’s just not a good answer,” Minow said, and then assured him that there were lawyers who could help him.
GETTING TO NO
Minow has focused on corporate governance because in her view it encompasses everything else. “You can’t get anywhere on any other issue without addressing the issue of the board,” she said. “The more I do this, the more I realize that the only thing that really matters is who is on the board.”
It would seem like dissatisfied shareholders could simply promote board candidates of their own, but Minow hasn’t found that to be an effective course. Finding qualified candidates who wish to run is “brutal” because they know that, if elected, they’ll struggle for credibility and probably find their initiatives stonewalled by the other more orthodox members. Minow strongly favors voting ineffective members off the board as a sign of shareholder discontent. Getting a “no” vote against a sitting board member sends a powerful signal.
THAR SHE BLOWS
A great example of the power of shareholders to vote no and send a no-confidence vote to a board member occurred at JP Morgan after the infamous “London Whale”85 incident. It’s important to remember that shareholder resolutions are a level of escalation in your engagement with a corporation. The first step is always communication: letters on behalf of shareholders stating a given concern and laying out a viable solution.
One hopes that rationality and logic are powerful enough, but often that’s not the case. Perhaps that’s because corporations and shareholder advocates speak a different language. But even when the same language is spoken, sometimes change can be difficult to bring about. After the global financial collapse of 2008, you would think that the message would be clear in any language: stop sweeping risky investments under the rug!
It appeared, to some at least, that JP Morgan Chase—which survived the 2008 financial meltdown—had gotten that message. In 2012 it was earning billions in profit under CEO and Chairman Jamie Dimon. At that time, Bruno Iksil, a trader in the London office, initiated a series of complex derivative trades86—the same financial instruments that earned such a nasty reputation in 2008. Iskil’s trades lost the bank a whopping $6.2 billion and earned Iskil the nickname “The London Whale” when it came to light that he and his colleagues were keeping two sets of books to hide the losses.
Of course, the loss came as a complete surprise to everyone. Well, not exactly. As early as 2008, according to a 2014 report by the Federal Reserve’s Inspector General, examiners at the New York Federal Reserve Bank had spotted risks in the unit’s trading practices. They just didn’t follow up.
As the London Whale debacle unfolded, enter Bill Patterson, executive director of the CtW Investment Group. Founded in 2006, CtW works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 5.5 million members. Before establishing CtW, Patterson—in the investment field since the 1980s—was one of the first to shine a spotlight on Enron before its 2001 bankruptcy.
With CtW, he continued his mission to enhance shareholder value through active management of the investments held by its members. “We went after the banks, including JP Morgan Chase because they weren’t managing their subprime risk,” he said. “We sent letters to six of the big banks and met with the board directors and the six committees.”
The reforms he recommended were largely dismissed. Three of those banks no longer exist. Among the survivors was JP Morgan Chase. But its survival wasn’t due to exemplary management. For years, Patterson had been clamoring for changes but had gotten little support from shareholders. According to Patterson, “they supported no independent proposals and reflexively voted for the board.” One of the problems with that was that the board of directors had essentially become an echo chamber for Jamie Dimon. But after the London Whale breached the surface, it was obvious that something was wrong.
It was Patterson’s view that the risk management committee not only lacked checks and balances but “was not on top of what was required to manage risk.” The London Whale only made that more obvious, especially the aftermath, when “there was a new wave of revelations about misconduct that confirmed our contention,” Patterson said.
Of the greatest concern to Patterson were the apparent conflicts of interest of a board member who sat on the risk management committee. Ellen Futter, according to Patterson, lacked any risk management experience at all. “She was president of the Natural History Museum in New York,” he said. JP Morgan CEO Jamie Dimon was also on the Natural History Museum’s board, and JP Morgan Chase donated money to the museum. To Patterson, the conflict of interest was clear. “It just seemed like [Futter] was an inappropriate director for that committee,” said Patterson.
But how do you get rid of a member of the board who isn’t right for the job? “You talk to the company,” Patterson said. “You begin with diplomacy, and if that doesn’t work, then you escalate.” Getting changes in the board is often a behind-the-scenes campaign of letter writing and persuading other shareholders to withhold support for ineffective board members, and to vote against their pay packages in annual proxy votes.
Patterson and others worked hard to garner support among shareholders to withhold support, and when the vote came, Ellen Futter resigned.
USING SUPPLY CHAINS TO STOP THE CHAIN SAWS
Corporations have enormous resources and whole departments—along with advertising and public relations agencies—devoted to burnishing their brand image. They can bring these to bear against you, or you can turn those forces in your favor. That’s what happened in the battle to stop Home Depot from selling old-growth lumber.
Starting in the mid-1980s there had been years of confrontations between environmental activists and logging companies to stop the clear-cutting of old-growth rainforests87 at locations around the world and, in particular, British Columbia’s Clayoquot Sound ancient forest and at the Headwaters redwood forest in Humboldt County, California.
Dozens of organizations were involved, including Friends of Clayoquot Sound,88 Bay Area Coalition for Headwaters (BACH),89 Environment Protection Information Center (EPIC),90 Trees Foundation,91 Sierra Club,92 Rainforest Action Network,93 Greenpeace,94 Rose Foundation,95 and many others.
The battles involved tree sits, including the epic 738 days in a Redwood named Luna by Julia Butterfly Hill,96 as well as legal actions, protests, banner hangs, boycotts, acts of civil disobedience, political intervention, and congressional action. In 1996 activist groups turned their attention on companies that were purchasing old-growth lumber to try and stop the demand in the supply chain.
Thomas Van Dyck saw an opportunity to add the power of shareholder advocacy to the mix. Looking down the supply chain of MacMillan Bloedel, Canada’s largest lumber company that was clear-cutting pristine coastal rain forests, he decided to focus on one of their largest customers, Pacific Telesis Group (PacTel), the landline phone service provider for Northern California. They were grinding up the old-growth wood for phone books, “The trade-off appeared increasingly absurd—would shareholders want the company brand associated with ancient forests being destroyed for phone books that were thrown away after one year? There was business risk here.” So, he decided to file a shareholder resolution.
Previous attempts to pressure companies that directly owned the forests had been difficult—this was their primary source of revenue. But PacTel didn’t own the forests; they could easily shift to a sustainable paper supplier for their phone books. The resolution earned an 8.9 percent vote, sent a message, and brought public scrutiny to the issue.
Next up on the supply chain was Home Depot. Rainforest Action Network had been organizing protests at the stores, and it occurred to Tom that shareholders were losing brand value every day. He asked one of his clients, Educational Foundation of America, that owned Home Depot shares to complement their grant making and their mission by authorizing the filing of a shareholder resolution. Thomas then hired Michael Passoff, a University of Alberta PhD student who had left his research on the Clayoquot Sound rainforests to join the fight to stop clear-cut logging in 1993. Michael, working with Conrad MacKerron and allies at Trillium Asset Management, filed the resolution and engaged in dialogue asking Home Depot to write a report on phasing out sales of old-growth wood.
Intensive negotiations did not bring about an agreement to withdraw the resolution, so it went to a vote at the company’s 1999 annual general meeting. At the time, most resolutions were struggling to get a five percent favorable vote, making anything higher than that significant. Thomas, Conrad, and Michael adopted a tactic rarely used before on environmental or social resolutions, launching a large-scale solicitation and get-out-the-proxy-vote campaign to gain investor support. They developed an investor fact sheet that highlighted the reputational and financial risks of using old-growth wood as well as the benefits of using available alternatives, such as wood certified by the Forest Stewardship Council.97 The financial arguments supporting the resolution were mailed to the company’s top 5,000 investors, and they personally called the top 150 shareholders to provide additional details.
The resolution received the support of 113 million shares or 11.8 percent—one of the highest environmental resolution votes of that year. The high approval rate got the attention of Wall Street Journal, The New York Times, the San Francisco Chronicle, and other major media. Press coverage at this level put pressure on Home Depot to act and aroused public interest, increasing the likelihood that if Home Depot did nothing, more shareholder resolutions would be filed in upcoming years, more customers would take their business elsewhere, more demonstrators would appear, and more damage would be done to the Home Depot brand.
Three months later Home Depot agreed to phase out sales of old-growth wood by 2002. The company released a wood purchasing policy that stated it “will give preference to the purchase of wood and wood products originating from certified well-managed forests.” They committed to eliminating wood purchases from “endangered regions around the world” and to promoting the use of “alternative environmental products.”
Yet the company’s ensuing lack of communication led shareholders to refile the resolution in 2000. According to Passoff, “We had a hard decision to make. The dialogue had stalled although we knew they were making progress in searching for certified wood and working with World Wildlife Fund, Natural Resources Defense Council, and others to identify endangered forests. But the action plan on developing a tracking system and identifying alternative suppliers was well behind schedule. We flew to Atlanta to meet with them, and they updated us on the challenges they were facing in developing new processes. They shared their supplier questionnaire with us for feedback, and overall we felt that things were moving, although taking longer than promised.”
This is an example of how company dialogues are complex, and there is a give and take, trust earned and trust broken, and ultimately the time clock on real progress is ticking. Bottom line, the resolution was withdrawn. Meanwhile, Rainforest Action Network (RAN) continued, and even escalated their protests. According to Time magazine, the week of June 24, 2001 RAN staged a day of action in 70 cities,98 according to former RAN Executive Director and founder Randy Hayes, “Customers will be offered ‘rain forest tours’ through the store, spotlighting products made with trees from pristine, old-growth forests around the world: dowels and tool handles of ramin wood from Southeast Asia, doors of Amazon mahogany, cedar shingles, Douglas fir lumber from the temperate rain forests of North America, and lauan plywood from the Philippines and Indonesia.”
As You Sow and Trillium Asset Management’s engagement continued, and by year-end 2002 Home Depot was another step closer to making good on its commitment to eliminate the purchase of wood and wood products from endangered regions around the world. They were promoting certification under the Forest Stewardship Council standards. They worked to develop definitions to translate “old-growth” into industry terms that had meaning to loggers and encouraged more responsible forestry practices in several hot spots, including Indonesia and the Central Coast of British Columbia.
By 2003, Home Depot was still not 100 percent old-growth wood–free but had become the industry leader in promoting responsible wood purchases. In shareholder dialogue the company said they were thankful, saying that even though it took three years, they could now source wood “from store to stump,” and the overall process improved their tracking system and resilience of their supply chain encompassing 5,000 suppliers and over 50,000 products.
GET THE LEAD DOG AND THE PACK FOLLOWS
The work by Home Depot paid unexpected benefits, because as soon as they had seen the light, their major competitor, Lowe’s, knew it looked bad in comparison. Lowe’s wanted to match Home Depot’s policies. Whatever its motives—environmental responsibility, raw competitiveness, or fear that their company would be in the crosshairs next—wasn’t all that important. Then it was like dominos, on down the line with the different wood products retailers all signing up.
Home Depot had been chosen for many reasons, chief among them that it was a market leader, and as a consequence several other major industry players with combined wood sales of nearly $20 billion followed, but change might have been much slower if the press coverage had not linked the fight to their logo. As was mentioned earlier, a brand’s value is estimated at 27 percent99 of the company market capitalization. For Home Depot that meant over $6 billion dollars in value that management was fighting to keep.
After Home Depot agreed to phase out sale of old-growth wood products and give preference to FSC certified wood, Office Depot received shareholder resolutions and soon agreed to an internal ban on paper sourced from old-growth forests and increased their stock of office paper with 30 percent post-consumer waste content. Following suit, Staples committed to sell 30 percent average post-consumer waste content paper and cease sourcing from endangered forests in 2002 after shareholder dialogue, a resolution, and a grassroots campaign led by environmental groups. Both later agreed to sell 100 percent recycled paper.
The whole point of the engagement with the retailers was to impact the supply chain leading back to the chain saws in the forest.
BRAND REPUTATION AS A LEVER FOR CHANGE
Corporations go to a lot of expense burnishing their reputation and building their brand’s public image, as it is incredibly valuable. Coca Cola doesn’t sell soft drinks; they sell a “brand.” Consequently, as the Home Depot example shows, companies are skittish if that brand’s image is threatened. Imagine how the giant Swiss food and beverage company Nestlé felt in the 1970s when it was labeled a “baby killer.” At the time Nestlé was heavily promoting infant formula as a superior alternative to breast milk in developing countries. Nursing mothers with little education and less experience evaluating the veracity of marketing campaigns believed the hype.
Once mothers stopped nursing their babies, their breast milk dried up, of course, and mothers had no choice but to continue using formula. The stuff was very expensive for average households, so many mothers watered it down—using contaminated water in some cases—to make it go further.
Healthcare experts and critics said the resulting malnutrition, along with the transmission of water-borne illnesses, led to sickness and the deaths of many infants. This was labelled “commercially caused malnutrition.” Then, in March 1974, a booklet by Mike Muller and published by “War on Want” detailing the campaign and provocatively titled The Baby Killer100 was published in Britain. Although Nestlé sued, the Baby Killer label stuck and soon aroused what would become a multinational global boycott of Nestlé products. So, the “outside” component was in high gear.
THE FAITH-BASED SHAREHOLDER COMMUNITY WEIGHS IN
These actions were complemented by a shareholder strategy, too. This was coordinated by the Interfaith Center on Corporate Responsibility (ICCR), whose executive director was Tim Smith. ICCR was composed of a number of Protestant and Roman Catholic investors. Infant formula abuse soon became one of its top priorities.
Together, they filed shareholder resolutions with US formula manufacturers to halt the heavy promotion of bottle feeding over nursing. As those shareholder resolutions grew, ICCR continued playing a prominent role in the campaign, which included a court suit against Bristol Myers by ICCR member the Sisters of the Precious Blood and ultimately blossomed into a worldwide boycott of Nestlé. Eventually, the World Health Organization and UNICEF stepped forward, establishing an international code of conduct for companies making and selling baby formula.
The companies begrudgingly accepted the standards, and after a couple of years, the sky had not fallen. In fact, Tim Smith said that, on balance, this campaign was probably good for the companies. They got a chance to meet some of their critics and investors, and the changes advocated led to better business practices and a more favorable public image, among other things.
Figure 7A: Published in 1974, The Baby Killer booklet informed a global campaign that is still associated with the Nestlé brand. Used with permission of War on Want.
Maybe if Nestlé had simply listened to the public health community and investors at the start and paid closer attention to what was happening on the ground with its products, they could have prevented a lot of damage to their brand and, most importantly, prevented many senseless deaths.
ACTION GUIDED BY FAITH
Sister Nora Nash’s life of shareholder advocacy is profoundly influenced by her faith. A member of ICCR and the Philadelphia Coalition for Responsible Investment, Nash is a sister of St. Francis of Philadelphia, and serves as the Director of Corporate Social Responsibility for her congregation. Attending a country school in Limerick, Ireland, Nash said, “We were always involved in doing something for the foreign missions and helping those who were poor. That was a very important part of my childhood. We were not rich, and we were not really poor, but we knew there were people worse off than ourselves.”
Community outreach was an important part of her ministry as an educator, working with students and parents to provide meals and clothing for those who were homeless, and delivering hundreds of Thanksgiving baskets to the less fortunate. “That part of social justice was always part of my life, and it is also part of our mission as Franciscans.”
While teaching junior high students in the 1970s, Nash was active at a local level in a campaign to stop the clothing manufacturer Farah from using sweatshop labor in Texas, and her life as an advocate for corporate responsibility has only grown since then. Among the most significant campaigns Nash has been involved with were those against predatory credit card company lending practices and predatory loans, including opaque lending agreements and the targeting of students, which led to enactment of the Credit Card Act in 2009.
This federal statute was passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It is comprehensive credit card reform legislation that aims “to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.”
Then, and to the present day, Nash and others in her order are active in issues “that challenge our society, whether it is human rights, fracking, climate change, trafficking, or ministering to and with those who are disenfranchised.” Her commitment goes well beyond the economic realm. “We have a commitment to living our mission which is to live ‘the passion of the Gospel’ as St. Francis did, and ‘take the necessary risks to be a healing, compassionate presence in our violent world.’”