At the May 18^th shareholder meeting of Northrop Grumman, a small but dedicated group of religious investors took up this gauntlet and brought to the floor a proposal to do just that. The shareholder proposal requested that the company provide a detailed report that disclosed to the shareholders the monetary and non-monetary political contributions that would influence the general public in support or opposition to any political candidate. I moved this resolution on behalf of the Congregation of the Passion and other religious investors at the shareholder meeting where it was well received by the shareholders even though the Board of Directors requested a vote against the resolution. The vote failed but there was enough support to keep this resolution moving and we hope to engage with the company on a discussion over promoting transparency on their political contributions.

In the wake of Citizen’s United many socially responsible investors have brought these resolutions to the floor at a number of different companies. Although many of us were displeased with the ruling of Citizen’s United in that it empowered the corporate community to have further influence in the political system we were pleased by the Security and Exchange Commission’s ensuing support for shareholder action on developing accountability on issues like political spending. It is in this judicial environment that socially responsible investors have come together to promote corporate accountability on political contributions.

As with so many other issues regarding corporate governance this issue remains an uphill battle but we have noticed a recent surge of shareholder support for the promotion of corporate accountability. With our federal government having relinquished this level of regulation many shareholders recognize that the further collusion of multinational businesses with the political system could further erode our representative system of government to the powerful special interest of corporations. We recognize that businesses like Northrop Grumman lobby the government with their interest in mind and as shareholders we also recognize that their business interest becomes our financial gain. But as Catholic religious communities we also recognize a moral responsibility to be responsible stewards so that our financial gain does not
become the cause for unintended social consequences. With that in mind the United States Catholic Bishops offered guidelines for socially responsible investments reminding us of the proper social role of our investments.

Individual Christians who are shareholders and those responsible within church institutions that own stocks in U.S. corporations must see to it that the invested funds are used responsibly. Although it is a moral and legal fiduciary responsibility of the trustees to ensure an adequate return on investment for the support of the work of the church, their stewardship embraces broader moral concerns. As part owners, they must cooperate in shaping the policies of those companies through dialogue with management, through votes at corporate meetings, through the introduction of resolutions and through participation in investment decisions. (U.S. Catholic Bishops, Economic Justice For All, 354)

While it is good that the shareholder community is becoming more engaged with promoting responsible corporate governance some of us continue to question the wisdom of the Supreme Court in deregulating the financial influence of the business sector within the American political system. Even if we succeed in establishing internal mechanisms of corporate accountability we must nevertheless recognize that many other stakeholders will remain disenfranchised from the development of corporate policies. In the long run we cannot hope to be an effective substitute for promoting the common good which is a principle responsibility of government. Catholic social teaching recognizes that “the free market can have a beneficial influence on the general public only when the State is organized in such a manner that it defines and gives direction to economic development.” (Compendium, #353) The State cannot be said to be “organized in such a manner” if it is under the influence of the corporations.

As a history student I was given a wonderful metaphor to help explain the importance of studying the past as we analyze the policies of the future: the rowboat. The metaphor is simple, in order to move forward one has to be seated in a way that looks behind. In this case, the best signal you have with regards to where you are going is to notice how much you are deviating from where you have been. The 1930’s offered us an amazing lesson, our policies should not be governed by private or market interest alone.   

Early in 2010 the Supreme Court held a controversial ruling in the Citizens United case. It expanded the influence of businesses in politics. Prior to 2010 Businesses could only contribute to campaign ads through Political Action Committees (PAC). This had the effect of making their political campaign contributions transparent. Now, since Citizens United, that is no longer the case. Corporations can now fund their own campaign ads to promote their own political interest and agendas during the election cycles. The Interfaith Center on Corporate Responsibility (ICCR) has noticed the massive financial interest that a variety of industries had through the campaign ad contribution by the Chamber of Commerce. Many pharmaceutical industries increased their campaign ads in the 2010 election focusing on the issue of health care. 10 years ago people were concerned about campaign finance reform. One does not hear about campaign finance these days, worst yet, people don’t seem to care about the increasing influence of corporate campaign finance.

Not all people share in this apathy. An increasing group of responsible shareholders have voiced their interest in promoting corporate disclosure of political activity. Responsible shareholders recognize that important interaction that a business should have in promoting their own particular interest within the political landscape, but they also recognize the potential backlash that over and undue political influence can have. The Center for Political Accountability (CPA) has released a “Handbook on Corporate Political Activity.” In light of Citizens United case CPA has created this informative resource for shareholder groups to be actively involved in encouraging businesses to adopt internal policies to increase transparency and to oversee political spending.    

In the 1986 document by the U.S. Bishops, Economic Justice for All, many Catholic communities, like ourselves were introduced to the moral imperative of being a socially responsible investor.      

Individual Christians who are shareholders and those responsible within church institutions that own stocks in U.S. corporations must see to it that the invested funds are used responsibly…  As part owners, they must cooperate in shaping the policies of those companies through dialogue with management, through votes at corporate meetings, through the introduction of resolutions and through participation in investment decisions. We praise the efforts of dioceses and other religious and ecumenical bodies that work together toward these goals. – #354

Through ICCR and the Tristate Coalition for Responsible Investments the Passionist are engaged in promoting our Church’s moral teachings through by being socially active shareholders. Many ICCR members like us have begun engaging with some of our corporate investments with the purpose of promoting greater disclosure on corporate political activities. Recently the Passionist co-filed a resolution with Walden Asset Management asking one of our corporate investments that happens to be a Board member of the Chamber of Commerce for a comprehensive review of political spending policies and oversight processes. We also look forward to a potential dialogue with one of our Pharmaceutical companies on their political activity.

Promoting social justice can be a daunting task and sometimes it may seem like we are facing an uphill battle. The battle may still be uphill but working with coalitions and finding creative solution allows a group to even out the field a bit.

The Interfaith Center on Corporate Responsibility held their 24^th annual special event in New York City on October 7^th. It was held in a spectacular venue that overlooks the South Street Seaport and the Brooklyn Bridge. The setting was particularly apt given the evening’s theme: “Enough is enough: Re-imagining Global Prosperity.”

The Brooklyn Bridge has linked Manhattan to Brooklyn for over 125 years and was a modern-day technological marvel in the late 1800s. It was also the scene of a horrific mob-scene on the day it opened. The long awaited span did not have the capacity to carry the throngs who rushed forward to see “the other side.” There were not enough gates, not enough police and not enough experience with this particular marvel of engineering. Overcrowded and chaotic, the crowd panicked and many were injured and some died. 

So as a few hundred ICCR members and friends gathered, we reflected on the definition of “enough.” As investors, we are still reeling from the near collapse of the financial markets; markets that did not have enough gates, not enough “police” and not enough experience with the particular marvels of financial engineering, two years earlier. As people with a deep and long-standing commitment to building a more just and sustainable world, we gathered together to ponder what “enough” means in the context of corporate transformation. How could we challenge ourselves to truly re-imagine global prosperity while challenging our corporate sponsors to work with us? As investors and stewards of our planet’s future, the guests at our gathering understood all too well what is at stake if we don’t get the balance right.

With remarkable deftness and humor, Darren Gersh, Washington Bureau Chief for PBS’s Nightly Business Report, moderated a discussion among three diverse and provocative thought leaders: Rabbi Rachel Kahn-Troster from Rabbi’s for Human Rights, Mr. Rinaldo Brutoco from the World Business Academy and Professor Aneel Karnani from the University of Michigan’s Ross School of Business. Readers of CSRwire Talkback will surely recall Professor Karnani’s recent Wall Street Journal piece, “The Case Against Corporate Social Responsibility” and the furor it incited in the CSR community.

As expected, a remarkable conversation erupted.

Rinaldo Brutocco led off.  For him the threat of what he termed the “climate crisis” was the most significant challenge facing global prosperity. Processes and trends exist today that are beyond the point of reversal. We are going to have a warmer planet. The need will be to adapt to this new normal.

Aneel Karnani took the position that if corporations are to be part of the solution they will do so only out of their self interest. Corporations will do the right thing only if it is the smart thing. However, the way to influence their behavior is not by the actions of socially conscious investors, but by the externalities of government taxation and regulation. In other words his position was that the corporate responsibility movement was irrelevant in influencing the decisions of corporations.

At this point Rabbi Rachel Kahn Troster reminded the audience of the prophetic tradition of Isaiah and Amos and their call for justice for the widow and the poor. The religious person is impelled to speak on behalf of justice and to make the case for justice. The prophet needs to challenge the powers that be to be true to truth. This is a voice that must be heard, even if the message falls on deaf ears.

When thoughtful, opinionated individuals come together to consider philosophical questions like “How much is enough?” “Have we had enough?” and “What exactly does global prosperity look like?” our points-of-view may be challenged or affirmed. But changing long-held beliefs is not necessarily the point of the gathering. The point is to bring people together to think about the questions, consider possible answers and, most importantly, build a few bridges along the way.

CSR Video Updates: Interview with Rabbi Rachel Kahn-Troster, Director of Education and Outreach, RHR-NA from ICCR on Vimeo.

Catholic social teaching calls us take this economic responsibility seriously:    

Individual Christians who are shareholders and those responsible within church institutions that own stocks in U.S. corporations must see to it that the invested funds are used responsibly. Although it is a moral and legal fiduciary responsibility of the trustees to ensure an adequate return on investment for the support of the work of the church, their stewardship embraces broader moral concerns. As part owners, they must cooperate in shaping the policies of those companies through dialogue with management, through votes at corporate meetings, through the introduction of resolutions and through participation in investment decisions. (Economic Justice for All, 354)

The work of promoting corporate responsibility involves all the issues that are of social concern to our Catholic faith. However there was one issue that was raised at the ICCR sessions that I would like to profile here as an issue that calls us awareness and action. The issue involves the production of cotton in the country of Uzbekistan. The product is now called Uzbek cotton. Cotton is a prominent commodity in the world. It’s primary use is in textile goods and our clothing wear. Cotton is also a key ingredient in the food supply. Uzbekistan is a major producer of cotton. There are two major issues revolving around Uzbek cotton production and they both are critical issues of social injustice.

The first issue that needs to be raised is with regards to forced child labor. In this case we are not talking about individual private enterprises that engage in this practice. Instead we are referring to a government sanctioned program that forces children to work in the cotton fields of Uzbekistan. Uzbekistan forces children officially from the age of 10 (although children as young as 7 have been found working the fields) to pick cotton. There are approximately 2 million children that are sent to work for 2-3 months a year and they are given a specific quota that they must pick. Children are forced to work in the field unless they are able to buy their way out. The government of Uzbekistan owns all the cotton gins and this have a purchase monopoly of cotton through 3 state owned trade organizations. Uzbekistan pays their farmers $.03 per kilo of cotton. The basic dignity of these children are being violated on these grounds

The second issue that is no less troubling is the critical environmental degradation that is taking place with regards to water, the most basic necessity for all humans. The Aral Sea was once the 4^th largest inland sea in the world. Since 1960, when the Soviet Union diverted all their rivers in order to irrigate the cotton fields, the Sea began to decline steadily until now it is less than 10% of its original size. All native species of fish are gone. Because of the nature of the cotton industry the remnant of the Aral Sea and the diverted rivers have been horribly polluted, dyes have contaminated the fresh water rivers and because the sea has shrunk so dramatically what remains is a highly salinized. Ironically the area now has 70% unemployment (ironic in that the reason for the environmental degradation was for the promotion of a particular industry.) This unemployment has been particularly felt in the fishing industry which is practically non-existent.

Even with international pressure Uzbekistan is unwilling to seriously address this issue. As religious investors the Passionist and the other ICCR members are strategizing how to utilize our investment portfolio to organize on this issue. Investors can go to ICCR to take part of these strategies as Socially Responsible Investors (SRI) advocates. As consumers however everyone can take part of this issue. The Uzbek cotton campaign is a very popular movement and many companies are boycotting Uzbek cotton in their own products. Most recently LL Bean, Hanes and J. Crew are now part of this movement. However there are still a number of American garment companies that are using Uzbek cotton like Gymboree, Abercrombie & Fitch and Fred’s. Here are two organizations that offer updates on the boycott of Uzbek cotton.

The Cotton campaign: http://www.cottoncampaign.org/

Environmental Justice Foundation: http://www.ejfoundation.org/page141.html

Corporate Responsibility has a long history in Holy Cross. In the early 1970’s the province, under the leadership of Fr. Neil Parson’s its Treasurer, began the development of an investment fund to support its ministries. At the same time some protestant churches led by the Episcopalians and United Methodists began to see the connection between their economic power as shareholders and the ability to change corporate policies and behavior. The catalyst was a request from the churches of South Africa that the international community join the fight against apartheid. Large transnational corporations were seen has supporting the white government’s suppression of the black population. A movement began here to ask large US corporations such as General Motors and Ford to leave South Africa. The large New York banks were asked to cut off lending.

Shareholders are the real owners of corporations. Shareholders elect the corporation’s Board of Directors who in turn hires top management to operate the company. The church shareholders felt the need to coordinate their efforts and set up in NYC the Interfaith Center for Corporate Responsibility.

In 1969 the Passionists had renewed their Constitutions. The new Constitution spells out in a forceful way that the Passion of Christ continues in the world today in the oppression of the poor, in the denial of basic human rights, in the violence of war, and even in the destruction of the earth’s environment. Fr. Parson’s realized the province’s investment portfolio could address this contemporary Passion of Christ. He began to relate to ICCR and heard about the situation in Chile where a coup against the socialist government of Aliende had installed a military dictator. What concerned him even more was that a large US transnational corporation, International Telephone and Telegraph (ITT), was accused of using money funneled by our CIA to finance the coup. The allegation was that they were afraid the socialist government would nationalize their operations in Chile. This corporation was owned in the Passionist investment portfolio.

Fr. Parsons realized he was in no position to investigate the truth of this accusation. but the Passionists could as shareholders ask the corporation to investigate what happened in Chile and report it to the shareholders and more importantly to adopt a corporate wide policy that they would not fund the violent overthrow of governments where they operated, especially in the third world. With the help of ICCR a resolution was written and sent to the company to be voted upon by all the shareholders at the next annual meeting.

Fr. Parsons asked me to attend the ITT annual meeting in Pittsburgh to move our resolution. I felt very intimidated walking into this enormous hall. There were several other members of ICCR there ready to support and talk very eloquently on this issue. To this day I do not remember the vote. But the important thing was that a light had been thrown on this issue. ITT had to stand up in public to deal with it. Hopefully they would not repeat these actions in other countries of the world. Today corporate management knows that there are shareholders moved by faith that will speak the truth to power.

Fr. Parsons left his position soon after this happened, but I remembered it very well.  In 1987 I was appointed Treasurer. One of my first actions was to have our province join ICCR as a full member.

www.youtube.com/watch?v=QXuCjtY45io