Editor’s Note: This article originally appeared in the Feb. 25 issue of Green Money Journal.
By Timothy Smith
The Episcopal Church made history in 1971 when it filed the first shareholder resolution by a religious organization. The company in question was General Motors, and the resolution called on the company to withdraw its business in South Africa. It was both church history and business history.
Religious organizations had publicly spoken out against South Africa’s repressive system of white supremacy before, but this was the first time that a religious organization had utilized the power of its stock portfolio to raise an issue for a vote by investors. While it was a front-page New York Times story, shareholder support was unenthusiastic, coming in at around 3 percent voting support. But in that moment, a new tool was created to present social and environmental issues to a company’s board and top management.
The Episcopal Church’s witness was quickly adopted by a number of other Protestant denominations including United Church of Christ, American Baptist Church, Presbyterian Church, United Methodist Church, Disciples of Christ and National Council of Churches, followed by Roman Catholic organizations. From a few dozen religious investors in the 1970s, today more than 300 religious organizations are part of the Interfaith Center on Corporate Responsibility (ICCR) with member assets of over $100 billion.
But that was still to come in the 1970s. At that time, a new era was emerging as businesses were engaged by investors who championed a concern for ethics and corporate responsibility along with a search for shareholder value.
As one might imagine, the earliest company responses countered that church representatives didn’t understand business, and that a bank couldn’t decide on a loan nor could a company make decisions on where to invest using social or ethical criteria. Within a few short years, however, major banks announced they were ending loans to the South African government because of apartheid. Chase Manhattan, led by David Rockefeller, announced it wouldn’t continue loans to the South African government since the bank didn’t want its funds supporting government-sanctioned racism.
The anti-apartheid campaigns had a number of notable and complementary component parts: The religious community, shareholder resolutions, universities, foundations, boycotts of company products and demonstrations, and Congress acted as well. The full article expands on each of these.
Are there lessons here for the vigorous debate occurring today on investments and climate change? Absolutely and here are a few of those...
Read the full article here.
Timothy Smith is Senior Vice President and Director of ESG Shareholder Engagement for Walden Asset Management.