Future Looks Good for Corporate Reform, Interfaith Audience Is Told

The push by socially responsible investors for corporate reform to help create more responsible businesses has reached a point of real and substantial progress, according to Connecticut state Treasurer Denise Nappier who spoke last Thursday at the annual forum of the New York-based Interfaith Center on Corporate Responsibility.

Indeed, an upcoming United Nations conference on climate change that Nappier is helping to organize will include dozens of state Treasurers, representing hundreds of billions of dollars in new, potential socially responsible investment assets.

Speaking on the topic of Pushing the Envelope of Corporate Change, Nappier told the audience of 300 institutional investors that issues of sustainable business practices have reached new heights as part of the corporate governance agenda.

ICCR is a coalition of 27 faith-based institutional investors, whose members include denominations, dioceses, orders, pension funds, healthcare foundations and publishing companies and whose combined assets exceed $10 billion. Members use their positions in the market as leverage to change unjust or harmful policies through shareholder resolutions and corporate dialogue.

Much progress has been made on a host of issues, said Nappier, including environmental protection, the fair and humane treatment of workers, creating independent and responsible directors and boards, and excessive executive pay.

Indeed, the sharp drop in public confidence in corporations and executives had created an unprecedented window of opportunity, for reform, Nappier said. We must keep it open and let the fresh air of reform come in. Theres never been a better time for investor powerand never more need for stricter oversight.

Nappier pointed to the recent resignation of New York Stock Exchange President Richard Grasso over a scandal regarding excessive pay as both a sign of investors power and the need for continued regulatory oversight. At the same time, other regulatory agencies are moving in the same directionwhether its Congress, the Securities and Exchange Commission, state Attorney Generals or state Treasurers. Were all moved to act, she said.

But to get the job done, different investor groups need to collaborate with each other. That includes not only the religious funds as represented by ICCR, but public pension funds, labor funds, environmental funds and other socially responsible investment funds, Nappier said. Coalitions can bring the expertise and leadership that no one group possesses. Given the current opportunity, what we make of it, is up to us.

One of those opportunities includes unprecedented shareholder access to independent directors to promote director accountability. That access will help counter such arrogant board actions as ignoring majority shareholder votes on certain shareholder resolutions.

The pressure can help ensure that regulators dont let up on corporate reform because its only a few bad apples. We know thats not true, Nappier said. The SEC is considering new proxy rules to give investors better rights, and socially responsible investors must keep on the SEC to make sure the new rules go far enough.

There also needs to be continued pressure on corporations on workplace diversity and democracy issues. Sustainable business issues relating to global warming and environmental sustainability are also extremely important, she said. Companies like ExxonMobil must realize that investors are not going to go away, she said, speaking about the upcoming UN conference. We have every right to know whats being done to protect the environment, she said, exhorting the assembled group of religious investors to stick together to accomplish social change.

The crowd applauded Nappiers comments, which corresponded to ICCRs corporate mission. In its just-released annual report, the organization notes: As a community of believers, we hold our faith dear and our call to justice sacred. We pledge our assets to the work of justice on behalf o the marginalized and oppressed. We are committed to a just ordering of society and invite the global community to join us in this effort.

But not everyone was optimistic. Michael Musuraca, assistant director in the department of research and negotiations for the American Federation of State, County and Municipal Employees – representing the largest public sector union in New York – spoke in response to Nappiers comments. Musuraca agreed that the socially responsible investment movement is at a crossroads – but not because things are going so well, but because theres so much danger.

Musuraca said the fight for corporate reform is also a political fight that must involve all citizens. The reform of corporate America will have to change the culture, which wont happen, unless you energize the people who are seriously hurt by it, he said.

Musuraca expects the struggle to be long and hard and that corporations wont reform unless pressured to do so. He pointed to under-funding of pension funds, corporations seeking to avoid paying taxes and fighting better environmental standards as evidence.

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