Holistic Approach to Socially Responsible Investing Webinar

In recent months, some SGI members have been revisiting their policies for socially responsible investment. Such periodic reviews can be an opportunity see this ministry in a fresh light. We must evaluate the quality, forms, and priorities of our commitments as to how effectively they serve the needs of our institutions’ mission and, in a preferential way, the needs of those most vulnerable and the care for creation. In such moments, we may find the conviction to respond to the signs of the times and to change the course into which habit and convenience have settled us and our institutions. These are privileged opportunities for each member institution to consider anew how to align investments with our deepest values.

On Friday, April 12, we were joined in our webinar by two leaders within the Interfaith Center on Corporate Responsibility (ICCR): Anita Green of Wespath Investment Management and Susan Smith Makos of Mercy Investment Services. Each shared the approach that their organizations utilize for socially responsible investing.

We are very grateful for the presence of both our guests in this webinar, for their commitment to work on this issues, and their generosity in sharing their wisdom with us.

As always, we welcome your feedback via a confidential evaluation found here. Slides from the webinar are found here.

If your institution is reviewing its policy for socially responsible investment, we are happy to help. Please, contact Frank Sherman or Chris Cox. We also recommend US SIF’s free Roadmap For Money Managers and its Roadmap For Financial Advisors. We also provide a number of resources here on our website.

ICCR Conference Highlights

By Ann Roberts, Dana Investment Advisors

As always, the ICCR March Conference was an energetic gathering of investors and allies, and attendance was record-breaking. One noticeable change from past conferences was a movement toward a more holistic approach to addressing shareholder concerns, echoing the overarching theme of Pope Francis’ Laudato Si’ that everything is connected. For instance, impact on human rights—the S in ESG–is threaded through all the issues we work on, and it is vital to consider this when advocating for specific changes in environmental and governance issues, as well as social.

Vonda Brunsting, Program Manager, The Just Transition Project, Harvard University

Some highlights include discussion of the Just Transition, which concerns the consequences of transitioning from fossil fuels on stakeholders (loss of jobs in the switch to renewables, loss of tax base for communities, etc.)—merging the E and the S. Worker-driven social responsibility (WSR) efforts such as the Fair Food Program and Milk with Dignity were also discussed. We are asking companies to switch from a mindset of company risk to worker risk. If something is bad for the worker, it is bad for the company. The final session on racial justice was particularly impactful as it reminded us that wealth is created by ownership of assets. Contrary to what politicians and others try to tell us, jobs are not the answer to closing the racial wealth divide. Our tax policies favor capital over labor, which disproportionately helps white people and penalizes minorities.

Most of all, this conference once again confirmed for us that there is strength in numbers. We are better together—and we are all connected.

“E Pluribus Unum”

By Bro. Robert Wotypka, OFM, Cap.

Nothing like a splash of Latin to capture the attention of many a Catholic. Has it worked? Good. This phrase is not from the Bible. As far as I can tell, Saint Jerome, who crafted the Vulgate Latin version of the Scriptures, and who was, by many accounts, not a lot of laughs, did not need or use it. Anyone know the Latin for “From one, three?” Now that would be elegant – and theologically correct.

“Out of many, one” was the motto of these United States of America (and a hearty “Hello!” to all our international readers) until 1957, when it was replaced by “In God We Trust.” Is either motto descriptive? Or aspirational? Or both? Or neither? The phrases come to mind in the context of today’s readings, for Wednesday of the Third Week of Lent (March 27, 2019), and in the context of my attending, as the province’s Corporate Responsibility agent, the twice-yearly conference of the Interfaith Center for Corporate Responsibility, which the Province of Saint Joseph participates in through its membership in the Seventh Generation Coalition for Responsible Investing.

The revelation of God to our ancestors in the Book of Deuteronomy, as proclaimed today, is this:

‘This great nation is truly a wise and intelligent people.’
For what great nation is there
that has gods so close to it as the LORD, our God, is to us
whenever we call upon him?
Or what great nation has statutes and decrees
that are as just as this whole law
which I am setting before you today? (Dt: 4: 6-8)

Jesus engages the law, too, in Matthew’s Gospel, underscoring that it will endure, that it is binding on all generations, even in the bright and wonderful light of the Incarnation. How so? Long story short: because the covenant is enduring, the law is likewise enduring.

Scripture is speaking of the Mosaic law. But it is not so with us, not so, with regard to our relationship with the state. We change laws, and we must. Or we take what was once custom or tradition and codify it. This was the case in the transition of the national motto, which was unofficially “E Pluribus Unum” from 1782 until the official law was passed in 1957 and “In God We Trust” was adopted.

Being a nation of ever-changing laws aligns with the wisdom of the Church, which speaks of itself in the Vatican II document Gaudium et spes as being ever in need of reform Franciscan spirituality begins from the necessity of being ever open to conversion, aka reform. And this aligns with my work as the Corporate Responsibility agent, which asks companies to be ever open to reform, to turn away from doing harm when harms are identified, and to embrace doing good: good for your customers, good for your employees, good for our common home, and good for your shareholders. And long will the company prosper that finds no contradiction in this.

May I then propose a reform? It comes from “the cry of the earth,” to use Pope Francis’ image from Laudato Sí. All but a fringe-y few acknowledge the need to mitigate the harms from catastrophic climate change that’s occurring as a result of the accumulation of greenhouse gases in the atmosphere since the dawn of the Industrial Age. Power generation accounts for about a third of greenhouse gas emissions. Moving away from energy generated from the burning of fossil fuels must therefore be among the first reforms wrought in the economy and the culture.

But it won’t be easy. Every utility has the ability to source its energy as it sees fit, that is, there are few obstacles preventing a power company from choosing a coal-fired power plant over, say, a wind farm or a solar array. Whatever is built will be regulated, but there are few laws specifying what is to be built, or none in many locales. Every utility is accountable to a public utility commission – and each PUC has its own laws, across all 50 states. Oh, and then there’s the rest of the world. Some nations have laws in place to oblige utilities to move toward renewable energy sources, and some do not.

Lord, give me the wisdom to ever trust you. I do. And I discern, and I invite and welcome your discernment, that it is now time as well for E pluribus unum, with regard to energy production. Out of the many companies and utilities and nations must emerge one set of laws, grounded in care for creation and love of our common home, that will reduce greenhouse gas emissions and increase the hope that future generations will not suffer needlessly as a result of our choices.

Pope Francis also wrote in Laudato Sí that realities are more important than ideas. Would you like to see what a just transition to sustainable energy looks like? Please, go here: https://www.powermag.com/indiana-utility-will-close-coal-units-transition-to-renewables/

And let us go in peace.

SGI, Institutional Investors Continue to Press Companies for Disclosure of Lobbying

Among issues of corporate governance, lobbying disclosure remains an urgent topic for shareholder proposals in 2019. Five SGI members are a part of a coalition of at least 70 investors who have filed proposals at 33 companies asking for disclosure reports that include federal and state lobbying payments, payments to trade associations and social welfare groups used for lobbying and payments to any tax-exempt organization that writes and endorses model legislation. That last sentence was detailed precisely because “following the money” is so complicated when it comes to lobbying expenditures. This year’s campaign highlights the theme of corporate political responsibility, with a focus on climate change lobbying.

Corporate lobbying impacts all aspects of the economy. Companies fund lobbying efforts on issues ranging from climate change and drug prices to financial regulation, immigration and workers’ rights. While lobbying can provide decision-makers with valuable insights and data, it can also lead to undue influence, unfair competition, and regulatory capture. In addition, lobbying may channel companies’ funds and influence into highly controversial topics with the potential to cause reputational harm.

In 2018, more than $3.4 billion in total was spent on federal lobbying. Additionally, companies spend more than $1 billion yearly on lobbying at the state level, where disclosure is far less transparent than federal lobbying. Beyond that, trade associations spend in excess of $100 million each year, lobbying indirectly on behalf of companies. For example, the U.S. Chamber of Commerce spent $95 million on federal lobbying in 2018 and has spent over $1.5 billion on lobbying since 1998.

To address potential reputational and financial risk associated with lobbying, investors are encouraging companies to disclose all their lobbying payments as well as board oversight processes. We believe that this risk is particularly acute when a company’s lobbying, done directly or through a third party, contradicts its publicly stated positions and core values. Disclosure allows shareholders to verify whether a company’s lobbying aligns with its expressed values and corporate goals.

“The faith community has been an active investor voice for around a decade pressing companies to expand disclosure on political spending (related to elections) and also lobbying disclosure. This is more important than ever as we look at issues of concern to ICCR members. For example it is a crucial time to hold companies accountable on their lobbying related to climate change and to urge them to lobby only for legislation consistent with the Paris Accord. Or monitor how drug companies lobby on opioids or drug pricing. Lobbying is not a remote governance issue but it intimately linked to a whole range of corporate responsibility issues we are all working on.”


Tim Smith of Walden Asset Management

Companies Receiving Lobbying Disclosure Resolutions for 2019 are:

  • AbbVie (ABBV)
  • Altria Group (MO)
  • American Water Works (AWK)
  • AT&T (T)
  • Bank of America (BAC)
  • BlackRock (BLK)
  • Boeing (BA)
  • CenturyLink (CTL)
  • Chevron (CVX)
  • Comcast (CMCSA)
  • Duke Energy (DUK)
  • Emerson Electric (EMR)
  • Equifax (EFX)
  • Exxon Mobil (XOM)
  • FedEx (FDX)
  • Ford Motor (F)
  • General Motors (GM)
  • Honeywell (HON)
  • IBM (IBM)
  • JPMorgan Chase (JPM)
  • Mallinckrodt (MNK)
  • MasterCard (MA)
  • McKesson (MCK)
  • Morgan Stanley (MS)
  • Motorola Solutions (MSI)
  • Nucor Corporation (NUE)
  • Pfizer (PFE)
  • Tyson Foods (TSN)
  • United Continental Holdings (UAL)
  • United Parcel Service (UPS)
  • Verizon (VZ)
  • Vertex Pharmaceuticals (VRTX)
  • Walt Disney Company (DIS)

Overpaid CEOs

On Thursday, our friends at As You Sow released their fifth annual report on the 100 Most Overpaid CEOs. The launch included a webinar with Rosanna Landis Weaver (the report’s author), Paul Herman (founder and CEO of HIP Investor), and ex-Secretary of Labor Robert Reich.

Not only are these 100 CEOs overpaid concerning the poor performance of their companies, many fund managers, like BlackRock, Vanguard and StateStreet, routinely endorse the executive compensation package of these CEOs at the annual shareholder meeting. The report points to necessary actions by shareholders concerning executive compensation. It really is worth your time to dive in.

Axios.com offered succinct coverage of the webinar and report here.

The report can be found here. The webinar can be found here.

Global companies and global problems

We have come to take for granted the size and sweep of modern multinational corporations. As companies merge to gain scale, it’s difficult to keep track of the corporation behind the brands we buy. Daily, we dress ourselves in clothes bearing labels of “made in” notices for countries that may be difficult to place on a map. We know that our vehicle, as well as our cell phone, was not made in an individual factory but assembled from components and parts made across a dispersed global supply chain. When out of season locally, we may notice that our fruit and vegetables may have come from distant lands. Multinational corporations seamlessly bring together many essential things in our daily lives.

Over the years, these multinational companies have grown to scales that may surprise us. While not an apples to apples comparison, the largest companies have annual revenues that dwarf the gross domestic product (GDP) of many countries. Some may be able to recite the top five global economies:

  1. United States ($20.5 trillion)
  2. China ($13.5 trillion)
  3. Japan ($5 trillion)
  4. Germany ($4 trillion)
  5. United Kingdom ($2.8 trillion)

Readers may be surprised to learn that Walmart, with over $500 billion in annual revenue, would rank #25, displacing Thailand. The fourth largest company, Royal Dutch Shell, displaces the Philippines at #40. The ninth largest company, Exxon Mobil, comes in just behind the Czech Republic, the 46th largest economy. At #11 among companies, Apple had a billion dollars more in revenue than Peru (#51 among countries) had in GDP. Foxconn, the 24th largest company, has greater annual revenue than the GDP of Kuwait (#58 in GDP). In all, 41 of the 100 largest economic entities on the planet would be corporations.

So, what does that mean for us? While policies and laws and regulations from countries are essential, companies play a critical role in addressing environmental and social issues such as climate change, food justice, health, human rights, and water stewardship. At bottom, the decisions that companies make have a tremendous impact on the most vexing global issues. In fact, choices made by companies, in many contexts, have greater impact than individual countries.

Michael Porter, in a 2015 TED Talk, underscored the importance of business in addressing critical problems. Global norms have been shifting. It is no longer acceptable for multi-national companies to simply meet the legal minimums set by local governments. Today, many international standards, including the UN Guiding Principles for Business and Human Rights, underscore the role of companies. Some of our resolutions with companies this year reflect this emerging understanding of the role of companies in addressing human rights.

The work of SGI contributes to the work of so many others– socially-conscious consumers, non-profit organizations, workers in the supply chain, and ethical executives– in seeking a more just and sustainable world.
Given the scale of multinational corporations and global nature of our economy, our mission is more critical than ever.

Decarbonizing Electricity Webinar

SGI has been leading important work on climate change with regional utilities. Today, we hosted our first educational webinar of 2019 where we learned more about how we can advance those conversations. We hosted Dan Bakal of Ceres and Franz Litz, program consultant at the Great Plains Institute. Dan has been a key partner in our dialogues with the utilities. Franz has led innovative efforts to bring together policy makers, regulators, utilities, and NGOs to take action on climate change. In particular, he has led the building of a Road Map to Decarbonization in the Midcontinent.

We are very grateful for the presence of both our guests in this webinar, for their commitment to work on this issues, and their generosity in sharing their wisdom with us.

As always, we welcome your feedback via a confidential evaluation found here. Slides from the webinar are found here.