Tag: Corporate social responsibility

CRI History: Socially Responsible Investment Coalition

CRI History: Socially Responsible Investment Coalition

Natalie Wasek

As part of our series on remembering Fr. Mike Crosby and Celebrating 50 years of SGI, we wanted to highlight the histories and growth of all of the CRIs.

The Socially Responsible Investment Coalition (SRIC) began as a dream of Sr. Francis Lorene Lange CDP in 1974. She believed that a Coalition for Responsible Investment (CRI) could be started in this region. She had worked with Fr. Mike Crosby OFM Cap to found a Texas group to work with Interfaith Center on Corporate Responsibility (ICCR). The seed was planted but did not sprout until 1982.

Texas CRI was founded in 1982 with a number of religious congregations: Congregation of Divine Providence, Missionary Catechists of Divine Providence, School Sisters of Notre Dame, Sisters of Charity of the Incarnate Word—San Antonio, Texas, Missionary Oblates of Mary Immaculate, Sisters of the Sacred Heart of Jesus, Benedictine Sisters—Boerne, Texas, The Society of St. Teresa of Jesus, Sisters of Charity of the Incarnate Word—Houston, Texas, and Congregation of the Holy Spirit. By 1997, Texas CRI officially changed its name to the Socially Responsible Investment Coalition (SRIC). Since that time, SRIC has grown to 19 Institutional and Associate members and a number of individual members. We continue to work to bring about responsible corporate behavior through the power of shareholder resolutions as well as corporate dialogues.

In the early years, members participated in various shareholder initiatives that included the boycott of Campbell’s Soup and Nestlé’s products and actions to end apartheid in South Africa. SRIC members documented working conditions, environmental contamination, and community issues surrounding Maquiladoras located at U.S./Mexico border. Members also raised questions with Houston Industries regarding the safety of the South Texas Nuclear Project and with DuPont and Chevron about their practices and clean-up of uranium mines.

For 40 years, as faith and values–based investors, we have a long history of shareholder advocacy on socially responsible issues as we prompt companies to act on positive outcomes for society. Some of our many SRIC initiatives include: addressing environmental pollution; advocating for state-wide Medicaid expansion; working on sustainable mining issues in Ghana, Colombia and Peru with the Faith Reflections Initiative. We have also worked nationally to generate awareness of human and sex trafficking in hotels during several Super Bowls and have spoken out on negative environmental and health impacts of fracking and methane emissions in oil and gas production. As we look towards the future, we will continue to engage corporations encouraging them to adopt more ethical and sustainable business practices and address their impacts on people and the planet.

Since 1982, SRIC has been a member of Interfaith Center on Corporate Responsibility (ICCR). Currently, we are collaborating with ICCR members to focus on advancing worker justice, human rights, climate crisis, access to medicine, nutrition insecurity, responsible banking and finance, environmental justice and corporate governance

Thank you to Ruben Lopez and Anna Falkenberg for sharing this history with us!

For more information about SRIC, please visit: https://sric-south.org/

Do You Consider Yourself To Be An Activist?

Do You Consider Yourself To Be An Activist?

sgicoalition

By Frank Sherman

I was at a sustainability conference last week that was attended mostly by business and academia. After introducing myself and SGI at our table, I was asked “Do you consider yourself to be an activist?”

I hesitated for what felt like an eternity. What a loaded question! Was this a trap? Did he think I was going to the Milwaukee Art Museum after the conference to throw tomato soup on the paintings and glue my hands to the wall?

Given all the buzz about “anti-ESG,” “woke capitalism,” and “socialist political agenda” these days, I didn’t want to play into the culture war narrative. Republicans candidates for financial offices in Arizona, Florida, Illinois, Kansas, and Minnesota have all taken anti-ESG positions. They and other Republicans say big financial firms are abusing their power to advance a liberal agenda on issues like diversity, social justice and, especially, climate change. One Senator even accused Blackrock of breaking antitrust laws by being a member of the Climate Action 100+ coalition (which includes SGI, by the way). 

Most of the general public don’t understand what ESG means. The simplest description is a set of environmental, social, and governance considerations that investors use to try to understand risks and opportunities that aren’t accounted for in traditional financial models. For example, environmental risks like climate change present physical and transition risks that are not reflected in a company’s P&L or balance sheet. Another risk unaccounted for in the company’s financial statements are their impacts on human rights: to their employees, suppliers, customers and society at large. Although not recognized in financial reporting, these risks are very real…to individual companies and to the economy as a whole. They vary by region, industry, and individual company. Most investors and the public are blind to the magnitude of these risks. As society’s awareness of these risks increases, asset managers large and small are taking them into account in their portfolio management and corporate engagements.

Companies like Blackrock are pushing back on state laws which try to protect the fossil fuel industry (e.g. TX, WV) by explaining that ESG strategies are part of their fiduciary duty to manage material risks for their clients. But is that why SGI members use the ESG strategies? Is our sole incentive to manage long-term financial risks?

That’s part of it, no doubt. We are responsible for managing these funds as an obligation to our community members or clients. But SGI’s mission statement states that we also want to “to build a more just and sustainable world for those most vulnerable.” Our fiduciary duty goes beyond getting an adequate return on investment to also promote human dignity, act justly, enhance the common good, and provide care for the environment. The recently updated USCCB SRI guidelines speak to this double objective. The Guidelines are based on two principles: responsible financial stewardship and ethical & social stewardship based on Catholic moral principles. They espouse three strategies: Avoid Doing Harm, Actively Work for Change, and Promote the Common Good.

In addition to managing financial risks, SGI members view shareholder engagement with corporations as a powerful catalyst for social change. ICCR’s tag-line – “inspired by faith, committed to action” – sets forth our pledge to be active owners. Although I wouldn’t label SGI members as “activists,” we have been active owners for nearly 50 years. And I wouldn’t describe our capitalism as “woke” yet, but people are starting to wake up to the fact that the economy is supposed to serve society rather than the other way around.

Back to my conference table… I don’t think I answered the question posed to me very well at the time. With more time to reflect, I would respond that rather than an activist, I would describe SGI members as active owners inspired by faith!

Some helpful resources concerning the pushback on ESG investing:

Human Rights Remain a Focus

Human Rights Remain a Focus

Natalie Wasek

SGI members have been engaging mac & cheese and ketchup producer, Kraft Heinz, on issues including nutrition, deforestation, and human rights for several years. In 2019, Kraft Heinz published a Human Rights Policy after withdrawal of a shareholder resolution filed by The Capuchin Province of St. Joseph. Subsequently, after an ESG materiality assessment, Kraft Heinz ranked human rights as among the issues with the greatest impact on the company and of most importance to its stakeholders. 

The Capuchins and other SGI and ICCR members continued to engage the company on the implementation of their new policy. However, their lack of transparency and slow progress on implementing a due diligence process resulted in a low score of 21 out of 100, ranking 27 out of 43 companies on the most recent Know the Chain Benchmark, which has also identified tomatoes, cattle, and coffee being sourced by Kraft Heinz as having a high risk of human rights abuses. This was further confirmed by the Corporate Human Rights Benchmark who scored Kraft Heinz 7.5 out of 26, including 0 points on Human Rights Due Diligence. 

Given this lack of progress, SGI members filed a second proposal asking the company to complete a Human Rights Impact Assessment to “mitigate against significant operational, financial, and reputational risks associated with negative human rights impacts throughout its supply chain.” Although the company undertook a global human rights risk assessment last year, they did not publish plans to complete a due diligence process. However, they have committed to undertake third-party due diligence audits prioritizing the most problematic countries and commodities identified in its risk assessment. Kraft Heinz further acknowledged that social audits are not designed to capture sensitive labor and human rights violations such as forced labor and harassment, and their due diligence audits will engage workers in a meaningful way to determine root causes and address remediation and capacity building. Based on this commitment, shareholders withdrew the proposal.

Despite the movement that we are seeing from the company, Kraft Heinz remains one of 106 companies whom ICCR members and allies are engaging on their weak human rights policy implementation. ICCR’s Investor Alliance for Human Rights reached out to those 106 companies, including others engaged by SGI members: Kohl’s, Macy’s, Phillips 66, TJX, and Yum! Brands, about scoring 0 across the human rights due diligence indicators in the Corporate Human Rights Benchmark (CHRB) 2020 Report. 

The statement sent to each company explains that “Companies need to know and show their respect for human rights under the UN Guiding Principles for Human Rights, through public disclosure of the implementation and ongoing results of human rights due diligence processes.” Similar to corporate greenwashing, companies often rely on policies, codes of conduct, and traditional audits which have been shown to be insufficient in addressing and remediating human rights impacts.

While it is important for a company to understand their material financial risks, a holistic human rights policy requires understanding of their salient risks. These salient risks focus on the risks to people rather than the financial performance of the company. Implementing a human rights policy and doing the proper due diligence is required for a social license to operate and should not create an internal dilemma. This is about fair and just treatment of people. It is not a question of if this needs to be done; it is a question of why it has not already been done. 

How did you respond to the Coronavirus pandemic?

How did you respond to the Coronavirus pandemic?

Chris Cox

By Frank Sherman

As some hard hit cities start to report a slowing of COVID-19 cases and express hope that we’ve indeed reached the much anticipated peak, our federal and state government leaders are struggling with the challenge of reopening the economy. The same debates on balancing public health and economic pain are playing out in corporate boardrooms and at small business owners’ kitchen tables. The slow response and lack of leadership at the federal level has not only shifted decision-making to states and local levels, they force the private sector to face the dilemma of when and how to bring back their employees, supply chains, and customers.

As faith communities, we recognize that the pandemic has put a spotlight on economic inequalities and a fragile social safety net leaving vulnerable communities to bear the economic brunt of the crisis (Human Rights Watch, March 19, 2020). In the U.S., four decades of income and wealth disparity was partly hidden by record low unemployment but is now exposed in unemployment insurance and food pantry lines. While many Americans were already knee-deep in debt pre-pandemic, half of households have no emergency savings at all (WSJ, April 15, 2020). Nearly 30 million children who count on schools for free or low-cost breakfast, lunch, snacks and sometimes dinner are now at home (NPR, March 20, 2020). Thankfully Congress has shifted most of the disaster relief to the workers and individuals this time rather than solely to companies as done in 2009.

As companies start to report their first-quarter financials, the message is clear: this recession is going to be bad! What will be the corporate response to these unprecedented times? The pandemic and impending recession have created an urgent opportunity for CEOs and corporate leaders to put the promise of purpose-driven leadership and stakeholder capitalism into practice (Just Capital).

I certainly noticed a change in the tone and focus of corporate communications, both internal and external. Instead of productivity and new product launches, companies are talking about employee and customer safety, corporate values, and community support. Examples such as Walmart’s enhanced paid sick leave, McDonald’s free meals for students and seniors, GM and Ford retooling auto assembly lines for ventilators (WAPO, April 4, 2020), Amazon prioritizing shipments of medical supplies and household staples (WSJ, March 17, 2020), and Thank You For Not Riding Uber (YouTube, April 8, 2020) appear to be empathetic. The public perception of whether these corporate responses are authentic or ‘COVID washing’ may depend on whether the company was purpose-driven before the crisis.

At the end of the day (…and there will be an end to this crisis), employees, consumers and society in general will ask these companies and their leaders one simple question: How did you respond to the Coronavirus pandemic? And when the corporate marketing machine restarts, let’s hope we have long memories.

Corporate America Develops a Conscience?

Corporate America Develops a Conscience?

Chris Cox

By Frank Sherman

There has been a lot of media coverage this week of the Business Roundtable CEOs new commitment and statement on the purpose of corporations. Leaders of companies including JPMorgan Chase, Apple, Amazon and Walmart have abandon their 40+ year sole focus on shareholders to embrace a “fundamental commitment” to all their stakeholders: putting employees, suppliers and communities on a pedestal that once belonged only to shareholders.

Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World, has been an effective critic of the statement.  “I absolutely see the change. It has become socially unacceptable as a company or a rich person not to be doing good. But what many are failing to do is ask: ‘What have I done that may be drowning out any of the do-gooding I’m doing?’ ” (Fortune, Aug 19, 2019). He cites the 2017 tax bill, supported by the Business Roundtable, in which the lion’s share of the benefits ended up in the hands of the top 1%, increasing the income inequality underlying many social problems.

The ‘enlightened’ CEOs are also taking heat from the right. The Wall Street Journal editorial page was quick to criticize (WSJ, Aug 19, 2019)… “A close reading shows there’s less substance here than meets the media spin, but it’s still notable that the CEOs for America’s biggest companies feel the need to distance themselves from their owners. Yet these CEOs are fooling themselves if they think this new rhetoric will buy off Ms. Warren and the socialist left. It may even embolden them by implying that corporate rules that require a focus on achieving value for shareholders are somehow morally insufficient.”

But Steven Pearlstein, Pulitzer Prize-winning columnist for The Washington Post, professor of public affairs at George Mason University, and author of the book Can American Capitalism Survive? has a different take from the BRT statement. His article in the American Prospect five years ago (When Shareholder Capitalism Came to Town, Apr 19, 2014) partly blamed the BRT for corporate America’s sole focus on shareholder value leading to the corruption of capitalism. However, Pealstein was optimistic about the BRT statement. “It’s important because it signals a shift in attitude in norms. That’s already occurring. It’s sort of confirming something that’s happening that’s, I think, the pendulum swinging back in the right direction, after having swung too far in favor of shareholders.” Pealstein met J.P. Morgan Chase’s CEO and chair of the BRT, Jamie Dimon, in his office last year to discuss the growing public distrust of corporations and CEOs.

When asked by PBS host John Yang if this may just be a P.R. gimmick, Pearlstein gave some practical advice that all stakeholders can benefit.  “Yes, it is good for P.R., but if they don’t follow through, if we continue to see companies that say, I’m giving up my American citizenship so that we don’t have to pay U.S. taxes anymore because our shareholders are making us do it; if companies say, we’re going to crush our unions because our shareholders are making us do it; they won’t be able to get away with that anymore.”

It’s up to us to remind these CEOs of their new found conscience!

What Story Do We Tell?

What Story Do We Tell?

Chris Cox

For an author and former tech company executive, Seth Godin has a no frills blog that offers pithy insight. In a podcast some years back, he observed the following:

“Once you have enough for beans and rice and taking care of your family and a few other things, money is a story. You can tell yourself any story you want about money, and it’s better to tell yourself a story about money that you can happily live with.”

SGI is an organization for those who want to tell a different kind of story about their money than a simple report on the bottom line. Our members are those who want their investments to tell a story consistent with the values and passions of their lives. Our members have served those on the margins in far-flung missions or just on the other side of town. Our members have run schools to provide a quality education, inspired by faith, to those who might not otherwise be able to obtain it. Our members have built health institutions that have served the ill and injured regardless of their capacity to pay. Our members have worked tirelessly to care for and to protect creation. Would it not make sense that the savings destined for their healthcare and retirement, and those funds entrusted to them by generous donors, be used in ways that reflect what our members believe to be important?

Once upon a time, I used to urge folks to look through the last ten checks they wrote—now, I’d suggest that younger readers look through the credit card statement—what do those expenditures say about our priorities and values? The work of SGI is to tell a story with our funds. It is a story that values the poor so often invisible within the economy, especially vulnerable children and women. It is a story where the Earth, its soil and seas and air, is more valuable than the gold and oil buried underground.

A story that focuses solely on the economic return is a story too thin to heal. Indeed, we need a story rich enough to live by. Our story will not interpret the world to everyone’s satisfaction. But, finally, in our judgement, their stories can’t stand up to our stories.