Corporate America has long been a major shaper of U.S. culture. Through product offerings, advertising campaigns, employment practices, and a large concentration of wealth, business corporations have significantly influenced the ways in which individuals think and behave. Arguably, corporations wield more power than our government and churches combined.
With such power, however, comes responsibility: the responsibility to assure equality and fairness in employment matters, the responsibility to manufacture and sell safe and reliable products, the responsibility to treat our environment with respect and care. All too often corporate America has abused these responsibilities. Cases of discrimination in the work place, of shoddy goods sold through deceptive advertising, of massive pollution of our air, water and landfills - all these are commonplace.
Over the past half century, our federal and state governments have passed numerous laws and established a host of agencies to monitor and control corporate America's behavior, as well as to provide remedies in those instances where the laws are violated. However, the interpretation of these laws is left to the administration in power, which is, in turn, influenced by issues of international competitiveness. Laws designed to control corporate behavior can thus be interpreted into oblivion. The question of these laws' effectiveness remains open for debate.
In an attempt to counteract corporations' evasion of the law and matters of social justice, religious institutions became involved some 20 years ago in a movement to advocate corporate responsibility. In the years since, the religious community and its allies - trade unions and municipal and state employee pension plans - have brought about significant change in the way corporations conduct their affairs. They have done so primarily by means of the shareholder's proxy, which allows investors to publicize in shareholder meetings their views about corporate behavior. Many religious groups have access to such meetings; the choice to become involved is theirs.
Most major religious organizations support their various programs with the help of income from an endowment fund of some sort. Very often, as a part of an overall investment strategy, at least some of these funds are invested in shares of stock. Over the past couple of decades, some stockholding religious organizations have decided that it is contradictory for them to fund mission programs with income earned from securities issued by companies whose behavior is objectionable. Many of these religious investors have elected to divest themselves of these securities.
Another group of religious investors, however, has decided that by holding on to the securities of corporations whose behavior and philosophies they question, they can use the shareholders' proxy and resolution process to change corporations. Such groups had a direct impact on 218 U.s.-based firms that decided to leave South Africa over the past 15 years. Similar investor groups, many of them religious, have influenced more than 500 companies to change their equal-employment opportunity policies, their environmental policies, their marketing strategies and their product design.
The struggle has been a difficult one. American corporations have not accepted willingly the changes asked of them. Without exception, corporate management and boards have opposed every resolution filed over the past 20 years that has addressed social-justice issues. These shareholder resolutions generally receive less than 10 percent of the vote at any given shareholders meeting. Corporate management only accepts proposals when the resolutions have created significant adverse publicity or nuisance.
The Securities and Exchange Commission was established by an act of Congress in 1934 to protect the public from unscrupulous investment practices. Firms wishing to raise money from the public are required to make a number of disclosures about their finances, management and operations before they can offer their securities for sale. …