Getting Corporations to Do the Right Thing

pinklidI admit it—the Dirt Diggers Digest is guilty of focusing on the bad news about corporate misdeeds. So in this post I will write about something positive: activist groups that are succeeding in changing corporate behavior for the better.

The occasion for this shift in emphasis is the recent announcement of the winners of the BENNY awards, which are given out by the Business Ethics Network. BEN is an association of organizations and individuals involved in corporate campaigns that seek to pressure companies to end injurious practices relating to the environment, public health and the workplace. (Full disclosure: I have served on BEN’s advisory committee.)

Since 2005 BEN has been giving awards celebrating outstanding victories. During the past few years it has also honored groups that are making progress toward such victories and given individual achievement awards to veteran campaigners.

Each time attend the awards ceremony and hear the descriptions of the campaigns, I find my skeptical shell melting away in a wave of optimism about the prospects for undoing corporate harm. This year was no different.

There was a tie for 1st place in the main BENNY award between the Campaign for Fair Food and Think Before You Pink: “Yoplait—Put A Lid On It!”

The Campaign—led by the Coalition of Immokalee Workers (CIW) and supported by the Presbyterian Church (USA) and others in the Alliance for Fair Food—has made great strides in improving the working conditions of immigrant farmworkers in southern Florida. The campaign has won a string of victories by going around the growers who are the direct employers of the workers and pressuring their major customers (fast food giants, supermarket chains, and major food service companies) to pay more for the produce with the understanding that the difference will go toward higher wages.

Think Before You Pink is a campaign led by Breast Cancer Action that has taken a critical approach toward the growing corporate practice of putting pink ribbons on their products to raise awareness of breast cancer. The campaign started out examining whether those companies are contributing a significant portion of the purchase price toward legitimate cancer research. More recently, it has challenged pink-ribbon companies that make products that have been linked to breast cancer (the campaign calls it “pinkwashing”).

One of its recent targets was Eli Lilly, which sells drugs meant to reduce the risk of breast cancer while at the same time distributing rGBH, an artificial growth hormone used by dairies that is a suspected carcinogen. Earlier this year, the Think Before You Pink campaign got General Mills to stop using rBGH in its Yoplait yogurt, which has extensively used pink-ribbon marketing.

BEN gave its first-place Path to Victory award to the Sierra Club’s Beyond Coal Campaign, which is seeking to reduce use of the climate-destroying black fuel through efforts such as organizing students at campuses which depend on coal-generated electricity.  The campaign, which is targeting some schools smack in the middle of coal country, has released a tongue-in-cheek online video with the tagline “Coal is Too Dirty Even for College.”

The Individual Achievement Award went to Sister Pat Daly, a veteran shareholder activist who heads the Tri-State Coalition for Responsible Investment, an alliance of Roman Catholic groups in the New York City metropolitan area. She is best known as one of the founders of Campaign ExxonMobil, which pioneered the effort to get the giant oil company to take a less irresponsible position on climate change.

At the BEN awards ceremony, Sister Pat also described facing down former General Electric CEO Jack Welch at a company board meeting. For years, she and other activists had been pressing GE to accept responsibility for cleaning up the PCB contamination it had caused in New York’s Hudson River. And for years the company resisted. Welch’s successor Jeff Immelt eventually relented, and in May 2009 a clean-up effort financed by GE finally began. Sister Pat’s role in that victory certainly deserved to be honored.

Whether over the course of months or decades, the kinds of campaigns celebrated by the BENNY Awards show that corporations can be made to do the right thing.

SRI Firm Now has Blemish On Its Own Record

Socially responsible investment (SRI) managers should be above reproach, given that they are essentially in the business of marketing virtue. It appears that Pax World Management Corp. lost sight of that principle. Today the Securities and Exchange Commission announced that it had charged Pax with misleading investors by investing in some companies that did not meet Pax’s stated criteria. Without admitting or denying the SEC’s findings, Pax agreed to pay a fine of $500,000 and to “cease and desist from any further violations of certain antifraud, false filing, and other provisions of the securities laws.”

The SEC’s filing states that in the period from 2001 through 2005 Pax World Management, which advises the Pax World Funds, purchased ten securities for its Growth and High Yield Fund portfolios that should have been excluded. These included:

– three that violated restrictions on companies deriving revenue from gambling or alcohol;

– three that violated restrictions on companies deriving more than 5% of their revenue from the U.S. Department of Defense; and

– four that failed to satisfy criteria relating to environmental or labor practices.

It is unclear from the SEC filing whether someone at Pax deliberately added those stocks (which are not identified) to its portfolios or did so through sloppiness. The SEC also charged that until 2004 Pax did not continuously monitor fund portfolios for compliance with their SRI criteria.

Pax CEO Joseph F. Keefe put out a press release today that oddly referred to the charges as “legacy SEC claims” because they occurred “prior to my arrival as CEO,” but he stated that “we regret and take full responsibility for what occurred during the 2001-2205 time period.” He also insisted that Pax is “committed to meeting the highest standards going forward.” It is unclear, however, whether Pax can now satisfy the screens that SRI investors may themselves employ in choosing money managers.

MORE SEC NEWS: Today the SEC also announced that its commissioners had voted unanimously to propose measures that would greatly expand the amount of information readily available on municipal bonds. Under the measure, the ongoing disclosure documents filed by issuers of muni bonds would be made available for free on the web by the Municipal Securities Rulemaking Board.

As I reported earlier this year, the MSRB has already begun to make the prospectus-type filings known as Official Statements available on a free site called Electronic Municipal Market Access, or EMMA. If the proposal is implemented after the public comment period, the annual financial information documents would also be available on EMMA.