Guest blog by Moira Hutchinson
I was recently asked to reflect on the experience of church investor activism on apartheid in South Africa for a new book, “Journeys to Justice: Reflections on Canadian Christian Activism”, edited by Joe Gunn.
That work was led by the Taskforce on the Churches and Corporate Responsibility, a coalition of national Protestant and Catholic churches and religious communities, founded in 1975 and carrying on until the late 1990s. Its mandate was to assist the members’ treasury and pension funds to take responsibility as investors for the environmental and social impact of the companies in which they were invested. In its early years, the issue of apartheid in South Africa was its priority.
As I wrote in the book, Canadian companies were incredibly fearful about having critics speak from within the corporate circle. Church investors dared to come to annual meetings to ask questions, or even worse, church investors filed shareholder proposals. That was very new in Canada. So, company spokespersons and shareholders who were friendly often said, “Why don’t you just sell your shares if you don’t like what we’re doing?”
That’s what they really wanted, because then we would be gone.
We learned that companies will agree to make changes – sometimes even significant ones – to avoid having shareholders ask questions at company annual meetings, or even worse (from their point of view), file formal shareholder proposals for inclusion in the mailing to all shareholders, for vote at the annual meeting.
Our experience taught us that it’s important to keep clear the distinction between disinvestment and divestment. Disinvestment was our goal – getting companies to disinvest from or leave South Africa or stop making loans. Divestment – that is, an investor selling shares in a company – was just one tool for trying to persuade the company to disinvest from South Africa. The other tool, shareholder activism, was the tool that the Taskforce emphasized.
At the time, however, many investors assumed that divestment was the only choice, and that somehow, victory was in hand as soon as they had sold their shares. Taskforce members, however, believed in stepping up the pressure on a company to disinvest, in a series of actions rather than in a single divestment action that became old history the day after it occurred.
Of course, there was a role and a time for both – for investors who divest, and for shareholder action. However, what I call the “clean hands” approach of some institutional investors, including universities, was regrettable. They, like the companies, appeared mostly to want to get rid of the hassle factor of students and others campaigning for them to divest. They made little or no effort to first use their considerable human and financial resources to bring pressure to bear on the companies. Nor did they develop processes for the long-term monitoring of the social and environmental impact of their investments.
Can what we learned help us today?
There has been a huge increase in recent years in “responsible investment”. Most of this is focused on stock selection – screening out companies engaged in activities we don’t like – tobacco production, for example. Or seeking out companies that are the “best of sector” in a particular industry – even such difficult sectors as mining.
Or seeking out companies in which a social good is a priority, for example, low cost housing, or new energy technologies.
This is all good but screening is mostly a behind-the-scenes and apolitical approach. What is often missing is the active and sometimes public engagement by shareholders to address the many problems that are not solved by an ethical screen or divestment.
For example, you may decide to divest from or screen out the largest fossil fuel companies, but what do you say about all the other companies across virtually all sectors – such as transportation or manufacturing or banking – whose activities are also very important as we try to address the challenge of transitioning to a low-carbon economy?
Fortunately, there are still investors who are active shareholders. Leading examples in Canada include the members of the not-for-profit organization, SHARE – the Shareholder Association for Research and Education – which grew out of the ashes of the Taskforce. It is in many ways stronger than the Taskforce because it is multi-sectoral. It includes not only some of the same faith-based organizations that were Taskforce members, but also foundations, educational institutions, pension funds and fund companies.
SHARE’s founding executive director, Peter Chapman was on the staff of the Taskforce with me, and for 18 years has been the visionary builder of SHARE. He stepped down from that position recently, but he will continue to provide some assistance to SHARE. He credits much of the development of SHARE to the pioneering work of the churches in the Taskforce, so many years ago, and I see in SHARE the continuation of that work today.