One SRI manager who will have an influence at the SEC is Adam M. Kanzer, managing director and general counsel for Domini Social Investments and director of its shareholder advocacy department, who was named to the SEC's Investor Advisory Committee, established in June. "The committee will be used by the SEC as a sounding board for regulation. We'll probably meet three to four times a year for a couple of years. We'll provide the SEC with input, let them know what are our concerns, what do we want the SEC to do,'' says Kanzer of Domini, Providence, R.I. and New York.
Investors seeking social change have already shown their muscle. In April, Bank of America's Kenneth D. Lewis was voted out as chairman of the board by shareholders irate over the bank's $50 billion acquisition of Merrill Lynch last year. Lewis retains his CEO title, but now knows investors' powerful clout.
Shareholders are also increasingly pursuing resolutions on CEO pay, pressing companies to give them an annual advisory vote on executive compensation packages, according to reports by the Social Investment Forum and the Interfaith Center on Corporate Responsibility. No doubt some of the ire shown by Bank of America investors was inspired by Lewis' total 2007 compensation of $20,404,009 in salary, cash bonuses, stocks and options granted. His 2008 compensation was slimmed down to $9,003,467.
According to the 2008 Economic Policy Institute report, the CEOs of major U.S. companies earned only 24 times more than a typical worker in 1965; by 2007, they were making 275 times more. CEOs in the U.S. also make far more than CEOs in other advanced countries, the report said.
Socially responsible investors have furthermore been pushing the 19 financial companies that received more than $1 billion under the U.S. Treasury Department's Troubled Asset Relief Program to disclose how much of their corporate funds went toward political spending, and they're seeking board oversight of such spending in the future.
Investors are consumers, too, and they're lobbying for more scrutiny of what goes into their products. Larisa Ruoff, director of shareholder advocacy for Boston-based Green Century Capital Management (advisor for the Green Century mutual funds), notes Green Century and its investors united to alert baby bottle distributors of a troubling additive in their products: Bisphenol A. It has already achieved success with one company, Whole Foods, the tenth largest food and drug store in the United States, which it urged to stop selling the BPA baby bottles.
"They were the first major company to take this step," says Ruoff, "They were one of the places consumers could go and know [the store] was making decisions in the best interest of public health."
Meanwhile, Green Century, which was founded in 1991 to promote corporate environmental responsibility and green investing (and which is wholly owned by nonprofit advocacy organizations), this year won agreements from three companies to adopt policies that increase corporate transparency by reporting contributions from entities that may lobby against climate change solutions. And the firm won one-third of the votes of shareowners for a resolution it filed at ConocoPhillips requesting that the company assess the environmental impacts of its tar sands operations in Alberta, Canada.
Other money managers are also pushing for environmental causes. Dalheim says Calvert Investments initiated a campaign pushing a major corporation to adopt environmentally sound forestry practices.
"A client contacted us about a problem they saw at Kimberly-Clark, about sourcing of wood fiber in Canada. That helped us focus our follow-up, as we had engaged the company in a dialogue two years prior.''