Historically, so-called "social resolutions," such as shareholder proposals on environmental, human rights, worker and social issues, have never achieved a "technical win" at any company. This means that no company has ever been forced to take action because a social resolution has received a majority vote.
The lack of technical wins has led some critics to argue that shareholder power cannot effectively influence corporate social behavior. However, the ultimate impact of shareholder activism may be difficult to determine, as companies may make changes as a result of shareholder resolutions or dialogue, yet not publicly cite shareholder concern and pressure as part of the impetus for making such changes.
For example, shareholder concerns and activity played a part in dismantling apartheid in South Africa through divestment, and phasing out the use of polystyrene at McDonald's. More recently, shareholders have contributed to public pressure on Home Depot to phase out wood sourced from environmentally-sensitive areas, and for the Maxxam Corporation to include more environmentally and socially conscious board members. In December of 1999, after years of shareholder dialogue and with new corporate leadership, Ford announced that it would pull out of the Global Climate Coalition. But even when shareholder activity does not produce immediate results, the actions of concerned and vocal shareholders are an important tool for social change:
First, when shareholders communicate their values and concerns to the companies they own, they exercise ownership responsibility, one of their most important rights and avenues toward making companies more accountable. When investors express their social as well as financial goals, they help make Wall Street more democratic and responsive to societal concerns.
Second, experience and evidence shows that sustained, strategic shareholder activism has helped social investors meet their goal of influencing corporate culture and social performance.
Building a sustained campaign means that investor activists must have a strategy beyond simply filing resolutions. Experienced shareholder activists view filing resolutions akin to ringing a doorbell: when you file a proposal, the company comes to the door. Once the door is opened, the shareholder begins or accelerates a dialogue process, which can create an avenue for corporate change. When a social resolution receives a significant number of votes (10% for example), well-governed companies usually feel the need to address the issue at hand through a dialogue process, which hopefully leads to a meaningful course of action.
To build a strategic campaign, one must set realistic objectives for what shareholder activism can achieve, and share information with and create/maintain an alliance with social movements. Coordination is particularly important to inform shareholder dialogues and to keep companies from "dividing and conquering" individual activists through separate discussions.
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