Lessons from a shareholder campaign supporting an indigenous community abroad

Community campaigns differ from issue campaigns in that a community's (and a shareholder's) ultimate goal is to change the behavior of an individual company or company's operation(s) that is impacting the community.

Shareholder activity enables investors to communicate their own concerns and amplify community voices. As a result, it may enhance a community's power vis-à-vis the company, raise public awareness, and/or increase pressure on the corporation. Unlike shareholders who support them, community groups may also integrate governmental and legal tactics into their campaigns, exercising laws to challenge company actions. (In contrast, many issue campaigns aim to change laws and regulations in and of themselves.)

Many companies put the interests of their financial stakeholders above the interests of other stakeholders, such as the communities in which they operate. Shareholder activism is one way concerned shareholders can harmonize their objectives with stakeholder objectives, and leverage financial power not only in the interest of shareholder value, but also for the promotion of social values and community empowerment. The following section recounts how U.S.-based shareholders exercised their shareholder power in accordance with their faith, and in solidarity with an overseas indigenous community struggling against an American mining company.

The Campaign Context

Through their commitment to social justice issues and links with missionaries, U.S.-based religious investors learned about Freeport McMoRan's controversial Indonesian mining operations. Environmental and human rights groups had also worked to spread the word about the problems at Freeport's Indonesian mine, and to hold the company accountable. A U.S.-based non-governmental organization (NGO) with links to Indonesian activists informed them of the shareholders' concerns, and appraised them of the U.S. shareholder resolution process. The Indonesian advocates welcomed the concern and partnership of the religious investors.

The Goal of the Shareholder Resolution

The goal of this shareholder tactic was not to provide the affected community with access to company management. The community had already been talking with senior officials at the company to no avail. Instead, the community viewed a lawsuit as the centerpiece of their efforts. The goal of the shareholder initiative was to allow concerned investors to voice their financial and social worries in cooperation and consultation with the local community, in hopes that the increased pressure would make the company more responsive to community concerns.

What the Resolution Requested

The resolution was carefully crafted. It was informed by the community's demands, but it did not come from the community itself (which at the time was filing a lawsuit against the company). The resolution was quite aggressive in requesting, among other actions, that the company halt all operations until a "just, accepted peaceful, and permanent resolution of local indigenous concerns can be reached in a consensus-based process with all stakeholders." This relatively radical proposal successfully passed SEC scrutiny. However, some familiar with the case believe that not every SEC staffer would have necessarily ruled in favor of such an aggressively-worded proposal.

Lessons from coalition-based campaigning on community issues

• Coordination: Coordination between shareholder activists is key. In this case there were two groups of concerned shareholders with different objectives: one group wanted the company to talk and cooperate with community and stakeholders; the other group was focused more clearly on amplifying community and stakeholder demands. Although both objectives furthered the community's goals, the groups did not always coordinate or communicate effectively.
• Different styles and tactics: In this case, the investors shared concerns with environmental activists who sometimes used different styles and tactics to influence corporations. Most long-term shareholder activists have inside access to corporate management, which puts them in a different position compared with other activists. They generally are less willing to publicly involve themselves in demonstrations and publicity stunts, as such actions may not reflect a shareholder value perspective, can undercut an investor's clout, and may diminish the potential of shareholder dialogue. Companies sometimes attempt to "divide and conquer" different activists by exploiting differences in objectives or approaches, but good coordination and communication among active parties can minimize this corporate tactic. In fact a diversity of objectives and approaches can even complement each other.
• Putting Shareholder Activism in Context: In some cases, no matter how much an investor may care about a community's struggle, shareholder power offers limited potential in helping a community its objectives. For example, a community group may oppose coal mining in general, but filing a resolution that asks a coal company to simply go out of business would not make sense from a shareholder perspective. In this case, instead of relying on vocal and supportive shareholders, the community may be better off working on land use or permitting issues. However, shareholder proponents have been able to contribute to community objectives by filing more subtle resolutions that ask a company to suspend operations in a given area until certain conditions are fulfilled; or to create policies that would ultimately result in a halt to a certain (type of) operation while leaving the company with viable opportunities in its sector.
• Limitations for Common Community Concerns: Due to SEC exclusions based on "ordinary business" and "personal grievance," community groups who own shares and are striving for better social/environmental performance at a particular facility may not be able to draft a resolution specific to that facility, unless they demonstrate that the facility has particular policy significance. For example, the SEC allowed resolutions asking oil companies to cancel plans to drill in the Arctic National Wildlife Refuge. In those proposals, the proponent was able to demonstrate that the Refuge is on the national radar screen and was worthy of being considered on a policy level (they cited, for example, that Congress has debated resource extraction in the Refuge three times in the last fifteen years).

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