Future Looks Good for Corporate Reform, Says State Official
Episcopal News Service. October 8, 2003 [031008-1]
Matthew Greco, Freelancer writer based in New York and a recent graduate of Union Theological Seminary
The push by faith communities and other socially responsible investors for corporate reform and to create more responsible businesses has reached a point of real and substantial progress, according to Connecticut state Treasurer Denise Nappier who spoke October 1 at the annual forum of the Interfaith Center on Corporate Responsibility (ICCR).
Speaking on the topic of "Pushing the Envelope of Corporate Change," Nappier told the audience, including a representative of the Church Pension Fund (CPF), that issues of sustainable business practices have reached new heights as part of the corporate governance agenda.
About 300 people attended the annual fund-raising and get-together event. Sr. Pat Wolfe, ICCR executive director, noted that the event had exceeded expectations in raising some $266,000. Major contributors included the CPF and the Peace and Justice Office of the Episcopal Church.
Much progress
Much progress has been made on a host of issues, said Nappier, including environmental protection, the fair and humane treatment of workers, creating independent and responsible directors and boards, and excessive executive pay.
Indeed, the sharp drop in public confidence in corporations and executives had created an "unprecedented window of opportunity," for reform, Nappier said. "We must keep it open and let the fresh air of reform come in. There's never been a better time for investor power-and never more need for stricter oversight."
Wayne Agard, a law clerk representing the Church Pension Fund, told ENS that it's important to understand that companies today have a fiduciary duty not just to shareholders, but to the community as a whole. "ICCR is important in forwarding that and changing the focus," he said.
Nappier pointed to the recent resignation of New York Stock Exchange President Richard Grasso over a scandal regarding excessive pay as both a sign of investors' power and the need for continued regulatory oversight. At the same time, other regulatory agencies are moving in the same direction-whether it's Congress, the Securities and Exchange Commission, state Attorney Generals or state Treasurers. "We're all moved to act," she said.
Coalitions bring expertise
Yet to get the job done, different investor groups need to collaborate with each other. That includes not only the religious funds as represented by ICCR-of which the Episcopal Church Pension Board, the Episcopal Diocese of Massachusetts and the Domestic and Foreign Missionary Society of the Episcopal Church in the USA are members-but public pension funds, labor funds, environmental funds and other socially responsible investment funds, Nappier said. Coalitions can bring the expertise and leadership that no one group possesses.
Proclaiming that reform groups ought to rejoice that , to quote Helen Keller, we live in a "splendidly disturbing time" because it points to the opportunity that exists. "What we make of it, is up to us," she said.
One of those opportunities includes unprecedented shareholder access to independent directors and to promote director accountability. That access will help counter such "arrogant " board actions as ignoring majority shareholder votes on certain shareholder resolutions.
The pressure can help ensure that regulators keep up the pressure and don't let up on corporate reform because it's not only "a few bad apples. We know that's not true," Nappier said. The SEC is considering new proxy rules to give investors better rights, and socially responsible investors must keep on the SEC to make sure the new rules go far enough.
Other issues include continued pressure on corporation regarding workplace diversity and democracy.
Protecting the environment
Sustainable-business issues relating to global warming and environmental sustainability are also extremely important, she said. Companies like ExxonMobil must realize that investors are not going to go away. In fact, Nappier is helping to organize a summit on climate change at the UN, attended by dozens of state treasurers representing billions in state pension funds. "We have every right to know what's being done to protect the environment," she said, exhorting the assembled group of religious investors to stick together to accomplish social change.
But Michael Musuraca, assistant director in the department of research and negotiations for the American Federation of State, County and Municipal Employees-representing the largest public sector union in New York-was not as optimistic as Nappier.
Responding to Nappier's comments, he agreed that the socially responsible investment movement is at a crossroads-but not because things are going so well, but because there's so much danger.
Musuraca said the fight for corporate reform is also a political fight that must involve all citizens. The reform of corporate America will have to change the culture, which won't happen, "unless you energize the people who are seriously hurt by it," he said, adding that he expects the struggle to be long and hard and that corporations won't reform anything unless pressured to do so. He pointed to under-funding of pension funds, corporations seeking to avoid paying taxes and fighting better environmental standards as evidence.