Faith-based investors confront corporations
By GEOFF DOUGHERTY
CHICAGO With her unassuming looks and cream-colored knit blazer, Sister Patricia Daly hardly seems the type to raise hell at a Fortune 500 company's annual meeting.
But dozens of times a year, she does just that. She leaves her home with a Palm Pilot and a copy of Institutional Investor magazine in her bag and arrives at meetings ready to press for social responsibility.
Daly is perhaps the most visible public face of an interconnected group of faith-based investor organizations that have become increasingly influential. Their power flows from investments of more than $100 billion, their willingness to file shareholder proposals year after year and the fact that few executives want their company to be seen fighting nuns.
"I don't use the God card," said Daly. "I'm not saying I'm speaking for Jesus here. But if people see the Dominicans and the Jesuits on a shareholder resolution, they're going to say, 'These are people with some credibility.' "
At Chicago-based Kraft Foods Inc., for example, company officials have met several times with Daly to discuss the company's use of genetically engineered ingredients.
"We've discovered we are not as far apart as we might have imagined," said Paul Carothers, a Kraft official who was at the meetings. "Our thinking has been informed by these discussions."
But Jack Welch, the former General Electric Co. chief who had a well-publicized disagreement with Daly at a company meeting some years ago, said the nun's shareholder proposals altered little at GE.
"They would vent their arguments, and we'd move on to next issue," he said.
Religious orders have a long history of social activism, but became high-profile advocates in the business world during the battles over U.S. investment in apartheid-era South Africa.
Leon Sullivan, a black clergyman who sat on the General Motors board, was instrumental in urging U.S. companies in South Africa to enact anti-discrimination provisions, and religious shareholders quickly joined him.
Today, Daly's group is pushing dozens of resolutions, addressing everything from governance issues at Merck & Co. to Alaskan oil drilling at Exxon Mobil Corp.
Daly's group and others like it have become increasingly sophisticated. Where their proposals once offered ecological arguments against Alaskan drilling, for example, they now offer financial ones, and that usually ensures that they are voted on by shareholders.
"The faith-based people have gotten a lot more serious about making the economic case for their issues," said Beth Young, a senior research associate at The Corporate Library.
Young said Daly has been successful at times because companies want to avoid the embarrassing publicity that can come from having environmental or corporate governance problems laid bare in a proxy sent to each of its shareholders.
"I think the religious affiliation is enough to push some companies to do something they might not do if they were presented with the issue by another investor," Young said.
At GE, the group has fought a long-running battle over the PCB-contaminated Hudson River.
Daly has met often with company executives and officials at the federal Environmental Protection Agency and said shareholder resolutions have been effective in drawing attention to the issue.
This year's resolution would make any executive cringe.
Sent to every GE shareholder at company expense, it noted that GE had dumped at least 1.3 million pounds of PCBs into the river, that a state agency had described the company's actions as "corporate abuse" and noted that GE had racked up a $20 million debt to the federal government in connection with the environmental problems.
Daly said the Interfaith Center's activities have helped warn the public about the dangers of eating fish from the Hudson and encouraged the company to take responsibility for pollution.
Welch, the former GE chief, said he wonders if Daly's proposals were designed to push for change at the company, or simply to attract publicity.
"I don't know what their cause really is," Welch said. "Whether it's PCBs or notoriety or what."
Welch said publicity over Daly's advocacy did not change GE's approach to cleaning up the Hudson.
"They're just another advocacy group. I never saw them as a problem," Welch said.
Chicago Tribune