The Pension Boards interviews the Rev. Richard Walters, Director of Corporate Social Responsibility (CSR), to explore PBUCC’s history of shareholder activism, and why this work is important for our world.

Q. How long has the Pension Boards practiced shareholder activism? Can you share a bit of this history?
A. Well, this goes back about 50 years. Shareholder activism started during the period of resistance to apartheid in South Africa. Faith communities began looking at how they could have an impact on companies that were doing business in South Africa. There was one particular gentleman, a Wall Street attorney named Paul M. Neuhauser, who was active in a group called the Episcopal Society for Cultural Racial Unity. He was very familiar with the Securities Exchange laws and shareholder regulations. So, for example, if a shareholder is unhappy with what a company is doing, they could file a shareholder resolution. Then, that resolution comes to the floor of the annual shareholders meeting and gets voted on. It's a way of influencing corporate behavior.

Now, prior to apartheid and the faith community becoming involved in shareholder activism, it was a tool that was primarily used to increase profits. Shareholders would file shareholder resolutions saying for instance, “Hey, you’re wasting money on advertising instead of just making more profits.”

The Beginning of the Faith-based Shareholder Activism
So, Neuhauser says something like, “Hey, there’s no reason why we can’t use a shareholder resolution to impress values on the company around issues that we care about and, in this case, apartheid.”  So, he drafted a resolution, filed it with General Motors (GM) and called for GM to cease doing business in South Africa until apartheid had been abolished. 

That shareholder resolution came to the floor at the annual shareholders’ meeting and it got voted down by the shareholders. The resolution was so new that nobody knew what to do with it. But there was one member of the GM board of directors named Rev. Leon H. Sullivan, an African American minister, who stood up and said something along the lines of, “I don’t know about the rest of you, but I’m voting for this resolution, because I think it’s what the company should do.” Sullivan steered the company even though that vote went down. He steered them to desegregate the workplace in South Africa and all of the GM plants, and eventually GM plants were sold to South Africans when apartheid was abolished. So, that was the beginning of the church's faith-based shareholder activism.

Q. Since South Africa and General Motors, do you believe public opinion on shareholder activism has changed drastically? If so, in what ways?
A. Yes and no. Yes, it has changed drastically in terms of supporting shareholder activism where people are aware of it, but most people don’t understand the world of investing nor how investors can pressure companies to do the right thing.

In our own resolutions at General Synod, you see shareholder activism appearing in those resolutions, which signals that more people have become aware that shareholder activism is an effective means of creating change around issues. This is something you never saw six years ago. The other aspect that signals more public support for shareholder activism is that people outside of the faith community, secular institutions such as the United States Forum for Social Investment and others, have begun practicing shareholder activism as an effective means to fight climate change and other issues. So, in  fifty years, there are many more investors practicing shareholder activism and there has been more public awareness over time.

PBUCC and UCF Continue Shareholder Dialogue Mission
It’s important to point out that a core group of people from different denominations, including the United Church of Christ, formed the organization called the Interfaith Center on Corporate Responsibility (ICCR), which continues to strategize around corporate dialogues. Presently, the advancements around shareholder dialogues with companies have been just tremendous with successes.

At one time, PBUCC was not the only sponsor of shareholder activism, it was embedded in another national instrumentality, but eventually the funds dried up for support of it, and so the only organizations that continue to carry this mission on behalf of the wider church are PBUCC and United Church Funds (UCF), because we have the resources and it relates to our work.

Watch ICCR’s “A Question of Values” video to learn more.