Social Consciousness Activism Discussion
In this chapter we’ve seen discussion of social responsibility and consciousness from within businesses. But companies can be pressured to engage in socially responsible activity in response to boycotts and economic pressure. In the late 1980’s, led by college students, pressure was put upon colleges and universities to divest holdings in companies doing business in South Africa to put pressure to end the apartheid government policies. More recently there have been increased pushes for mutual funds and group investments to be more socially conscious and to get out of investing in companies that produce tobacco products and firearms.
There has also been a rise in “Socially Conscious Mutual Funds” that purposefully avoid any of the companies engaged in “social ills” as a way to attract investors who want to avoid these companies. In many cases the investor pays more for this philosophy because the restrictions result with the funds underperforming when compared to other mutual funds.
In California, the California Public Employees’ Retirement System (CalPERS) is the largest public pension fund in the US. CalPERS is known for shareholder activism, using the large blocks of stock owned by the fund to create voting blocks and force issues to be voted upon by shareholders. Recently members have been pushing for CalPERS to become involved in stockholder movements in several oil companies to affect transparency and changes regarding climate change.
Note for reference: Corporations sell stock, which represents a partial ownership in a company. Owners of common shares of stock are considered equal – each share has the same vote. Having thousands of shareholders, however, can be unwieldy for operating, so the shareholders will vote to elect a Board of Directors. The is usually put into nomination by the company, and the shareholders vote to approve or reject each director. The board of directors is charged with the overall running of the company, with the CEO and other management reporting directly to the board. Shareholders can work to have referendum questions put to the shareholders at an annual meeting, though they may not be binding. Shareholders with a large block of stock usually can vote all shares as a bloc or can break up their votes. This is the main way shareholders can influence operations of the corporation.
For our discussion, go online and read up more on shareholder activism and divestment movements and consider the activities of some of these movements. Think about and post your research and thoughts on the following:
Is it a good idea, or even proper, for shareholders to try to leverage their slice of ownership to force companies to engage in socially (or politically) conscious activities, even if it can, at least in the short term, have a negative impact upon the company’s bottom line? Or should those decisions come from the directors who are voted to run the company? Is there a difference when non-owners pressure for action, such as boycotts and when college students protesting for divestment?
Discuss your thoughts on the issue and support your reasoning. Cite past or current examples in your answer. Post your response and then be sure to return and continue the conversation by responding to the postings of at least two (2) of your classmate’s posts. Remember to keep the discussion civil and follow good netiquette.
