April 30, 2004
Jewish Institutional Investors Form Shareholder Engagement Network
by William Baue
The Jewish Shareholder Engagement Network is based on the notion that Jewish tradition supports
such shareowner action as active proxy voting and dialogue with companies.
"There is no such thing to my mind … as an innocent stockholder. He may be innocent in fact,
but socially he cannot be held innocent. He accepts the benefits of the system. It is his
business and his obligation to see that those who represent him carry out a policy which is
consistent with public welfare."
These words of Louis Brandeis, an early 20th
Century Jewish Supreme Court Justice, encapsulate the tenets of the newly-formed Jewish Shareholder
Engagement Network (JSEN), a group of institutional investors with assets of more than $1.3
billion. The project, believed to be the first Jewish institutional investor group devoted to
shareowner action, had its founding meeting in November 2003.
The JSEN is affiliated
with the Interfaith Center for Corporate Responsibility (ICCR), a coalition of more than 270 Protestant and Catholic
organizations that promote shareowner action. JSEN member Nathan Cummings Foundation provides significant support
for the project. Other network members include the Naomi and Nehemiah Cohen Foundation, the
Forward Foundation, and the Union of Reform Judaism Pension Fund.
"There is a strong
basis in Jewish tradition to support shareholder activism," said Rabbi Mordechai Liebling, the lead
organizer of the network and "Torah of Money" director for the Shefa Fund, a Philadelphia-based Jewish community development
organization. "It is based on the principle that there can be no dichotomy between our economic
and spiritual lives."
"As the Talmud says, the first question you will be asked in heaven
will be, 'How did you conduct your business affairs,'" he continued.
There are three
direct principles in Jewish tradition that support shareowner action, according to Rabbi Liebling.
First, people cannot profit from forbidden activities, such as pollution, which endangers human
health, or underpaying workers. Second, people cannot partner or assist others in doing such
forbidden acts. And third, people should prevent their assets from causing harm, and one is
responsible if they do.
"The classic Talmudic example is about oxen: if ten people hold
shares in an ox and that ox causes damage, each shareholder is liable to pay a share, proportionate
to his or her holding, no matter how small and where or not he or she was actively involved in
handling the ox," Rabbi Liebling wrote in a memo he sent to SocialFunds.com. "You cannot transfer
responsibility for the effects of your assets."
This flies in the face of modern notions
"The modern corporation separates the identity of the shareholder and the
corporation--the concept of limited liability--the corporation and not the person is liable for
damages is a fundamental aspect of corporate economics," Rabbi Liebling writes. "This allows a
transfer of moral responsibility, thus shareholders feel that they have no responsibility for
illegal or immoral acts."
"Jewish tradition does not accept the separation so easily," he
The JSEN seeks to enact Jewish tradition by practicing active ownership, for
example by engaging in dialogue with companies over responsible corporate behavior or actively
voting proxies. The American Jewish World
Service, a JSEN member, is working to encourage other Jewish institutions, which collectively
own an estimated $30 billion in equities, to support shareowner resolutions addressing the HIV/AIDS
pandemic. The JSEN also recommends support for shareowner resolutions on executive compensation,
transparency in corporate political participation, global warming, prescription drug affordability,
and equal employment opportunity.
"Proxy voting is not only a matter of public policy but
a matter of fiduciary duty, essential for protecting and enhancing the value of the assets managed
on behalf of
others," says Nell Minow, a member of the JSEN Advisory Committee. Ms. Minow is
also editor and founder of The Corporate Library (TCL), an independent research firm that provides
corporate governance data, analysis, and risk assessment tools.
"The Reform Pension Board
has long felt that our financial investments have a social component," said Rabbi Stacey Offner,
chair of the socially responsible investment committee of the Reform Pension Board, the largest
Jewish institutional pension fund in the US. "We are delighted to join hands with other Jewish
institutional investors in an effort to give voice to our shared Jewish values, that we might
better invest not only in our financial future but in the kind of world that future will look