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February 14, 2012
ICCR Focuses on Dialogues More than Resolutions in Corporate Engagement
    by Robert Kropp

SocialFunds.com talks with Laura Berry about the Interfaith Center on Corporate Responsibility's shift in emphasis from filing shareowner resolutions to corporate engagement through dialogues.


When SocialFunds.com talked with Laura Berry, Executive Director of the Interfaith Center on Corporate Responsibility (ICCR), following the 2011 proxy season, she said, "The only real win is withdrawn resolutions, when companies look to us as a focus group for risk management."

In fact, a look at this year's 2012 Proxy Resolutions and Voting Guide reveals that ICCR's philosophy on corporate engagement has undergone a more fundamental evolution. The number of resolutions filed by ICCR members, which totaled 308 as recently as 2010, has decreased to 160 thus far in 2012. Members also report that they are engaged in 170 ongoing dialogues with corporations.

Clearly, a change in tactics has occurred at ICCR, from the more adversarial practice of filing shareowner resolutions to quiet engagement which, Berry told SocialFunds.com in a recent conversation, is often framed by the Chatham House Rule, "to encourage openness and the sharing of information."

Berry was quick to point out that ICCR members continue to vote their proxies in favor of shareowner resolutions filed by like-minded institutional investors. As the Guide states, "Proxy resolutions are one of many levers employed in shareholder advocacy, effective for bringing investor concerns to the more public forum of the company's annual shareholder meeting."

"There are a bunch of people working on shareholder proposals, and we're excited about all the work being done in the space," she said. Berry then described the process that led to ICCR's evolved approach to corporate engagement.

"In 2008, after a period of nine months and with the input of more than 100 people, we adopted a new strategic plan," she said. "We intentionally got about a third of the input from underrepresented voices who had visions of justice and sustainability aligned with ours."

The new strategic plan emphasized that "We seek a global community built upon on justice and sustainability through the transformation of the corporate world," she continued. "When you start to use language around transformation and collaboration, it starts to leave the field of adversarial conversations and pushes us toward everyone having a stake in transformation."

Which is not to say that corporations are let off the hook for such common practices as a failure to account for externalities. The list of 2012 shareowner resolutions posted on ICCR's website, for example, includes environmental sector rankings provided by Trucost, a leading environmental research firm.

"We took on the work of increasing more research-driven and well-informed dialogues with corporations, policymakers, and regulators," Berry said. "We needed to develop cross-sectoral approaches to systemic change in corporate behavior through intensive research. All of a sudden we weren't finding the bad guys and filing shareholder proposals, and we found a broader spectrum of collaborators, including how corporations were working with us through stakeholder focus groups."

Berry cited the financial crisis and other global crises as contributing as well to the evolution in ICCR's approach.

"The convergence of so many global crises over the last couple of years has made mainstream stewards of capital pay attention differently," she said. "It has made proprietary coalitions who might be more interested in protecting their own identity than in collaborating look up and say, we not only have to collaborate more authentically with each other. We have to reach across the ocean as well."

In a 2009 paper outlining the differences in approaches to shareowner engagement in the UK and US, James Gifford, Executive Director of the United Nations' Principles for Responsible Investment (PRI), wrote, "There is a cultural difference between the US and the UK on the issue of filing shareholder resolutions, with this tool being much more common in the US due to weaker shareholder rights leaving shareholders with fewer options, as well as a more confrontational corporate culture." Berry noted that ICCR's recent meetings at its New York City headquarters were attended by many more institutional investors from other continents, and the influence of the cultural differences of the new attendees cannot be discounted.

Berry also pointed to an article entitled Creating Shared Value, published last year in the Harvard Business Review. Authors Michael Porter and Mark Kramer wrote, "Corporate responsibility programs—a reaction to external pressure—have emerged largely to improve firms' reputations and are treated as a necessary expense. Anything more is seen by many as an irresponsible use of shareholders' money."

However, the authors continued, "The concept of shared value resets the boundaries of capitalism. By better connecting companies' success with societal improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets."

"What does it mean for a company when it looks at the common good and seeks economic value in creating shared value?" Berry asked. "If you believe in shared value, how do you capture the negative and positive externalities of strengthening communities where you operate?"

"More and more in the mainstream world, we see people asking, how do you measure this?" she continued. "How do we monetize it, and if we monetize it does it just make it a cynical money-making exercise? Our belief is that if some organizations have to apply a monetary value—to say that it is good business to treat people well—we just want the social transformation to occur. Whatever metrics and mechanisms are required to drive that change forward and bring more justice to the world, we're excited about it."

ICCR's emphasis on social transformation received further validation last year, when the United Nations Human Rights Council endorsed the Guiding Principles on Business and Human Rights of Professor John Ruggie, the UN Secretary-General's Special Representative for Business and Human Rights (UNSRSG).

Rev. David Schilling, the director of human rights for ICCR, described the Guiding Principles as "a significant breakthrough and an indispensible resource for investors in assessing the human rights performance of companies."

"Like any other principle-driven document, once a global norm is established it is amazing how words drive behavior," Berry said. "It's a benchmark for a new way of thinking about business and these other issues.

"When companies see that you're not only at the forefront of filing proposals and pushing them to change, but are also willing to acknowledge when they do change, they begin to change their way of looking at what corporate social responsibility means," she said. "They're willing to take more risks with us because we understand that moving through system change is hard."

"We started a movement 40 years ago, and we can do it again. The tools of the movement might be different, but the vision and the faith are the same."

 

 
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