how did we get here? the roots of social investing · 2013-09-10 · dals and mistrust, we bring...

How Did We Get Here? The Roots of Social InvestingSTEPHEN CALLAHAN

FALL/WINTER 2002

Socially responsibleinvestment is, for Jesuits, thework of structural justice. It

involves the investment portfolios of the ten

USA Jesuit provinces in efforts to positively

influence corporate behavior. As

shareholders in corporations, Jesuits have an

opportunity to influence corporate activities

in our country and throughout the world.

Jesuits also have the opportunity to make

investments in places where traditional

investment monies

do not flow, such as in community

development loan funds which develop the

human capital and housing stock in

underserved, undercapitalized geographical

areas.

—National Jesuit Committee on InvestmentResponsibility, Shareholder Advocacy

Guidelines, 2002

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not want their money sup-porting the conflict, social-

ly responsible investing(SRI) rapidly spread

as investors beganscreening their port-folios, zeroing inon military armsproduction andcorporate envi-ronmental prac-tices. Into the1970s, a series ofsocial and environ-mental movements

— f r o m c i v i lrights and women’s

rights to the antiwarand environmental move-

ments—served to increaseawareness around issues of

social responsibility. These con-cerns also broadened to includemanagement and labor issues, aswell as antinuclear sentiment.

In 1971, the EpiscopalChurch and others established theInterfaith Center on CorporateResponsibility (ICCR); the JesuitConference has been a member ofICCR in some fashion since 1975(see The Evolution of a Movementon page 4).

The Galvanizing Effect of Apartheid

I n the late 1970s, the conceptof social investing beganattracting a larger group of

American investors, due in largepart to concerns about the racistsystem of apartheid in SouthAfrica. This issue resonated deeplyin both Europe and the UnitedStates. Making profits under a sys-tem of racial apartheid became an

prosperity, and while official teach-ing forbade investments in compa-nies that were operating in thelegal shade, there was no wide-spread awareness of social invest-ing as a screen for making personalor institutional investments. Priorto the 1960s, Catholics and Jesuitsalike were rarely engaged in thisquestion.

Social Investing andContemporary Culture

T he modern roots of socialinvesting can be traced tothe impassioned political

climate of the 1960s. With thegreat social awakening of thattime, people began to call intoquestion the morality of certaintypes of investment practices andchoices. Largely started during theVietnam War by investors who did

In the Beginning

The origins of ethicalinvesting can betraced to early

biblical times, whenJewish law laid downmany directives onhow to invest ethi-cally, treat slavesequitably, tax fairlyand loan money ina non-usur iousmanner. Many ofthe reform mindeddenominations havebeen leaders in thisarea. In the mid-1700s,the founder of Meth-odism, John Wesley, evenwent so far as to claim thatthe use of money was the secondmost important subject of NewTestament teachings. As manysmall Christian sects settled NorthAmerica, some brought with themstrict norms with respect to howmoney should be used. Datingback to the 18th century, theQuakers and the Mennonites—whose traditions embrace peaceand nonviolence—have activelyavoided investing in enterprises orproducts designed to oppress orkill fellow human beings. For ex-ample, most Quakers refused toinvest in weapons and slavery.Many other religious investorsover the decades have activelyavoided the “sin” stocks of thealcohol, tobacco and gamingindustries.

For Catholics, social investingwas a practice that gained little orno attention until well after theSecond Vatican Council. PostWW II Catholics began enteringthe mainstream of middle class

Mr. Callahan is the provincial assistantfor social and international ministries

in the Maryland Province. continued on page 3

©2001

COURT ESYOF ARTIST MARIAN O SHER AND THE WASHINGTO N PR INTMAKERS GALLERY, WWW.W

ASHINGTONPRINTM

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FALL/WINTER 2002VOLUME 3, NO. 3

In All Things is published by theUnited States Jesuit Conference'sOffice of Social and InternationalMinistries. The Office of Social andInternational Ministries advises andassists the Jesuit Conference Boardand the Provinces of the Society ofJesus in promoting the domestic andinternational social mission of theSociety by means of: advocating pub-lic policy; public education; socialreflection and analysis; building anetwork of Jesuit and non-Jesuitindividuals and institutions; and sup-porting persons who are working inthe social apostolate, both domesticand international.

Editor-in-Chief: British Robinson

Managing Editor: Julie Bourbon

Associate Editor: John Kleiderer

Design: Eugenia Kim

Webmaster: Marcus Bleech

Richard Ryscavage, S.J., Secretary ofSocial and International Ministries/National Director of JesuitRefugee Service

British Robinson, National Directorof Social and InternationalMinistries

John Kleiderer, Policy Analyst

William Rickle, S.J., Ph.D., FieldSpecialist/Outreach Coordinator

Michael Seneco, Staff Assistant

Published tri-annually. The articlespublished here reflect the opinions ofthe editor or the authors. They are notmeant to represent any official posi-tions of the Society of Jesus.

Letters to the Editor must be signedand include the writer’s address anddaytime phone number. Letters maybe edited for length and clarity.

U.S. Jesuit Conference1616 P Street, NW, Suite 300Washington, DC 20036-1405

PHONE: 202-462-0400FAX: 202-328-9212

EMAIL: [email protected]://www.inallthings.org

From the Office…JOHN KLEIDERER

This issue of In All Things comes at an opportune time. With the backdrop of corporate scan-

dals and mistrust, we bring you an edition focused on socially responsible investing (SRI).

Predicated on the belief that one can do “well” while also doing “good,” this issue explores

the various facets of SRI, how to get involved, and the Catholic calling to partake in it.

SRI is a work of justice—the active witness of the Gospel in the marketplace. As proponents of a

preferential option for the poor, we are called to exercise our influence, whenever and wherever we

are able, to better the lives of the poor. Socially responsible investing is one way to do that. The poor

and marginalized lack influence with corporations, but as institutions and individuals with substan-

tial investments, we have access and clout. We encourage all of our institutions—Jesuit high schools,

colleges and universities—to join the provinces in engaging in the structural work of SRI.

Unfortunately, Jesuit institutional involvement in SRI is limited. Perhaps this speaks to the need

for deliberate formation of board members, or the need to raise awareness about SRI. This issue aims

to do just that—to educate investors about socially responsible investing, and to examine the

Christian calling to engage in SRI activities. But in the end, we are challenged to translate our rhet-

oric into action.

You may be skeptical. Can one really do this and still see financial growth? Isn’t this just feel-good

investing—does it really make a difference? How could I actually influence a large corporation? We

hope you’ll find some answers herein.

The issue opens with the roots and history of socially responsible investing, followed by an article

tracing the Jesuit involvement in the SRI movement through the years.

Bill Lockyear, chairman of the National Jesuit Committee on Investment Responsibility, covers

the nuts and bolts of SRI and provides practical advice for institutions interested in exploring SRI as

a viable business strategy. And Jesuit scholastic and lawyer Kevin O’Brien, SJ, addresses questions of

Christian ethics: Is there an ethical responsibility to engage in SRI? What ethical considerations

underlie the Ignatian call for SRI?

You will read a case study—still in progress—of how several Jesuit provinces are using their

investments to influence a pharmaceutical company to provide affordable HIV/AIDS medication to

Africans. And you’ll hear that CEO’s account of how his company is responding.

The issue concludes with a spiritual reflection, looking at how Ignatian spirituality relates to SRI

and asks the question of why Jesuits and others should care.

Be sure to check out the online supplement as well. You will find web links and helpful resources

in getting started with SRI, in addition to articles looking at alternative investments—an aspect of SRI

not touched upon in the print edition.

We hope you will find this In All Things not only interesting and educational, but also challenging.

Whether you are a Jesuit, a board member of a Catholic, Jesuit institution, an educator, or a former

volunteer, we hope this issue gives you pause and invites you to reflect.

“As Isaiah promised, the call to justice becomes attainable when we come together in prayer and

action. As communities of faith—in local congregations, in regional, national, and institutional set-

tings—we have great power. We have the power of our endowment funds and our collective voice to

influence the princes and principalities of our day. Our investments give us representation at share-

holder meetings and other venues to discuss just wages, fair treatment of workers, safer working con-

ditions, care for the environment, attention to human rights, and ethical balance sheets.”1

If not us, Who? If not now, When? If not for the Kingdom, Why?

1 From the Interfaith Center on Corporate Responsibility 2001-2002 Annual Report, page 3.

Roots of Social Investingn


continued from page 1

Church as Economic Actor

Although all members of the Church are

economic actors every day of their

individual lives, they also play an economic

role united together as Church. On the

parish and diocesan level, through its

agencies and institutions, the Church

employs many people; it has investments;

it has extensive properties for worship and

mission. All the moral principles that

govern the just operation of any economic

endeavor apply to the Church and its

agencies and institutions, indeed the

Church should be exemplary. (347)

— U.S. Catholic Bishops Pastoral Letter,

Economic Justice For All

funds were among the largestfinancial assets involved with SRI.

The number of bond, equity,mutual and money market fundsthat utilized some type of socialscreening increased from a handfulin the early 1980s to well over onehundred by 1997. The SocialInvestment Forum1 published a1995 study entitled After SouthAfrica: Responsible Investment Trendsin the U.S., which showed that$639 billion was invested in man-aged portfolios utilizing one ormore social investment strategies.This represented a ten-fold in-crease for the decade, the majority

of which involved sharehold-er advocacy.

Instead of taking thedefensive, corporate Amer-i c a began to respondmore proactively, often justto improve its tarnishedimage. Nonetheless, increas-ing numbers of Americancorporations initiated corpo-rate codes of conduct andmission statements that

included what came to be knownas “the double bottom line”—acommitment to serving the specialneeds of employees and the com-munities in which the businessoperated, in addition to making aprofit and serving the needs ofcustomers. This was reflected inthe spread of voluntary corporatefamily- and environmentally-friendly programs and practices,which in many cases went farbeyond governmental require-ments.

While precise demographics ofsocially responsible investors arenot available, certain segments ofthe population are more inclinedto participate, including babyboomers, women and minorities.In 1984, only $40 billion was putinto socially responsible investing.2

Contrast that figure with today,when one out of every eight dollarsinvested in stocks was promptedby a socially conscious decision.3

That comes to $2.34 trillion of the$19.9 trillion professionally man-aged in the United States (or 12percent), an increase of 81 percentfrom 1997.4

If history is any guide, social-ly responsible investing can onlycontinue to grow and with it, notjust profits, but awareness. It is,for Jesuits and their lay col-leagues, more than a matter offinancial investment. It is a workof structural justice. ✧

voices in this movement; ultimate-ly, the apartheid government wasbrought to its knees.

While it had made a clearmoral statement and set a stan-dard in terms of opposing apart-heid, the SRI movement had notyet won the hearts and minds ofmainstream investors, who con-tinued to view the practice as aninappropriate blurring of publicbusiness and private morality.Most investors believed thatsocial activists, in their zeal toadvance their left-leaning socialagenda, simply wanted to denybusiness their right to a just

return on capital. Thus, socialinvesting was generally viewed asa zero sum game of sacrificingprofit to do good, and mostinvestors quickly and willinglysteered away from it.

Evidence Mounts for“Doing Good and DoingWell” through SRI

S ocially responsible investinggot a serious foothold in thefinancial industry in the

1980s with the establishment ofscreened mutual funds like DominiSocial Investing and CitizensMutual Funds (see Resources onpage 20). From the mid-1980sand into the 1990s, accumulatedresearch began to demonstratethat corporations with good socialrecords on the whole outper-formed corporations with badsocial records. In turn, sociallyscreened portfolios, no matterwhat the issue, rewarded investorsbetter than unscreened portfolios.In other words, investors and busi-nesspeople could “do good”socially while also doing very wellfinancially. As a result, SRI took offin the U.S. in the 1980s. The port-folios of churches, universities andcolleges, and state and city pension

anathema. Concerned U.S. investorsjoined international efforts to puteconomic pressure on South Africato end apartheid. A growing num-ber of investors throughout the1970s and 1980s used bothscreening and shareholder advoca-cy to press for change in SouthAfrica. Both individual and institu-tional investors refused to invest incompanies that did business inSouth Africa and sponsored share-holder resolutions asking them towithdraw from the country.

Activists called for divestmentfrom U.S. business operations thatactively or even tacitly supportedapartheid. This became a pri-mary focus for many youngpeople on college campusesand in the boardrooms ofcolleges and universitiesacross the land. Most, aftersome internal struggle andconflict, implemented strictpolicies of divestment fromSouth Africa. Although eco-nomic sanctions againstSouth Africa ended in 1993,investors continued the practice byapplying similar principles to othercompanies.

Until the mid 1980s, SRI wasconsidered to be nothing morethan what Fortune magazine sar-castically called “feel-good invest-ing” or what would be labeledtoday as “politically correct”behavior. The movement neededto get over two credibility hurdles—one social/political and theother economic.

Wall Street “wisdom” had longpreached that making social judg-ments in the investment processwould have no effect on corpora-tions, especially large ones. A sec-ond bit of wisdom was the beliefthat making social judgmentswould limit return to investors.The first hurdle was successfullynegotiated as a result of the SouthAfrican divestiture movement inthe late 1980s. As more and moreU.S. corporations stopped doingbusiness in or with apartheid SouthAfrica, foreign corporations contin-ued to do business and even ex-pand their operations. There wasone major factor that accounted forthis different response: a successfuland strong social investing move-ment in the United States. Ameri-can corporations listened to the

1 www.socialinvest.org2 After South Africa: Responsible Investment Trends in the U.S., Social Investment Forum, 1995 Study. 3 Nelson’s Directory of Investment Managers, 1999.4 2001 Report on Socially Responsible Investing Trends in the U.S., Social Investment Forum.

In 2001, one out of every eight

dollars invested in stocks was

prompted by a socially conscious

decision. That comes to 12 percent

of the professionally managed

investments in the U.S.


Beginnings of ICCR

The Interfaith Center onCorporate Responsibility(ICCR) was founded in

1971 in part as a response toclergy concern over Americaninvolvement in the Vietnam War.The group’s first social policy res-olution was filed with GeneralMotors in 1971, calling uponGM to withdraw from SouthAfrica. By 1975, ICCR member-ship embraced 12 national Prot-estant Church agencies and 28Roman Catholic organizations.The increasing involvement ofthe Catholic community coinci-ded with a deepened conscious-ness of the integration of faithand action, as called for by theJesuit General Congregations 31and 32, and the internalization ofthe 1971 World Synod of Cath-olic Bishops’ document Justice inthe World, which stated:

Action on behalf of justice andparticipation in the transforma-tion of the world fully appear tous as a constitutive dimension

holders’ meetings dealing withthe issue of climate change, andbefore city and state pensionfunds urging them to vote theirproxies in favor of shareholderresolutions on equal employmentopportunity.

But this work is not simplythe general task of speaking theGospel in the marketplace. It hasmatured and aims to change spe-cific company policies and prac-tices. In other words, while it isindeed our responsibility to callpowers and principalities toaccount, it is our obligation to tryto change corporate behavior thatharms individuals and society.

In the early days of sociallyresponsible investing, the land-scape was unknown, the expecta-tions of religious investorsundefined. Now we look for spe-cific results, for companies toagree to change their policies andbehavior. These changes, largeand small, together constitutesignificant movement in the busi-ness community towards greatersocial responsibility.

In the last three decades, thesocially responsible investingmovement has grown by

leaps and bounds. From thebeginning, religious institutionswere motivated by their religiousvalues and grounded in theirwork in the world. In the matterof investments, it is clear that reli-gious organizations committed tosocial and economic justicenationally must examine the waysin which global corporationsadvance or delay their social jus-tice agendas. And since the faithcommunity owns a “piece of therock” through its investmentportfolios, it is, in fact, a partici-pant in the decisions and behav-ior of global corporations. Thus,as global citizens and as globalinvestors, religious organizationsfind themselves intertwined withglobal corporations.

This has led religious organi-zations to some strange and won-derful places for which there wasno seminary training: to corpo-rate board rooms discussinghuman rights, to corporate stock-

The Evolution of a Movement:From Fringe to CredibilityTIM SMITH AND SR. PATRICIA WOLF, R.S.M.

Mr. Smith is the senior vice president of Walden Asset Management

and president of the Social Investment Forum.

Sr. Wolf is the executive director of ICCR.

Social Screening describes theinclusion or exclusion of corporatesecurities in investment portfolios basedon social or environmental criteria.Socially concerned investors generallyseek to own profitable companies withrespectable employee relations, strongrecords of community involvement,excellent environmental impact policiesand practices, respect for human rightsaround the world, and safe and usefulproducts. Conversely, they often avoidinvestments in those firms that fall shortin these areas.

Alternative Investing describesinvestments designed to providetraditionally hard to obtain capital forsuch programs as preservation of familyfarms,loans to small businesses, andconstruction of low- to moderate-income housing.

Shareholder Advocacy describesinvestor efforts to submit and vote corporate proxy resolutions as a means of influencing company behavior. Thisstrategy was successful in pressuringcorporations to pull out of South Africa.It has also been instrumental in reportingminority hiring practices and improvingenvironmental practices throughadoption of the CERES principles (anenvironmental code of conduct).

The CERES Principles (Coalition for Environmentally Responsible Economies)

as water, soils and forests. We will conserve non-renewablenatural resources through efficient use and careful planning.

Reduction and Disposal of WastesWe will reduce and where possible eliminate waste throughsource reduction and recycling.All waste will be handled and disposed of through safe andresponsible methods.

Energy Conservation We will conserve energy and improve the energy efficiency of ourinternal operations and of the goods and services we sell. We willmake every effort to use environmentally safe and sustainableenergy sources.

Risk ReductionWe will strive to minimize the environmental, health and safety risks to our employees and the communities in which we operate through safe technologies,facilities and operating procedures, and by being prepared foremergencies.

Safe Products and Services We will reduce and where possible eliminate the use, manufacture orsale of products and services that cause environmental damage or

By endorsing the CERES Principles,companies not only formalize theirdedication to environmental awarenessand accountability,but also actively commit to an ongoingprocess of continuous improvement,dialogue and comprehensive, systematicpublic reporting. Endorsing companieshave access to the diverse array of experts in our network, from investorsto policy analysts, energy experts,scientists, and others.

Principles

Protection of the BiosphereWe will reduce and make continual progress toward eliminatingthe release of any substance that may cause environmentaldamage to the air, water, or the earth or its inhabitants. We willsafeguard all habitats affected by our operations and will protectopen spaces and wilderness, while preserving biodiversity.Sustainable Use of Natural Resources We will make sustainable use of renewable natural resources, such

The CERES Principles are named after Ceres, the Roman goddess ofagriculture.

Evolution of the SRI Movementn


Recent ICCR Activities

• In 2002, ICCR members asked BritishPetroleum (BP) to stop using the CrazyHorse name for its Gulf of Mexico oiloperation, in recognition of the harm thatcommercialization of this great spiritualleader causes to the American Indiancommunity. In response, BP changed thename to Thunder Horse. BP is the second major corporation to address thisissue following last year’s decision byStroh’s Brewing Company to cease bottlingits Crazy Horse malt liquor.

• ICCR members asked Texaco, PepsiCo, andUnocal, as well as other companies, towithdraw from Burma (Myanmar) in 1997due to the egregious human rights violations brought against theBurmese people by a military junta. Texacoand PepsiCo withdrew; Unocal hasremained in Burma and is now the subject of a federal lawsuit.

• ICCR members helped to change the termsof the global warming debate bychallenging corporations to takeresponsibility for climate change and greenhouse gas emissions. As a result of thisstrategy, ICCR resolutions received recordsupport among investors in 2002, resulting in votes of 20 to 30 percent. For instance, an ExxonMobilmotion outlining how the company will promote renewableenergy sources received 23.9 percent of thevote.

• Also in 2002, ICCR filed a motion(receiving 26.81 percent of the vote)requesting that American Standard reporton greenhouse gas emissions—includingsteps the company would take to reduceemissions substantially.

continued on page 6

tor’s mission and beliefs. Positivescreens, on the other hand, servethe purpose of pointing theinvestor toward companies andfinancial institutions that serve aspecific social good.

Shareholder advocacy consistsof several components: letterwriting, direct dialogue with cor-porate management, the pubicfiling of shareholder resolutions,speaking at the annual meeting ofshareholders and voting proxiesto constructively influence corpo-rations. No institution is moreclosely associated with social pol-icy shareholder proposals thanICCR; none are more closely

associated with influencingcorporate social policy thanthe faith community. Whilesome companies view theshareholder resolution as ahostile act, ICCR views thisactivity as a statement of

stewardship and responsibility.Alternative investments direct

capital toward projects that bene-fit the poor and are critical to amulti-pronged strategy of sociallyresponsible investing. For morethan 20 years, ICCR membershave collaborated with communi-ty development organizations,credit unions, minority-owned

conduct, predatory lending, mili-tarism, workplace equality, afford-ability and accessibility ofpharmaceuticals, as well as issuesrelated to indigenous peoples.

Elements of SociallyResponsible Investing

There are several basic typesof socially responsible in-vesting, including screen-

ing investment portfolios,shareholder advocacy and alter-native (direct) investment incommunity economic develop-ment. Within the faith communi-ty, negative screens are often

applied to restrict investment incertain industries or companies,such as for-profit health care orcompanies that manufacture abor-tifacients, nuclear weapons, land-mines, tobacco or pornography.The screens grow out of a convic-tion that it would be wrong tomake money from industrieswhose purpose or products runcounter to the responsible inves-

of the preaching of the Gospel,or, in other words, of theChurch’s mission for theredemption of the human raceand its liberation from everyoppressive situation (JW 6).1

Today, ICCR’s membershipnumbers 275 Protestant, Cath-olic and Jewish institutionalinvestors, including denomina-tions, orders, pension funds,health care systems, foundations,publishing houses, and dioceses.The U.S. Jesuit ConferenceOffice of Social and InternationalMinistries is also an active mem-ber of ICCR. Since its inception,the faith community has re-imag-ined the world from theperspective of justice, andcorporations have felt ourimpact. Once we were con-sidered a fringe movement.Not so today!

Our members connecttheir mission, with its emphasis onjustice, to their investment strate-gies and decisions. Commonlyadopted principles for investmentactivity include human dignity,environmental responsibility andworld peace; ICCR core programssupport these member principles.We address issues such as globalwarming, environmental justice,human rights, global codes of

health or safety hazards. We will inform our customers of theenvironmental impacts of our products or services and try to correctunsafe use.

Environmental Restoration We will promptly and responsibly correct conditions we have caused that endanger health, safety or the environment. Tothe extent feasible, we will redress injuries we have caused to personsor damage we have caused to the environment and will restore the environment.

Informing the Public We will inform in a timely manner everyone who may be affected byconditions caused by our company that might endanger health, safetyor the environment. We will regularly seek advice and counsel throughdialogue with persons in communities near our facilities. We will nottake any action against employees for reporting dangerous incidents orconditions to management or to appropriate authorities.

Management Commitment We will implement these Principles and sustain a process that ensuresthat the Board of Directors and Chief Executive Officer are fullyinformed about pertinent environmental issues and are fully

responsible for environmental policy. In selecting our Board ofDirectors, we will consider demonstrated environmentalcommitment as a factor.

Audits and Reports We will conduct an annual self-evaluation of our progress inimplementing these Principles. We will support the timely creationof generally accepted environmental audit procedures. We willannually complete the CERES Report, which will be made availableto the public.

For more on the CERES Principles, visit www.ceres.org. CERES is the leading

U.S. coalition of environmental, investor and advocacy groups working

together for a sustainable future. More than 70 companies, including

multinationals as well as small and medium-sized companies, have

committed to continuous environmental improvement by endorsing these

CERES Principles.

The voice of the faith community

in the marketplace is more urgently

needed today than ever before.

1 Justice in the World, World Synod of Catholic Bishops, Second General Assembly, November 30, 1971, #6. www.osjspm.org/cst/jw.htm.

Evolution of the SRI Movement



fidence in companies and in themarketplace and convinced in-vestors that corporate governancestructures must be made moreaccountable. At the same time,many companies are looking atthe impact of their decisions innew and different ways. Thevoice of the faith community inthe marketplace is more urgentlyneeded today than ever before.Looking at the wave of global

social problems—from AIDS,to global warming, tosweatshops, to dishonestyin corporate board rooms—we as religious investorsneed to find ways to workwith other socially con-cerned stockholders to makea difference. Indeed, many

such investors exist and are join-ing in this movement for corpo-rate social responsibility.

The faith community hasbeen engaged in the corporateresponsibility movement formore than 30 years. Some ICCRissues will never gain wide share-holder support, and nearly alltake years to come to public con-sciousness, but we will continueto be a voice within the move-ment and for one simple reason:to bring forth God’s reign ofjustice. The faith community willbe there, seeking to make aworld of difference. ✧

tion, but rarely offered the optionupfront. Shareholder advocacyefforts have shown significantresults, particularly through theinitiatives of religious organiza-tions in concert with environ-mental groups, labor unions andpension funds.

Using their leverage, religiousshareholders have sponsored thous-ands of resolutions with companies.These resolutions often become

the basis for dialogue with man-agement and have led to hundredsof “agreements.” For example,companies have agreed to issue re-ports on diversity, the environ-ment or codes of conduct. Othercompanies have made specificchanges in policy endorsing theCERES (Coalition for Environ-mentally Responsible Economies)Principles for environmentallysound business practices andreporting annually on their envi-ronmental progress and chal-lenges (see Principles on page 4).

The recent wave of corporatescandals has shaken investor con-

banks and loan funds—agenciesthat play a vital role in meetingbasic human needs such as hous-ing and job creation. Theseefforts have resulted in the invest-ment of more than $100 millionin community economic develop-ment (CED) enterprises. (Formore on CED, see In All Thingsonline supplement.)

On occasion, however, ICCRmembers have decided divest-ment is the stronger strate-gy, either because theirshareholder activity has notachieved significantprogress or because theactivity or product of a cor-poration is deemed so egre-gious that ICCR investorscannot in good conscienceprofit from it. Divestment was apowerful tool in the campaign toend apartheid in South Africa,but it is no longer embraced as akey strategy.

The Evolution of aMovement: From Fringe to Credibility

When we first becameinvolved in the cor-porate responsibility

movement, investment managerswould accommodate inclusion ofinvestment screens if requestedby a religious order or denomina-

PHO

TO CO

URTESY O

F BP-AM

OCO

The first step is to recognize that when we

invest in a corporation, we are literally

enabling its mission. When we object to

any part of that mission, we bear witness

as faith communities and as shareholders.

We can use our power to influence

corporate decisionmaking. And we can

focus attention on policies that affirm the

whole of creation.

—ICCR 2001-2002 Annual Report

Rosebud Sioux tribal leaders and Crazy Horse’s descendants come together with British Petroleum executives for a landmark meeting.

We as religious investors need

to find ways to work with other

socially concerned stockholders

to make a difference.


By the 1980s, some of the U.S.Jesuit provinces—most notablyMaryland, New York and Detroit—were involved with the ICCR instockholder activism. Althoughmost of the activity came from thesocial ministry people at theprovince and national levels, someof the most proactive voices wereprovince financial officers: the lateFr. Dave Meier, S.J., at the JesuitConference, Fr. Henry Chamber-lain, S.J., and today, WilliamLockyear, the lay CFO of theOregon Province.

Creative tension arose be-tween the JACIR, which tended tovote proxies with corporationmanagement (and sometimesagainst ICCR initiatives), and theNational Office of Jesuit SocialMinistries, which was increasingly

an earlier generation, less inclinedto question the practices of reveredand respected institutions and lesslikely to challenge market capital-ism. The question of so-called“sin” stocks like tobacco, alongwith the apartheid question inSouth Africa, began to chip awayat these staid and stolid views.

At Jesuit universities and col-leges, where youthful voices ofdissent found some ready backersamong younger Jesuits, especiallyin light of more recent Vatican IIpronouncements and the “radi-cal” results of the Jesuit GeneralCongregation 32, the concernsabout ethical investment practicesgained more credence. But not allwere in agreement, just as in thelarger society and culture. Andthere were strong objections toovercome.

The Society of Jesus in theUnited States is activelyinvolved today in Socially

Responsible Investing (SRI), ini-tiating shareholder resolutionsand choosing investment oppor-tunities on the basis of the poten-tial to “do good while doingwell.” We set down this road inearnest in 1974, when the U.S.Jesuit Conference formed theJesuit Advisory Committee onInvestment Responsibility (JACIR).This Committee worked to getthe U.S. provinces to vote theirproxies from the substantial port-folios they managed, comprisedprimarily of endowment moniesfor seminary training.

At the same time, anotherJesuit Conference group, theNational Office of Jesuit SocialMinistries, was taking part inshareholders’ meetings and pro-posing resolutions. At the time,stockholder activism was increas-ing among religious and secularinvestors to divest from corpora-tions operating in apartheid SouthAfrica. Groups such as theInterfaith Center on CorporateResponsibility (ICCR), with theU.S. Jesuit Conference as a mem-ber, were organizing the divest-iture movement (see The Evolutionof a Movement on page 4).

In the 1970s, within Jesuitand Catholic circles, the SRImovement increasingly reflectedthe broader society. Clearly therewere some—particularly youngerpeople open to the reforms ofVatican II and active in civil rightsand other pressing social ques-tions—who were openly advocat-ing for more thoughtfulapproaches to SRI. But they werenot the dominant voices in theChurch or among the Jesuits;those who controlled decisionmaking in this arena were still of

U.S. Jesuits and Investment Responsibility HistoryREV. JOHN DISTER, S.J.

Fr. Dister (Detroit Province) is the provincial assistant for social

ministry, assistant for retreat ministryand regional director of

the Ignatian Lay Volunteer Corps.

Purpose of NJCIR

The primary purpose of the National JesuitCommittee on Investment Responsibility(NJCIR) is to advocate for and effectchanges in corporate behavior bysupporting work on the province andnational levels. NJCIR members encourageone another on province level efforts, suchas filing shareholder resolutions, votingproxies, participating in corporatedialogues, and developing investmentguidelines. Nationally, the NJCIR works tobroaden awareness of socially responsibleinvestment in Jesuit-related institutions, toinvolve Jesuits in collaborative efforts withothers committed to socially responsibleinvestment, and to make uniquecontributions using the resources of asmany provinces as possible.

—NJCIR, Shareholder AdvocacyGuidelines, 2002

continued on page 8

1970

s Interfaith Center on CorporateResponsibility (ICCR) begins. Thefirst social policy resolution is filedwith General Motors, calling uponGM to withdraw from South Africa.

Jesuit Advisory Committee onInvestment Responsibility (JACIR)forms.

SRI movement increasingly reflectsthe broader society; “sin” stocks,along with the apartheid questionin South Africa, chip away at stolidviews of earlier generations.

Vatican II pronouncements and the“radical” results of the JesuitGeneral Congregation 32 garnercredence for ethical investmentpractices.

SRI Through the Years

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Jesuit Conference board dissolvesJACIR in favor of a new Jesuitapproach; creation of theNational Jesuit Committee onInvestment Responsibility(NJCIR).

ICCR members ask Texaco,PepsiCo, Unocal, and others towithdraw from Burma. Texaco andPepsiCo withdraw; Unocal remainsand becomes the subject of a federal lawsuit.

Chicago, Detroit and OregonProvinces co-file with theMaryland Province on anHIV/AIDS resolution withAbbott Laboratories.

ICCR members ask BritishPetroleum (BP) to stop usingthe Crazy Horse name for itsGulf of Mexico oil operation,and BP complies.

History of Jesuit Involvement in SRI



means that most of the U.S.provinces will co-file on variousHIV/AIDS resolutions withAbbott, Bristol-Myers, Merck andPfizer, or will continue thedialogue with them. Predatorylending and global warming res-olutions will be the subject ofseveral province co-filings as well.

Much has happened in theSociety of Jesus and in the corpo-rate world in the 25 years sincethe U.S. provinces were firstinvolved in stockholder activism.In the early days, Jesuits involvedin social ministry on occasionfound themselves at odds withtheir province treasurers, whowere reluctant to support stock-holder activism. Today, half themembers of the NJCIR areprovince treasurers or their layassistants. More recently, there isa growing awareness of the valueof a more collaborative relation-ship between socially activeinvestors and corporation man-agement—in large part becauseprioritizing social justice en-hances the corporation’s reputa-tion and increases profits for all.Wall Street is slowly learning thelesson. ✧Special thanks to Frs. Henry Chamber-lain, S.J., Joe Daoust, S.J., and Gap LoBiondo S.J., who contributed valuableinformation to this history.

bility, and energy and environ-ment.

Last year, the Chicago,Detroit and Oregon Provinceswere among a number of co-filerswith the Maryland Province on aresolution with Abbott Labora-tories (see Shareholdr Advocacyand the AIDS Pandemic on page16). Most of these same provincesco-filed similar resolutions withICCR members on Bristol-Myers,Merck and Pfizer, but these werewithdrawn after further dialogue.Several provinces also co-filed res-olutions with Conseco, Citigroupand Wells Fargo on predatorylending issues.

A commitment was made atthe most recent NJCIR meeting(September 2002) that all prov-inces will be strongly encouragedto purchase at least a minimumequity position in a corporationwhen a Jesuit province is the leadfiler on a shareholder action. It ishoped that the 28 Jesuit collegesand universities would also partic-ipate in this important work (seeInvestors: It’s Just Money on page9). At that meeting, the groupdetermined that HIV/AIDSwould continue to be its primaryshareholder advocacy priority,followed by predatory lendingand global warming.

For the coming year, this

activist in opposing corporationsin an effort to bring about corpo-rate change. The Jesuit Confer-ence board dissolved the JACIR in1984 in favor of a new Jesuitapproach to corporate investmentresponsibility.

The Jesuit provincials decidedthat each province would form acommittee on investor responsi-bility—made up of membersrepresenting a balance of socio-economic views—to serve as themajor consultation group to theprovincial. In turn, the JesuitConference staff was to proposestructures to coordinate informa-tion and discussion among theprovince investment responsibilitycommittees. This led to thecreation of the National JesuitCommittee on Investment Res-ponsibility (NJCIR). NJCIR ismade up of representatives fromall 10 U.S. provinces and UpperCanada who meet twice yearly toset strategies, share informationand receive input from ICCR.Members of the NJCIR educateone another about alternativeinvestment opportunities andreport any progress they’vemade with corporate executives.NJCIR’s major areas of interestare the six issue groups of ICCR:health care, militarism, equality,global finance, global accounta-

Why consider this work a distinct, social priority?responsible for their actions. This kind of investing arose out ofnecessity during a period of intense globalization. Wheninvestors could no longer keep track of the operations ofcompanies halfway across the world they naturally refused to beheld personally responsible for the actions facilitated by theirinvestment. The world is again experiencing intenseglobalization; every corporation is multi-national in at leastsome fashion. As Catholic investors, it is important that we bearwitness to the robust understanding of property in our tradition.This could be considered an evangelical moment in the courseof global capitalism.”

—NJCIR Resolution, April 2001

“Catholic social teaching understands the rightful ownership ofall property to depend, in some sense, upon the exercise ofresponsibility, accountability and stewardship with regard toownership. In order to use what we own in accordance with thepurpose for which it was created, we need to remain connectedto its exercise. However, the creation of limited liabilityownership during the age of mercantilism gave rise to the firstcorporations of the sort in which we now invest ourendowments. This kind of ownership for the first time allowedindividuals or institutions to own something without beingcompletely responsible for it. The benefits are clear: if thecompany went bankrupt, the investors lost their investment butwere not held responsible for the remaining debts of thecorporation. The potential social cost is equally clear: we havecreated in this kind of ownership a form of agency that is divorced from morality. Corporationsact in the world with some degree of moral, though notnecessary legal, impunity specifically because no one is truly

Key Terms

SRI—Socially Responsible Investing

JACIR—Jesuit Advisory Committee onInvestment Responsibility

ICCR—Interfaith Center on CorporateResponsibility

NJCIR—National Jesuit Committee onInvestment Responsibility

Some U.S. Jesuit provinces—notably Maryland, New Yorkand Detroit—engage in ICCR stockholderactivism.

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SRI Through the Years

All of us recognize the everyday demands on

our assets and resources. But equally

demanding

is the need to invest well—not

just for the greatest growth, but for the

greatest good.



Mr. Lockyear is the chief financialofficer of the Oregon Province

and chairman of NJCIR.

members are asked to support theinstitution as a result of theirbusiness knowledge and commu-nity contacts. A primary task,then, is the formation of theboard membership: an awarenessof the plight of those who haveless and our service of a faith thatdoes justice should become partof each board member’s world-view. Justice concerns mustinform and permeate Jesuit

boards— we cannot sim-ply put on the “faiththat does justice hat” aswe enter the boardroomor the chapel. It is alifestyle choice thatshould influence every-thing we do as Chris-tians and investors.

National and inter-national involvement ofJesuits, friends andbenefactors is critical. All10 provinces of the U.S.Assistancy have beeninvolved in recent SRIactivity led by theNational Jesuit Commit-tee on Investment Res-

ponsibility (NJCIR) (see U.S. Jesuitsand Investment ResponsibilityHistory on page 7). Because theJesuit name commands immedi-ate attention and respect, theirefforts have influenced corporateAmerica. (For a recent example ofthis activity, see ShareholderAdvocacy and the AIDS Pandemicon page 16.)

Underlying the SRI move-ment is a basic assumption that

• Develop the involvement ofboards and the administratorsof Jesuit works in sociallyresponsible investing (SRI).

• Plan for the involvement of alllevels of leadership teams inSRI.

• Plan for the involvement of stu-dents and constituents in SRI.

• Most importantly, lead byexample and involve Jesuitsthemselves in SRI.

How to go about involvingall these friends and supporters?First and foremost, we must edu-cate Jesuits in the SRI movement.Only when they themselves arefully aware of the possibilities canJesuits ask questions with confi-dence in any leadership role thatthey fill.

Generally speaking, boardmembers and trustees are notselected for their strong sense ofIgnatian tradition. More typically,

Jesuit institutions and spon-sored works have becomeincreasingly reliant on in-

vestment portfolios to generatereturns sufficient to support theirmission. After years of sky-highreturns, most are bemoaning therecent declines. But imagine thatduring this time of marketfluctuation, a broader measure ofinvestment return was consi-dered—one that took intoaccount the moral andsocial consequences, aswell as the financialimplications, of invest-ment decisions.

The difficulty is thatnon-financial returns arenot as easily quantified.Simple mathematics pro-vides us with a rate ofreturn, P/E ratio andmanager comparisons, buthow does one measurecommunity improvement,a clean environment orthe value of democracy?To gauge the success ofnon-financial returnsrequires a different mind-set, as well as an understandingthat an investment representssupport (tacit or explicit) of themanagement practices of thecompany in which one has invest-ed. It also provides managementwith a resource base to continueits operations. How to ensurethat these relationships result in apositive investment return for thefaith-based investor?

Those in leadership at Jesuitinstitutions must:

Investors: It’s Just MoneyWILLIAM LOCKYEAR

Market drops 300 points! A common headline in recent times.

Jesuit investment portfolios double theirreturns!

But how can that be?

continued on page 10

Call to Action



for one year? Establish an advocacy account. Move sufficient shares (atleast $2,000 worth) into this account to be held until youradvocacy activity is complete.

● How can a minimal amount of investmentprovide a significant voice?A minimal investment provides an entry point into theconversation. Once involved, we have several forums ofinfluence:

• Public forum: Each issue has a public presence that canand should be used to spread support.

• Shareholder forum: Shareholder meetings and theproxy process provide an efficient method to effectivelypresent our thoughts and concerns.

• Boardroom forum: We have directly influenced manycorporate board members through education and ministry.We can build on this connection as a basis to initiatedialogue and propose change.

● There are too many issues. How do weavoid spending all of our time on SRI? The organization needs to focus on one or two specific issues that are heartfelt. Each institution needsto evaluate which “forums”it can most directly influence and evaluate them for possible participation.

● Who votes our Jesuit proxies?Typically, investment managers fill this role. However, proxiescan and should be voted by the shareholder. As Jesuitshareholders, we should be in a role of understanding theissues and having a voice in those issues.

● Why haven’t Jesuit students raised these

SRI: Frequently Asked Questions

by the institution. Once, divesti-ture would have been the popularresponse to a corporation’s ques-tionable business practices. Today,Jesuit institutions realize thatthey can continue to hold stock

that was purchased based onsound investment fundamentalsand use that position as a voicefor the poor. Rather than raisepossible oversight questions and

shareholder activism is an effectivetool. Often the first response to acall for investment responsibility isdivestiture. Clearly that is the sim-ple way out. It is also the surestway for an investor to lose his orher voice and any possibleinfluence in the entity’soperations. The AbbottLaboratories examplereflects the value of main-taining and using thatvoice. Only by forcing theconversation were weable to convince Abbottexecutives to fly toTanzania and Uganda towitness for themselves thedevastation wrought byAIDS. Without our Jesuitshares, there would havebeen no discussion—noinvestment, no seat at thetable.

Jesuit institutions have aresponsibility to investors to usethe proceeds of their investmentsto maximize the work being done

● Do our bucks walk our talk? As individuals on mission we can have an impact in manydifferent ways: our presence, our teaching, our leadership andour finances. Often finances are left off that list in search of a“better return.”

● Why is a better return only measured inpercentages?In upholding the board’s or leadership’s fiduciary responsibility,specific market driven benchmarks are the only consistentlyapplied yardstick for measurement. Does a 10 percent returnwith an active voice in corporate operations provide a higherlevel of leadership than simply a 10 percent return?

● How is business related to human issues suchas justice? Business is not an ethical being. Ownership of stock provides anopportunity to influence businesses to be more aware of theirimpact on fairness and justice.

● Do Jesuit financial officers, at all levels(parishes, schools, social ministries, etc.),operate outside the Jesuit mission? Shouldthey?All functions within any ministry should be well informed of andactively support the Jesuit mission—a faith that does justice.

● Does Socially Responsible Investing decreaseour return?Not necessarily. Use your portfolio for advocacy, not forexclusion. It takes a minimal commitment in terms ofinvestment (at least $2,000 for one year) to have a voice.Without that commitment, your accounts will be managed likeany other.

● Our managers actively trade our portfolio.How can we be assured that we’ll hold a stock

impact future contributions byeliminating companies from theirinvestment portfolios, institutionscan instead effectively managecontributions while continuing toact in the service of faith and for

the promotion of jus-tice.

It is important tomaintain one’s voice.Begin with small steps,perhaps selecting onecompany or one issue.Clarify with investmentmanagers who shouldbe voting proxies andhow they should bevoted. Identify otherorganizations that con-sider themselves share-holder activists andlearn how to assist eachother. Don’t try to do

too much. Tackling too manyissues at once is a recipe for fail-ure, the surest way to cast doubton the effectiveness of yourefforts and to dissipate your ener-

A primary task, then, is the formation

of the board membership: an awareness

of the plight of those who have less and

our service of a faith that does justice

should become part of each board

member’s worldview. It is a lifestyle

choice that should influence everything

we do as Christians and investors.

As people of faith, we act out

of respect for the dignity of every human

being, community, and all of creation. Our

mission is to hold corporations publicly

accountable for the human, social, and

environmental consequences

of economic globalization.

We challenge corporations to implement

policies, programs,

and practices that protect human rights,

communities, and the environment which

are based

on principles of justice and sustainability.


Call to Actionn


gy and resources. This only pro-motes a decline in future activity.Pick your causes wisely and dothem justice.

Good luck. I look forward tocrossing paths with you in thisIgnatian pursuit of the greatergood. His tradition of prayerful,knowledgeable and honest com-munication is just what corporateAmerica needs. ✧

● Should we select board members with SRI in mind?Board members are asked to participate for a number of reasons, generally related to finance, developmentor relationship building. Living a life of faith that does justicemay not be that reason. How do we insert “justice” into theireveryday life and thought? This begins with a process of education. Invite your board members to participate withyou in events serving the poor. Consider short retreats,continuing education and meeting participation by those whohave been on mission. Focus a portion of your meeting on howyour organization has served the poor and additional ways itcan continue to do so.

When we invite board members to sit with us and advise us, we take on the role of conversion. Thisconversion begins to take place as we bring board members intoour lives and leadership. This is board formation in its purest sense.

End each meeting with the question: how has our meeting reflected a faith that does justice?

issues?Good question.

● Our portfolio is not large enough to haveindependent managers. We only use mutualfunds. Are we out of the game?Today there are many mutual funds available with a variety ofscreens and activities. With a little research, you can find onethat addresses your interests. (See Resources on page 20.)

● How do you approach a company with yourconcerns?First and foremost, you are not an adversary. You are ashareholder concerned that your investment return bemaximized. Your approach, most likely through shareholderrelations, should be well informed, professional and on task.

● How will they respond?The drawbridge to the corporate castle will quickly be raised.Be persistent and don’t be driven off by the legal response youwill most likely receive.

● How do we identify relationships?Who in your realm of relationships has knowledge, experience orexpertise in either the company or the issue? Look to your boards, advisory committees, students,parishioners, friends, faculty, researchers, development officesand other co-laborers. Remember that SRI is only one piece ofyour institution’s efforts—be realistic about what can be accomplished and aware of whom you might alienate.

How Do We Get Started?*

1. Identify whether your mission or activities place you in the path of current orfuture issues (e.g., a number of Oregon Province Jesuits are active in Africa, in theheart of the AIDS pandemic).

2. Involve your community, board and friends in the process of developing a policythat addresses that issue.

3. Identify who will lead the activity.

4. Contact the Interfaith Center on Corporate Responsibility (ICCR), the NationalJesuit Committee on Investment Responsibility (NJCIR) and/or a regional coalition todetermine with whom you can collaborate.

5. Identify companies with which you would like to work.

6. Make arrangements to hold the stock or to acquire shares if you don’t already ownsome.

7. Ensure that you are voting the company’s proxy.

8. Once you have held the stock for a year, consider co-filing on any shareholderresolutions addressing the company and the issue.

9. Identify people who have expertise and can assist in developing a professionalapproach.

10.. Consider becoming the primary filer.

If your institution isinterested in more

information on sociallyresponsible investing or how to get started

in it, contact the NJCIR consultant,

Sr. Doris Gormley, [email protected],

or William Lockyear [email protected].

They are available to provide workshops andpresentations to your

institution and/or board. * Visit In All Things online for more concrete guidelines on filing shareholder resolutions.

Church as Shareholder andInvestor

Individual Christians who are shareholdersand those responsible within churchinstitutions that own stocks in U.S.corporations must see to it that the investedfunds are used responsibly. Although it is amoral and legal fiduciary responsibility ofthe trustees to ensure an adequate return oninvestment for the support of the work ofthe church, their stewardship embracesbroader moral concerns.

As part owners, they must cooperate inshaping the policies of those companiesthrough dialogue with management, throughvotes at corporate meetings, through theintroduction of resolutions and throughparticipation in investment decisions. Wepraise the efforts of dioceses and otherreligious and ecumenical bodies that worktogether toward these goals.

We also praise efforts to develop alternativeinvestment policies, especially those whichsupport enterprises that promote economicdevelopment in depressed communities andwhich help the church respond to local andregional needs. When the decision to divestseems unavoidable, it should be done afterprudent examination and with a clearexplanation of the motives. (354)

— U.S. Catholic Bishops Pastoral Letter,Economic Justice For All


the profit-making function of acorporation, but insists that thecorporation need not make themaximum amount of profit possi-ble. Adherents to the contempo-rary view ask managers to settle forless-than-maximum profits, so thatsome earnings can be used fornon-economic ends. Contributingto society is not discretionary, butobligatory, under a variety of ethi-cal principles. Among these princi-ples are the following.

• Principle of Human Dignity:Every person, as uniquely createdin the image of God, enjoys a spe-cial dignity that is inviolable. Forover a century, Catholic socialteaching has relied on this princi-ple to insist that economic sys-tems must serve and promotehuman dignity. With this dignitycome certain fundamental rights,both economic and political, suchas the right to a living wage, ade-quate housing, health care, edu-cation, free speech, assembly andthe practice of one’s religion. Theexercise of these rights, and theircorresponding duties, is essential

This traditional, free-marketview of corporate social responsi-bility has in recent decades fallenmore and more out of favor, espe-cially as corporations have becomelarger and multinational. In manyways, the largest corporationsresemble small governments inthe influence they wield over peo-ple’s lives. Moreover, advances intechnology, communications, andtravel have made the world amuch smaller place. Today, a largecorporation’s business decisionshave far-reaching effects. Withthis greater power and influencecomes the need for safeguards toensure that corporations exercisetheir power responsibly. Ethicalrules, along with statutory regula-tions, serve as a check on corpo-rate power.

Just as governments ofwealthy nations have recognizedtheir responsibility to people livingin developing countries, corpora-tions have recognized that theyhave duties beyond earning profitsand following the letter of the law.The contemporary view of corpo-rate social responsibility affirms

The tactics of sociallyresponsible investing anddivesting rest on the

assumption that corporationshave an obligation to act in asocially responsible manner. Thisassumption is not beyond dispute.A more traditional understandingof corporate responsibility assertsthat corporations exist only tomake a profit. Business ethicsrequire nothing more of man-agers and employees than thatthey follow the law in the con-duct of their business. Under-lying this free-market view is thepremise that society is best servedwhen the corporation is free torespond to market forces, whichdrive the company to provideproducts and services that peopleneed and want. In return, thecompany earns a profit, good jobsare created, shareholder valueincreases, and income is generat-ed. Any action that the corpora-tion takes to benefit society—beyond what the law and marketdemand—is simply a matter ofcharity, commendable but notrequired.

The Ethics of Corporate SocialResponsibilityKEVIN O’BRIEN, S.J., J.D.

“The organization needs to be an ethical

creature — an organism capable of both

reaping profits

and making the world a bettter place to

live.”

—Robert Haas, Chairman and

Chief Executive, Levi Strauss

Mr. O’Brien (Maryland Province)is a Jesuit scholastic and visiting

instructor of philosophy and ethics at Saint Joseph’s University in

Philadelphia. A former corporatelawyer, Mr. O’Brien assists the

Maryland Province in its shareholderadvocacy work.

The Global Sullivan Principles● Express our support for universal human rights and,

particularly, those of our employees, the communitieswithin which we operate, and parties with whom we dobusiness.

● Promote equal opportunity for our employees at all levelsof the company with respect to issues such as color, race,gender, age, ethnicity or religious beliefs, and operatewithout unacceptable worker treatment such as theexploitation of children, physical punishment, femaleabuse, involuntary servitude, or other forms of abuse.

● Respect our employees’ voluntary freedom of association.

● Compensate our employees to enable them to meet atleast their basic needs and provide the opportunity toimprove their skill and capability in order to raise theirsocial and economic opportunities.

● Provide a safe and healthy workplace; protect humanhealth and the environment; and promote sustainabledevelopment.

● Promote fair competition including respect for intellectualand other property rights, and not offer, pay or acceptbribes.

● Work with governments and communities in which we do

business to improve the quality of life in thosecommunities—their educational, cultural, economic andsocial well-being—and seek to provide training andopportunities for workers from disadvantagedbackgrounds.

● Promote the application of these principles by thosewith whom we do business.

We will be transparent in our implementation of theseprinciples and provide information which demonstratespublicly our commitment to them.

For more on the Global Sullivan Principles, go towww.globalsullivanprinciples.org.

The Preamble

The objectives of the Global Sullivan Principles are to supporteconomic, social and political justice by companies wherethey do business; to support human rights and to encourageequal opportunity at all levels of employment, including racialand gender diversity on decision making committees andboards; to train and advance disadvantaged workers fortechnical, supervisory and management opportunities; and toassist with greater tolerance and understanding amongpeoples; thereby, helping to improve the quality of life forcommunities, workers and children with dignity and equality.

The Principles

As a company which endorses the Global Sullivan Principleswe will respect the law, and as a responsible member ofsociety we will apply these Principles with integrity consistentwith the legitimate role of business. We will develop andimplement company policies, procedures, training and internalreporting structures to ensure commitment to these Principlesthroughout our organization. We believe the application ofthese Principles will achieve greater tolerance and betterunderstanding among peoples, and advance the culture ofpeace.

Accordingly, we will:

An Ethicist’s Perspectiven


must try to live out neatly definedethical principles amid the messycomplexities of doing business.Balancing the interests of share-holders, employees, managers andthe community is not an easy task.In a year where so much attentionhas focused on the alarming greedand misconduct of a few businessexecutives and big-time investors,we must commend and supportthose who have faithfully livedtheir vocation. Let us recall, espe-cially now, Pope John Paul II’sown encouraging words to busi-ness managers in 1983: “Thedegree of well-being which socie-ty today enjoys would be unthink-able without the dynamic figureof the business person…”3

A corporation is a fictitiousperson, a construct of the law. Acorporation has no conscience, nomoral center, apart from thosewho work for the corporation andinvest in it. Socially responsibleinvesting and business practicesthus depend on the conscience ofeach person who has economicpower. Both investor and managershare the obligation to form theirown conscience. To do so, theymust sensitize themselves to thestruggle for economic justice,become more aware of the plightof the poor, boldly strive for thecommon good and vigilantlydefend human dignity. Only thendo they uphold their vital Christianvocation in this complex world. ✧

would generally accept these prin-ciples and rely on them to helpguide their business decision-mak-ing. Still, asking managers andshareholders to look to the long-term and to settle for less-than-maximum profits is a hard sell inmany boardrooms, especially inrecent times when stock priceshave tumbled and attorneys, ana-lysts and auditors have scrutinizedevery business decision. Cost-ben-efit analysis still rules the day. Inspite of the cold, utilitarian calcu-lus of the bottom line, adherentsto the contemporary view persistin urging managers to consider thenon-economic consequences oftheir actions.

If “doing the right thing”according to ethical principles isnot enough reason to convinceskeptical managers and share-holders, then one could morepractically argue that it’s goodbusiness. First, by helping toimprove the quality of life incommunities where their goodsand services are sold, corpora-tions sustain markets for thefuture. Moreover, acting in asocially responsible manner cancreate good will among con-sumers. Good works by businessoften lead to good PR, which isespecially valuable today whenmany corporate executives areunder suspicion for suspectaccounting, insider trading orextravagant compensation deals.Finally, governments frequentlyboth reward and encourage socialresponsibility with a variety ofbusiness-friendly regulations andtax breaks, thus lowering the costof doing business.

These practical arguments,however valid, reduce corporatepractice to the lowest commondenominator: self-interested profitmaking. They obscure from viewthe unique vocation of theChristian business person. As theU.S. Catholic bishops asserted:“Business people, managers,investors, and financiers follow avital Christian vocation when theyact responsibly and seek the com-mon good. We encourage andsupport a renewed sense of voca-tion in the business community.”2

This, like any vocation, is notalways easy, for business leaders

to safeguarding the dignity ofeach person. This principle hasbeen codified in Catholic socialteaching. These rights are notabsolute—they must be balancedagainst the rights of others in acommunity. But no balancing ofrights should undermine theintegrity of the human person.

• Principle of the CommonGood: As human beings, we aresocial creatures—we necessarilylive in community with otherpeople. Without community, wewould not be able to thrive ashuman beings. The commongood calls us beyond our ownself-interest and asks us to consid-er our obligation to other indi-viduals and to the community as awhole. Just as it must promotethe dignity of the person, oureconomic system must enhancethe communities in which welive. In a world drawn moreclosely together by travel, com-munications and commerce, ournotion of community and thecommon good encompasses morethan our local community. Itembraces the entire world.

• Principle of Justice: Inhuman relationships, we musttreat one another with fairnessand equity, giving to others thatto which they are entitled ashuman persons. Catholic socialteaching has emphasized our spe-cial obligation to help the poor,marginalized and vulnerable inour society. Justice demands thata corporation must treat not onlyits employees fairly, but mustconsider how its business deci-sions affect others in the commu-nity. Business leaders must beresponsible stewards of theresources at their disposal. Intheir 1986 pastoral letter,Economic Justice for All, the U.S.Catholic Bishops emphasized,“The freedom of entrepreneur-ship, business, and finance shouldbe protected, but the accounta-bility of this freedom to the com-mon good and the norms ofjustice must be assured.”1

Those who embrace thecontemporary view of cor-porate social responsibility

1 U.S. Catholic Bishops, Economic Justice for All, paragraph 110.2 U.S. Catholic Bishops, Economic Justice for All, paragraph 117.3 Pope John Paul II, Address to Business Men and Economic Managers (Milan, May 22, 1983) in L’Oservatore Romano, weekly edition in English

(June 20, 1983):9:1, as quoted in U.S. Catholic Bishops, Economic Justice for All, paragraph 110.

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In my travels, I also identifiednew partnership opportunities. Invillage after village, the stark real-ity of seeing children affected bythe disease from birth broughthome the issue of prevention ofmother-to-child transmission(PMTCT). Unfortunately, due tothe lack of testing and the stigmaof AIDS, less than 10 percent ofpregnant women throughout Africaknow their HIV status. Speakingwith nongovernmental organiza-tions, I learned that while testingis a crucial component of PMTCTprograms, it is also one of themost expensive because of theneed for skilled labor, infrastruc-ture, counseling services and thecost of the tests themselves. Ibelieved Abbott could fill an im-mediate need that would havefar-reaching impact. Soon after Ireturned, we announced thatAbbott would donate up to 20million of our rapid tests,Determine HIV, to qualifiedPMTCT programs throughoutAfrica and LDCs over the next

five years. Our donation pro-

gram is the first of itskind. It eliminates thecost of purchasing testsand reduces related laborexpenses due to Deter-mine’s relative ease of usein comparison to tradi-tional diagnostics. Ourhope is that Abbott’s offerof free tests will spur the

creation of new PMTCT pro-grams. Abbott’s donation willenable more pregnant women toget tested, and in partnershipwith Boehringer-Ingelheim—whosedrug helps reduce the transmissionof the virus to newborns—morewomen who are HIV-positive willreceive treatment. Our otherpartners include the ElizabethGlaser Pediatric AIDS Founda-tion, Catholic Medical MissionBoard, governments and others.

My conversations during thistrip also affirmed how private-public partnerships contribute tothe sustainability of AIDS programs.

our drugs even further, makingthem available at a loss to ourcompany and redoubling ourefforts to get these products to asmany developing countries andpatients as possible.

As critical as it is, providingdrugs is only one aspect of a muchlarger response that is needed.Fighting AIDS in a sustainablemanner means putting partner-ships and community engagementat the center of all of our initia-tives. For us, this involves listeningto needs and developing solutionstogether. Of particular interestduring my trip was the progress ofour Step Forward …for the world’schildren initiative, which fundsmodel community programs tohelp orphans and other childrenaffected by AIDS.

One such program is at theKipande School in Tukuyu, aremote village in the mountainsof southwestern Tanzania. Thelocal people there were justifiablyproud to show me what they hadaccomplished with a grant from

Step Forward and their own labor.They built new classrooms, akitchen and a dining room in theschool; planted a vegetable gar-den to feed the children; installeda new water harvesting system;improved a main road; and con-structed a bridge over one of therivers surrounding the school. Inone year alone, Kipande schoolattendance rose from 50 percentto 94 percent, and its academicranking soared from 22nd in thedistrict to first place. The KipandeSchool has become a focal pointfor transforming lives in thatcommunity.

No boardrooms. No pre-sentations. No familiarfaces. Indeed, nothing

familiar. It was a business tripunlike any other, and one of themost informative, productive,humbling and uplifting trips Ihave ever made. I traveled toTanzania and Uganda this pastApril to see, first-hand, the impactof AIDS on the population there.

I was also there to see theresults of several Abbott Labora-tories projects launched in 2000.It was heartening to hear fromdoctors, community leaders, gov-ernment officials, nongovern-mental organizations and patientswho showed me how our effortsare making a difference in thefight against AIDS. By the time Iboarded the plane to returnhome, I had decided to expandour AIDS-response activitiesthroughout Africa.

Corporate social responsibil-ity has long been a part ofAbbott’s business ethos. Nearlytwo decades ago, none of uscould have imagined thecatastrophic impact ofAIDS on entire communi-ties, countries, a continentand, indeed, generations.Abbott’s own history inthe fight against AIDSbegan with the develop-ment of the first licensedtest to detect HIV in1985. Since then, we haveintroduced other diag-nostics and antiretroviral drugs1

to enhance quality of life forpatients.

Clearly one of the greatestchallenges in addressing HIV/AIDSis expanding health care access topeople in countries that are hardesthit and with the fewest resources.Under our Abbott Access initia-tive launched in 2001, we beganmaking our antiretroviral drugsand rapid HIV tests availableat no-profit levels to Africa andthe Least Developed Countries(LDCs). Based on what I learnedon my trip to Tanzania andUganda, we reduced the prices of

A Trip of Hope MILES WHITE

Mr. White is the chairman and CEOof Abbott Laboratories.

Summary of Abbott’s programsin developing countries

Abbott AccessLaunched in 2001, the aim of Abbott Accessis to broaden access to Abbott’santiretrovirals and rapid test to 68 countries,covering Africa and Least DevelopedCountries, at a loss or at no profit,respectively, to Abbott. To learn more, visitwww.accesstohivcare.org.

Determine Donation Program In June 2002, Abbott announced it woulddonate up to 20 million of its rapid (15minutes) test, Determine HIV, over five yearsto programs aimed at preventing mother-to-child transmission (PMTCT) in Africa andLeast Developed Countries. This offer isavailable to qualified PMTCT programs. Tolearn more, visit www.abbott-pmtct-testing.org.

Tanzania CareIn 2002, Abbott initiated a program to helpstrengthen the national health care systemin Tanzania in partnership with thegovernment. This program will cover multiplehospitals and laboratories to increasetraining of medical workers and laboratorypersonnel; to expand access to voluntarytesting and counseling and treatment; and tocreate a national reference and teachingcenter at Muhimbili National Hospital. Thelong-term vision is for Muhimbili to becomea center of excellence for the region.

1 Antiretroviral medications — Medications that temporarily suppress viral replication and improve symptoms, but do not cure the HIV infection.They have various adverse effects and patients receiving these medicines require careful monitoring by adequately trained health professionals. Forthese reasons, continued rigorous promotion of measures to prevent new infections is essential. —World Health Organization (www.who.int)

I urge other CEOs to travel to the

developing world. Nothing is more

powerful and compelling than seeing

the face of AIDS directly; it would

be difficult for anyone to visit these

countries and not want to do more.

The Face of AIDS in Africa: A CEO’s Personal Accountn


Launched by the Abbott Laboratories Fund in2000, Step Forward assists orphans andvulnerable children who are infected andaffected by HIV/AIDS and the communitiesthat care for them. Step Forward fundsmodel programs in Burkina Faso, India,Tanzania and Romania. The programsaddress four interrelated areas: health careservices and infrastructure; voluntary HIVcounseling and testing; education; and basiccommunity needs, such as clean water.

To learn more, visit www.stepforwardforchildren.org

Miles White, chairman and CEO of Abbott Laboratories, hears directly from children at the Kurasini Children’s Home during hisvisit to Dar es Salaam, Tanzania. Abbott’s “Step Forward” grants helped pay for renovations of Kurasini, which houses and caresfor some 75 children who are without immediate or extended family to care for them due to AIDS.

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anyone to visit these countriesand not want to do more.

Much more needs to bedone. Turning the tide againstAIDS requires the cooperationand leadership of governments,nongovernmental groups, faith-based organizations, patientadvocates, United Nations agen-cies, foundations and companies.

Most remarkable to me dur-ing this trip was the sense ofhope among the people affectedby AIDS and those who are serv-ing them. It takes hope to con-vince others to invest in fightingthis pandemic and to sustain theenergy and resources of thosealready engaged. I have seenfirsthand how partnerships, com-mitment, resources and a sharedsense of hope are helping peoplethroughout the continent.

Every effort counts. Some-times success is measured onechild, one family or one village ata time. For each one who hasbeen touched, it makes all the dif-ference in the world. ✧

all of our AIDS-related humani-tarian programs. We will also con-tinue to urge other companies tojoin the fight. At forums such asthe recent International AIDSConference in Barcelona, theGlobal Business Coalition onHIV/AIDS, the Global HealthCouncil, and the CorporateCouncil on Africa, we are sharingour programs, experiences andbest practices.

Moving forward, I will seekopportunities to invite businessleaders to visit our projectsthroughout Africa and to getinvolved with us. Advocacy by thefaith-based community—whichhas long been in the forefront ofdelivering health care in Africa—has also kept the world’s atten-tion on AIDS. Indeed, we mustcontinue to encourage eachother’s work.

I urge other CEOs to travel tothe developing world. Nothing ismore powerful and compellingthan seeing the face of AIDSdirectly; it would be difficult for

Muhimbili Hospital in Dar esSalaam plays a critical role inTanzania, yet this public hospitalis in desperate need of revitaliza-tion and basic repair. It was clearthat some targeted infrastructureand systems improvementswould dramatically expand thehospital’s ability to treat HIVpatients. Walking through thewards, I decided that Abbottmust contribute to Muhimbili’smodernization. Over the nextfive years, we will partner withthe Ministry of Health to restorethe hospital’s laboratory capaci-ty; build an HIV center thatincludes a day hospital, outpa-tient clinic, counseling and psy-chosocial support facilities; createa national HIV teaching center;and introduce pharmacy, healthinformation and managementsystems. We will also enhance thelaboratory capabilities of 20additional hospitals throughoutTanzania.

By the year 2007, Abbottexpects to invest $100 million in


Sr. Gormley is a consultant to the Jesuit Conference, facilitating

communication and cooperation betweenICCR and the Jesuit provinces.

Province agreed to take the leadshareholder role in working withthe company. The Chicago, Detroitand Oregon Provinces agreed toco-file the resolution with theChristian Brothers InvestmentServices, the Women’s Divisionof the General Board of GlobalMinistries of the United Method-ist Church, and the AmalgamatedBank Longview Collective Invest-ment Fund.

During the summer of 2001,the U.N. General Assembly helda special session to address theAIDS crisis. Several initiativesresulted from that meeting,including the United NationsAccelerating Access Initiative(AAI) and the Global AIDS Fund,which identified a goal of $7 bil-lion per year to fight the disease.That same summer, ICCR beganorganizing a strategy to bring theissue of affordable drugs beforethe pharmaceutical corporationsthat research and develop prod-ucts to treat AIDS.

In November 2001, NJCIR

bility History on page 7) lever-aged Jesuit province investmentsin a strategy to provide greateraccess to prevention and care ofHIV/AIDS for the majority ofinfected persons in Africa. At thattime (September 2001), five Jesuitprovinces held Abbott Labora-tories equities in their portfolios.In consultation with the Inter-faith Center on Corporate Res-ponsibility (ICCR), the Maryland

General Congregation 34exhorted the Jesuits“…to do whatever [they]

can to change internationalattitudes and behavior towardsAfrica.” Having subsequentlyadopted the AIDS crisis in Africaas its primary shareholder advoca-cy priority, the National JesuitCommittee on Investment Res-ponsibility (NJCIR) (see U.S.Jesuits and Investment Responsi-

Shareholder Advocacy and the AIDS Pandemic: A Case StudySR. DORIS GORMLEY, S.F.C.C.

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After nearly 50 years of marriage, this Tanzanian couple had hoped to be cared for in the golden years by their grown children. Instead, their daughter is extremely ill with AIDS andthey have become parents once again, to her young children.

No longer can our global society look the other way and ignore

the fact that the spread of HIV/AIDS in the developing world

has reached pandemic proportions. This disease has already

infected 62 million people in Africa, killing nearly one-third of them—a

staggering 22 million people. It is the world’s fourth greatest killer, causing

nearly five percent of all deaths worldwide and 20 percent of all deaths in

sub-Saharan Africa. AIDS is destroying what there is of Africa’s economy,

dissolving the extended family structure and annihilating the 15–50 year old

population. UNAIDS recognizes the epidemic as “the most devastating disease

humankind has ever faced.”

infected persons in sub-SaharanAfrica.

In February 2002, after theshareholder resolution was filed, agroup of the faith-based investorsmet with three members ofAbbott’s staff at ICCR’s NewYork offices. At that meeting, theinvestors agreed that Abbott waslagging well behind in its effortsto address the HIV/AIDS pan-demic, in contrast to the initia-tives of its peer pharmaceuticalcompanies. Merck & Co. Inc., forinstance, was engaged in a public/private partnership with Botswanaand the Bill and Melinda GatesFoundation to address the coun-try’s infrastructure and handlingof the AIDS crisis; both Merckand the Gates Foundation con-tributed $50 million. The con-sensus from the Abbott/ICCRmeeting was that the shareholderresolution would remain on theproxy ballot for the April 2002Abbott annual meeting.

pragmatic reason to take decisiveaction: the devastation of thecurrent and future African econ-omy wrought by the AIDS pan-demic will eliminate new marketsfor the distribution of productsand services. In other words,multinational corporations have abusiness stake in the resolutionof this crisis.

Before the resolution wasfiled, Abbott had already agreedto decrease the price for its twoanti-HIV drugs, cutting the annu-al price per patient for each drugfrom $6,000 to $650 (a pricethat yields no profit to Abbott).On the surface, this seemed to bea bold step, but in fact, othercompanies were making theirdrugs available for even lowerprices and a few companies wereactually donating their products.On a continent where the aver-age annual per capita income isless than $400, Abbott’s $650price tag still kept these drugsinaccessible for most of the

notified Miles D. White, CEO ofAbbott, that it was filing a share-holder resolution asking “…theBoard of Directors to developand implement a policy to pro-vide pharmaceuticals for the pre-vention and treatment of HIV/AIDS, malaria and TB in ways thatthe majority of infected personsin African nations can afford.” Inaddition to the Abbott filing,Jesuit provinces co-filed theresolution with Bristol MeyersSquibb, Merck, Eli Lilly andPfizer, all of which are part of theAccelerating Access Initiative.

Faith-based investors believethat pharmaceutical companieshave a unique mission to pro-mote health and that all corpora-tions, as stakeholders in theglobal community, have a respon-sibility to provide a social andenvironmental return to share-owners as well—as a financialreturn. This is commonly referredto as the “triple bottom line.”With AIDS, there is also a clear

In Uganda, 65% of AIDS-affected households studiedwere obliged to sell property to

pay for traditional care, and children were often forced to discontinue

schooling because they were needed for labor, and because

the family could no longer afford school fees. These data suggest that many

of the 14 million children who have

lost one or both parents to AIDS

will face a future without an

education and without an

inheritance of land or livestock.

The annual per capita income of

persons in countries like Burundi, Kenya,

Rwanda, Uganda and Zambia is less than $400,

making the current cost of many HIV/AIDS drugs prohibitively expensive.


A Case Studyn

continued on page 18

Many countries in sub-Saharan Africa arebeing decimated by the AIDS epidemic, with28 million of the 40 million persons currentlyliving with HIV calling that region home. Upto 35% of adults in some regions are living with HIV, and life expectancies in particularlyhard-hit countries like Zimbabwe have dropped significantly—from 65 years before the AIDS epidemic to a current life expectancy of36 years. In the next 15 years, up to 30% of the workforce in some countries will die from AIDS.

UNAIDS has shown that in Ivory Coast,families living with AIDS experienced a two-thirds reduction in monthly income,causing many to go into debt despite a 50% decrease in monthly consumption.

Botswana

Zimbabwe

Zambia

KenyaKenya

TanzaniaTanzania

RwandaBurundi

RwandaBurundi

Ivory Coast

Botswana

Zimbabwe

Zambia

Ivory Coast

UgandaUganda

PHOTO:NASA.IMAGE DATA: AVHRR, NDVI, SEAW

IFS, MODIS, NCEP, DM

SP & SKY 2000 CATALOG; AVHRR AND SEAWIFS TEXTURE: RETO STOCKLI; VISUALIZATION: M

ARIT JENTOFT-NILSEN, VAL, NASA GSFC

Source: UNAIDS, www.unaids.org



Shareholder filers meet outside the Abbott Pharmaceuticals annual board meeting in Chicago in April. FRONT L– R: Artemus Gaye, United Methodist Church; Doris Gormley S.F.C.C., Jesuit Conference; Laurie Michalowski,S.S.S.F., United Methodist Church. BACK L– R: Richard Ryscavage S.J., Jesuit Conference; Jon Fuller S.J., M.D., BostonMedical Center; Peter Clark S.J., St. Joseph’s University; Kevin O’Brien S.J., J.D., St. Joseph’s University; Kurt DenkS.J., Loyola College.

A Case Study

With these latest initiatives, itappears that Abbott has movedslightly ahead of its peers in itsresponse to the HIV/AIDS pan-demic. At the same time, there isroom for improvement on theissue of accessibility for infectedpersons, for whom affordabilityof care is the primary stumblingblock. This continues to be theinvestor-advocates’ priority.

As faith-based investors, westrive for collaboration and com-mon ground with companies.The leverage of stock ownership,coupled with the presence andwitness of the faithful, brings theworldview and value prioritiza-tion of the Jesuits and others inthe faith community into ourdeliberations with major globalcorporations. While these multi-nationals have the power to effectchange on a dramatic scale, nosector of society can contain thispandemic alone. The issue is bothcomplex and daunting, requiringthe political will, commitmentand partnership of public and pri-vate sectors to harness this dis-ease. The scope and complexityof the problem are no excuse fordelay or inaction. We will contin-ue our efforts to challengeAbbott and other corporations toembrace a new perspective on thisissue that affects all of us so pro-foundly. The Gospel calls us to befaithful, especially in the face ofthese continued challenges. Wewill continue to pursue justice forthe afflicted in Africa. ✧

In an interview in The WallStreet Journal two months later,Mr. White discussed a host ofnew initiatives, which included acommitment of $100 millionover five years to rebuild a Tan-zanian hospital network for treat-ing AIDS, a further reduction ofdrug prices, and donations ofAbbott’s diagnostic test forHIV/AIDS to programs for pre-vention of mother-to-child trans-mission (PMTCT) in developingcountries.

While pleased that Abbottwas responding more significant-ly to this crisis, NJCIR was disap-pointed at the modest pricereduction, which still kept thedrugs beyond the reach of mostinfected persons. NJCIR request-ed a second dialogue with Abbottin August 2002. Members ofAbbott’s staff, representativesfrom AXIOS International (aconsulting firm contracted byAbbott to implement its initia-tives in developing countries)and members of the shareholderadvocacy group gathered forthis second meeting, at whichAbbott presented the particularsof its new initiatives. The num-ber of participants—24 in total—was a testament to the serious-ness and focus that both groupsbrought to these dialogues.While the meeting was anotherstep in nurturing positive work-ing relationships, it was clearthat issues remained to beaddressed.

Prior to the annual meetingICCR and the Jesuit Conferenceissued press releases outlining thereasons for filing the shareholderresolution. In addition, a letterwas sent to all 28 Jesuit collegesand universities encouraging themto vote in favor of the resolution,and a request was circulated to allJesuits and their associates to prayfor the success of the vote.

Fr. Jon Fuller S.J., M.D., a clin-ician in practice with HIV/AIDSpatients who has had clinical exper-ience in Africa, agreed to speak atthe Abbott annual meeting insupport of the resolution. I was alsoa speaker. Fr. Rick Ryscavage,Fr. Peter Clark, Kurt Denk andKevin O’Brien also attended. Thepresence of these Jesuits at themeeting and their informal con-versation with Abbott executivesafterwards were clear testimonyto the Society’s commitment tothis issue.

When Fr. Fuller and I hadfinished our presentations, Mr.White recounted his recent tripto Tanzania and pledged to takefurther steps to address the AIDScrisis (see A Trip of Hope on page14). The shareholder resolutionreceived four percent of the vote(approximately 51 million shares).Although this outcome may seemquite small, most corporationsrecognize a four percent vote as asignificant advocacy success, espe-cially when company manage-ment advises voting against theproposal, which Abbott did.

Accelerating Access Initiative

Begun in December 2001, AcceleratingAccess represents a redoubling of effortsby UNAIDS to assist countries inimplementing comprehensive packages ofcare for their citizens living with HIV/AIDS.It includes UNAIDS’ advocacy and policyguidance on HIV care at the global leveland also involves “fast track” support forthose developing countries that haveformally indicated that they wish to significantly expandaccess to HIV care, support and treatment,and that want assistance from UNAIDS. Atthe same time, UNAIDS will continue toadvocate for a basic package of care (including voluntary counselingand testing and psycho-social support) tobe provided to all countries.

The initiative emerged out of a partnershipbetween the United Nations (the UNAIDSSecretariat, UNICEF, UNFPA, WHO and theWorld Bank) and five pharmaceuticalcompanies (Boehringer-Ingelheim, BristolMyers Squibb, F. Hoffmann-La Roche,GlaxoSmithKline, and Merck & Co., Inc.). Ithas since been broadened to include othermembers of the industry.

See www.unaids.org for more details.

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Those who control capital, partic-ularly large corporations, have anobligation to employ their pro-ductive power in ways that servethe common good, beyond nar-row self-interest.

In recent years, Pope JohnPaul II has been an especiallybold voice for corporate socialresponsibility. In his message to

the Jubilee 2000 DebtCampaign, he addressedthese issues when hewrote: “The Church hasconsistently taught thatthere is a ‘social mortgage’on all private property.This concept must beapplied to ‘intellectual

property.’”1 The Pope spoke evenmore directly to the obligationsincumbent upon drug manufac-turers when, in Tanzania in 1990,he urged:“The AIDS epidemic calls for a

supreme effort of internationalcooperation on the part of gov-ernments, the world medicaland scientific community, andall those who exercise influencein developing a sense of moralresponsibility in society. Thethreat is so great that indiffer-ence on the part of publicauthorities, condemnatory ordiscriminatory practices towardthose affected by the...virus orself-interested rivalries in thesearch for a medical answer tothis condition should be con-sidered forms of collaborationin this terrible evil which hascome upon humanity.”

The teachings about the justuse of corporate power are ulti-mately an application of Ignatianspiritual principles writ large.While legitimate differences willpersist regarding the extent andprecise shape of these obligationsto the poor of the world, to sup-port measures such as the Abbottshareholder resolution is toadvance the Ignatian vision thatincludes a fervent desire “to be ofhelp to souls” and “to find Godin all things.” In a world sharplydivided between great affluenceand desperate poverty, followersof Ignatius can do no less. ✧

ethical experts. The Jesuit world-view, spirituality and value priori-tization have been made clear tomultinational corporations withthe power to effect change on adramatic scale.

The documents of recentJesuit General Congregationshave embraced the preferentialoption for the poor with a partic-

ular regard for the least advan-taged; we are motivated to makespecial efforts to improve theirlot. Inspired by the care Ignatiusshowed to the poor and lowly ofhis time, Jesuits in all lands seekout opportunities to identifythemselves more closely with thelives of the poor. We seek to workwith the poor, for the poor andon behalf of the poor, usingwhatever expertise and influencewe can muster to improve the lifechances of those who are margin-alized in any way. Among the dis-tinctive contributions we canmake is to enter the corridors ofcorporate power in order toadvocate for business policies tomake the world more humane.

It is certainly no accidentthat such Jesuit initiatives res-onate with the social teachingsof the universal church. For morethan a century, Catholic socialteaching has called believersto advance the common goodthrough actions and policies thatsupport not only charity, butsocial justice. A consistent themeof this teaching is the imperativeto distribute resources necessaryfor survival to where they will dothe most good. This principle,sometimes referred to as “theuniversal destination of materialgoods,” just i f ies occas ionaldepartures from purely marketprocedures, mechanisms and dis-tributions when these do not fullyserve human life and progress.

St. Ignatius of Loyola be-queathed to us a distinctivespiritual vision, a way of

seeing the world that affects allwe do. Inspired by this Ignatianvision, Jesuits and those whoshare their spirituality find them-selves engaged in numeroustypes of social involvements toserve humanity and to give gloryto God.

We should not besurprised that the practiceof socially responsibleinvesting entails makingunpopular political stances.We are called to undertakeeconomic initiatives, suchas shareholder actions per-taining to corporate responsibilityon the part of multinational phar-maceutical firms (see ShareholderAdvocacy and the AIDS Pandemic:A Case Study on page 16). SeveralJesuit provinces have sponsoredthe Abbott resolution as a strate-gy to advance the cause of justicein the distribution of keyresources.

The goal of filing resolu-tions with pharmaceutical compa-nies is to increase the availabilityof the life-saving drugs they pro-duce—in this particular instance,HIV drugs. Millions of infectedpeople, particularly in the poorestnations on earth, have no accessto these pharmaceuticals becauseof their high cost. Unless corpo-rations that control the “intellec-tual rights” to these drugs comeunder pressure to expand theirdistribution at more affordablecosts, the mismatch of need andsupply will continue with tragicconsequences. The universal socialconcern that is part of theIgnatian vision finds this statusquo intolerable.

This initiative is an excellentexample of the convergence ofIgnatian spirituality and the Jesuitability to engage diverse sectorsof civil society in advocating forthe marginalized. Its membersand colleagues “on the ground,”who hear the voices of thoseclamoring for life-saving thera-pies, have joined hands withfinancial, clinical, corporate and

The Spirituality of ShareholderResolutionsREV. JON FULLER, S.J., M.D., AND REV. TOM MASSARO, S.J.

Shareholder Responsibility

Most shareholders today exercise relativelylittle power in corporate governance.Although shareholders can and should voteon the selection of corporate directors andon investment questions and other policymatters, it appears that return on investmentis the governing criterion in the relationbetween them and management. We do notbelieve that this is an adequate rationale forshareholder decisions. The question of howto relate the rights and responsibilities ofshareholders to those of other people andcommunities affected by corporate decisionsis complex and insufficiently understood. Wetherefore urge serious, long-term researchand experimentation in this area. Moreeffective ways of dealing with thesequestions are essential to enable firms toserve the common good. (306)

— U.S. Catholic Bishops Pastoral Letter,Economic Justice For All


Fr. Fuller (California Province) is a staff physician at the Adult AIDSProgram at Boston Medical Center.

Fr. Massaro (New England Province) is a professor of moral theology at the

Weston Jesuit School of Theology.

To support measures such as the Abbott

shareholder resolution is to advance the

Ignatian vision that includes a fervent

desire “to be of help to souls”

and “to find God in all things.”

1 L’Osservatore Romano, 25 September 1999, p. 5.

Economic Justice for All: Pastoral Letter onCatholic Social Teaching and the U.S.Economy, National Conference of CatholicBishops (United States Catholic Conference,Inc., Washington, DC, 1986). 1-800-235-8722.

Doing Faithjustice: An Introduction toCatholic Social Thought, by Fred Kammer,S.J. (Paulist Press, Malwah, NJ, 1991).www.usccb.org

Social Analysis: Linking Faithand Justice, by Peter Henriot,

S.J. (Orbis Books,Maryknoll, NY, 1980).http:// orbisbooks.com.


Fair Labor Association (FLA). Non-profitorganization combining the efforts of industry, non-governmental organizations (NGOs), colleges anduniversities to promote adherence to internationallabor standards and improve working conditionsworldwide.

www.kld.comKLD Research & Analytics, Inc. Promotes globalsocially responsible investing by providing superiorcorporate social research products and services toinstitutional investors.

www.greenmoneyjournal.comGreenmoney Journal. Socially and environmentallyresponsible investing and business information since1992. In print and online.

www.sri-adviser.comSRI World Group. Socially responsibleinvestment center for financial advisers,money managers, and financialplanners. Provides objective news,tools, and information products tobetter serve clients.

www.shareholderaction.orgShareholder Action Network (SAN).

Serves as a clearinghouse of informationand analysis to the socially responsible investing (SRI)community on shareholder advocacy.www.worldcsr.comworldCSR.com. Business-oriented site that provideslinks to organizations engaged in socially responsibleinvesting and sustainable development.

www.fairlabor.org

www.iccr.orgInterfaith Center on Corporate Responsibility. ICCR’smembership is an association of 275 faith-basedinstitutional investors, including nationaldenominations, religious communities, pensionfunds, endowments, hospital corporations, economicdevelopment funds and publishing companies.

www.irrc.orgInvestor Responsibility ResearchCenter. Provides impartial,independent research oncorporate governance, proxyvoting and corporateresponsibility issues. IRRC offersguidance and advice on proxyvoting and company profileinformation for portfolio screeningand other purposes.

www.paxfund.comPax World Funds. The first broadly diversified,publicly available mutual fund to use social andfinancial criteria in its investment decisions. Socialscreening, shareholder activism, voting proxies,community investment.www.socialinvest.orgSocial Investment Forum. Offers comprehensiveinformation, contacts and resources on sociallyresponsible investing.

Calvert Social Investment Fundwww.calvert.comA full family of mutual funds designed to helpinvestors achievefinancial security whilehelping to build asustainable world andprotect quality of life.Calvert has been in themutual fund business for25 years and managesmore than $8 billion inassets in 27 screened and non-screenedportfolios for over 220,000 shareholders.

DEVCAP Shared Return Fundwww.devcap.orgThe DEVCAP Shared Return Fund is a socially-screened mutual fund with both financial andsocial investment criteria. Investors maycontribute a percentage of their total returns to microenterprise programsin developing countries.

Domini SocialInvestmentswww.domini.comAn investment firmspecializing exclusivelyin socially responsibleinvesting, they managemore than $1.2 billion inassets for individual and institutional investorswho wish to integrate social andenvironmental criteria into their investmentdecisions. They manage the Domini Social Equity Fund, the oldest andlargest socially and environmentally screenedindex fund in the world, as well as two uniqueinvestment vehicles thatinvest in communityeconomicdevelopment—theDomini Social BondFund and the DominiMoney Market Account.

ContentsHow Did We Get Here? The Roots of Social Investing

STEPHEN CALLAHANA comprehensive history of socially responsible investing . . . . . . . . . . . . . . . . . . . page 1

The Evolution of a Movement: From Fringe to Credibility TIM SMITH AND SR. PATRICIA WOLF, R.S.M.Socially responsible investing, past present and future . . . . . . . . . . . . . . . . . . . . . . page 4

U.S. Jesuits and Investment Responsibility History REV. JOHN DISTER, S.J.Tracing Jesuit involvement from the 1970s . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 7

Investors: It’s Just Money WILLIAM LOCKYEARA call to action for Jesuit institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 9

The Ethics of Corporate Social Responsibility KEVIN O’BRIEN, S.J., J.D.An ethicist’s perspective: How does Catholic social teaching call for SRI? . . . . . . . page 12

A Trip of HopeMILES WHITEPersonal reflection: A CEO’s account of a trip to AIDS-ridden Tanzania . . . . . . . . page 14

Shareholder Advocacy and the AIDS Pandemic: A Case StudySR. DORIS GORMLEY, S.F.C.C.Jesuit provinces file shareholder resolution with Abbott Laboratories . . . . . . . . . . . . page 16

The Spirituality of Shareholder Resolutions REV. JON FULLER, S.J., M.D., AND REV. TOM MASSARO, S.J.What does Ignatian spirituality have to do with SRI? . . . . . . . . . . . . . . . . . . . . . page 19

NON-PROFITORGANIZATIONU.S. POSTAGE

PAIDPERMIT #4786

WASHINGTON, DCU.S. Jesuit ConferenceSocial and International Ministries1616 P Street NW, Suite 300Washington, DC 20036-1405

• WEB RESOURCES • SOCIAL INVESTMENT FUNDS

• BOOKS

Socially Responsible Investing:Making a Difference and MakingMoney,by Amy L. Domini (Dearborn TradePublishing, Chicago, IL, 2001). 1-800-621-9621, ext. 3650.

The Post Corporate World:Life After Capitalism, by David C. Korten (Berrett-KoehlerPublishers, Inc., San Francisco, CA,

1995). 1-800-929-2929.

When Corporations Rulethe World,by David C. Korten (KumarianPress, Inc., Bloomfield, CT andBerrett-Keohler Publishers, Inc.,San Francisco, CA, 1995).1-800-929-2929.

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