The decline of publicly traded companies - and what it means for us

Today's #1 most-emailed op-ed on the New York Times explores the decline of the stock market as a common investment, and what it means for the way we influence our own investments.
Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.

At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years. Civilians, rather than plutocrats, controlled corporate America, and that relationship improved standards of living and usually kept the worst of corporate abuses in check. With America Inc. owned by its citizens, the success of American business translated into large gains in the stock portfolios of anybody who put his savings in the market over most of the postwar period.

Today, however, stock markets, once the bedrock of American capitalism, are slowly becoming a noisy sideshow that churns out increasingly meager returns. The show still gets lots of attention, but the real business of the global economy is inexorably leaving the stock market — and the vast majority of us — behind.

Committees on investor responsibility and responsible investment activists must recognize that our schools are among the 'ultra rich elite' who have the ability to invest outside of the stock market, and we must adapt our strategies accordingly. We must employ new strategies and tools - such as fund manager engagement, new comprehensive responsible investment policies, and community investment - to deal with the changing landscape. The strategies that REC has advocated in for institutions' stocks, such as proxy voting and shareholder resolutions, will still be important for a long time, but there is much more out there that we can - and will - be doing in the future.
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by Caroline Incledon, Community Investment Campaign Organizer

Community organizing is impossible to do without the help of allies. Unfortunately, while it is sometimes easy find people who identify with your message or purpose, it can be harder to formulate stronger, more committed relationships with allies. However, the demonstrated support of allies is integral to the success of a campaign, whether those allies are other students, school administrators, local political officials, or even an old friend who lets you bounce ideas off of them at every opportunity. Either way, allies can embolden and broaden your campaign, open administrative doors, increase legitimacy, and (probably most importantly) increase capacity. My current community organizing work has impressed upon me the importance of ally support, and I have a few tips for those looking to increase their allies. Essentially, it boils down to  “A.L.L.I.E.S.”: Assess, link, lobby, inspire, engage, and sustain.

Assess your current campaign plan to determine your work capacity and what type of allies are most necessary for your work moving forward. For example, are you looking to move your school’s money into a local bank? Some potential allies could be student’s in your school’s Economic Club, professors of Urban and Environmental Planning, or administrators in the Media Relations office. It will be useful to think broadly about what type of support you need, and to look for support from every level. At the same time, be realistic. Will it really be useful to devote time and resources to engaging a student group only tangentially related to your cause? Or, will it really be possible to engage potential support from notable alumni or a local politician? Sometimes, these contacts may be worth pursuing, but it depends on the power dynamics of your school, what you are looking to accomplish, and what you know or perceive about these allies. Essentially, try to organize a diverse list of potential allies, prioritizing those you feel would be a) most helpful, and b) most willing to become involved.

Link yourself to them. Somehow, you need to get in touch with this person, whether by email, phone, or in person. However, I recommend finding common ground, such as a mutual friend or shared interest (you might need an ally to meet your ally!). You might attend a professor’s lecture, or a student’s club meeting, and approach them afterwards about your shared aspirations. If you approach an ally, you want to be able to link yourself effectively, and be able to explain coherently and fully why you feel their support would be a valuable and unique addition to your campaign.

Lobby your potential ally. Once you have their interest, you need to explain your campaign, its benefits, and what you feel their potential support could be. Try to be specific. If you want an ally to be involved in a certain aspect of your project or campaign, let them know, and say why. Also, allow for their input – if they are truly interested, maybe they have their own ideas about how to be most effective. Which leads me to my next point, which is:

Inspire! Asking for help or support from someone can feel like you are asking a favor. But ultimately, if you’ve chosen your allies correctly, your goals should be mutual, and success for one is success for both. Let your ally know that you are passionate about their cause as well as your own, and that you see coordination as furthering both of your messages. You don’t want their begrudging support; you want committed and excited allies!

Engage them in substantive discussion about responsibilities and expectations. This is the hard part. So far, you’ve explained your purpose and vision, and hopefully gotten your ally excited about your message. At the same time, you want to channel that excitement into real action, and create the foundation of a continuous, mutually beneficial relationship. Ask them how they see their supportive role. Realistically, how much time can they dedicate? Can a student dedicate 2 hours a week to assisting with research or coming to meetings, can a professor only give you 5 minutes of his time every other week, and can you only get a community investment speaker to come for 1 hour to your campus? Finally, what are the goals that you want to accomplish, or feel will be accomplished more effectively, by working together? State all of this beforehand. While an ally relationship is (and should be) flexible, it is also important to understand what your ally is bringing to the table and how you anticipate a successful relationship ensuing.

Sustain. Hopefully, your ally will provide welcome support or even relief in a crucial moment, but in many cases, we hope for allies that are continuously active. Make sure you consider and ensure the sustainability of allies wherever necessary. If you are looking to expand or increase student interest in your campaign, make sure you are integrating students’ comments and concerns, so that students will want to maintain their support. If you are looking for the assistance of an administrative ally, try to check in with them relatively frequently. Most importantly, let all your allies and supporters know when their efforts have truly helped you or the campaign, whether in big or small ways. Demonstrating appreciation for their work is important to maintaining sustainable allies, but it is also important because it makes YOU a good ally.
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STARS Investment Guide

Are you a STARS school?


REC just released a companion guide to the Sustainability Tracking Assessment and Rating System (STARS) sustainable investment section. REC is a partner on the rating system and wants to ensure that all universities understand how to answer the questions and learn from the process. This guide is available in the “Additional Resources” Section of the STARS Reporting Tool website as well as in the Handbooks section of the REC website. In addition to the guide there is a Worksheet tool that helps schools arrive at the answers needed for the survey. The list of STARS institutions is available here.

According to the STARS Technical Manual the point of the investment section is to:

This subcategory seeks to recognize institutions that make investment decisions that promote sustainability. Most institutions invest some of their assets in order to generate income. Together, colleges and universities invest hundreds of billions of dollars. Schools with transparent and democratic investment processes promote accountability and engagement by the campus and community. Furthermore, institutions can support sustainability by investing in companies and funds that, in addition to providing a strong rate of return, are committed to social and environmental responsibility. Investing in these companies also supports the development of sustainable products and services. Finally, campuses can engage with the businesses in which they are invested in order to promote sustainable practices. (STARS Technical Manual, Investment section)

The introduction to the guide states:

As a member of the STARS Technical Advisor Work Group on investments and the executive director of a group that works with colleges and universities on responsible investment, I’ve seen a variety of concerns expressed by people at different institutions about how to best answer the questions in the Investment section of STARS, both being honest and scoring the points that they deserve. This section has confused people for different reasons, from difficulty evaluating investments to lack of understanding of a Committee on Socially Responsible Investment or as we call it, a Committee on Investor Responsibility (CIR).

In this document I hope to answer many of the questions that people have and clarify the scoring system.

Check it out!

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Colleges and Universities Should Join Major Institutional Investors in Voting for Annual Say on Pay

The Dodd-Frank financial reform bill requires a mandatory vote on whether advisory say on pay votes, which allow shareholders to approve or disapprove of executive compensation decisions, should occur every one, two or three years. Major institutional investors representing over $800 million in assets are calling for voters to vote for an annual referendum.

Colleges and universities, which promote open and informed dialogue in society, should vote alongside these investors in favor of an annual vote. Multi-stakeholder committees on investor responsibility often vote only environmental and social resolutions but say on pay is a matter that has social and governance implications, and one institutions of higher education should take seriously, and refer to their committees.

According to the release from AFSCME and Walden Asset Management, supporters of the annual votes include CalPERS, the New York State Common Retirement Fund, NYCERS, F&C Asset Management (U.K.), Hermes (U.K.), the General Board of Pension and Health Benefits of the United Methodist Church, Calvert Asset Management, Pax World and Amalgamated Bank. Mutual fund companies State Street, Vanguard, Fidelity and Putnam all have announced they will support these votes as well.

According to the release and statement:

“Unchecked and unapproved CEO pay directly contributed to the financial crisis,” said Gerald W. McEntee, President of AFSCME, which was the first sponsor of a shareholder resolution promoting an advisory vote on pay. “Companies with problematic pay practices or a history of ignoring shareholders will be seeking fewer votes. That’s why shareowners need to vote for annual say on executive pay.”

Timothy Smith, Senior Vice President of Walden Asset Management stated, “This will be a unique proxy season on executive compensation. Addressing excesses and problems with executive compensation requires a vote each and every year rather than occasional accountability every three years. Say on Pay votes have already stimulated re-thinking by Board Compensation Committees on various perks and controversial pay formulas. The discipline of an annual vote will encourage Boards to be more responsive and accountable on compensation.”

Read the full statement.
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An Object in Motion…

By Brett Vetterlein, Community Investment Campaign Organizer

Getting started is always the hardest thing to do. Whether it’s that 10 page paper due on Friday, starting a workout routine, or quitting a bad habit, the first step is always the hardest. That hold even more true for starting a campaign. While making fliers and talking about ideas seems very easy, when we actually try to begin to formulate ideas into actions is where we get caught up. This is what I’m going through trying to start a Community Investment campaign at my Fordham University campus here in the Bronx. The pieces are in place, there are people willing to put in the work, and all the research is basically complete. Our proposal is in its final stages and now we need to act. But that action step is always going to be the hardest one.

However, an object in motion stays in motion (or so says Sir Isaac Newton). That first step more easily makes way for the second, which allows for the third and pretty soon you are sprinting full speed. The object doesn’t stay in motion by itself, mind you. There are very complicated natural processes going on that keeps a ball rolling. We, the organizers, activists, and concerned citizens, are the gravity of social justice movements and campaigns. If we want the object to stay in motion we have to make it stay in motion. And just as Sir Isaac Newton wrote down the laws of gravity, I will write down the laws of (social) movement. And yes, my ego is that big. Just kidding.

1. GET HELP! You can’t do this on your own. Surround yourself with a group of supportive and like-minded (and even sometimes not-so-like-minded) people who are willing to put in the work is the first thing you need to do to start your campaign. Even finding one singular person who will help is better than nothing. There are always levels of people’s commitment, but having a handful of close comrades to help in your campaign is the first law of (social) movement.

2. GAMES ARE WON ON MONDAYS! Well I used to play a lot of sports growing up, and the one thing I always learned was that you didn’t win a football game on gameday, but rather you won it during practice on Monday. To break it down even further, the big flashy rally you have isn’t what’s going to win the campaign for you. You’re going to win your campaign sitting in a coffee shop researching credit unions with two other people Monday afternoon.

3. BE FLEXIBLE! Having a plan is essential to your campaign. It seemed so obvious that I didn’t even think to list it as one of my laws. However, just as essential is that ability to be comfortable altering and even sometimes abandoning all or some of your plan. Situations change. You might ask your board of trustees to approve of a proposal to move money into your community, and they very well might say no. Does your campaign have to end? No. The ability to improvise, and to do it in an organizationally democratic way, is vital to any campaign for social justice. You aren’t going to meet all of your deadlines for everything all of the time. That doesn’t mean you should plan to, but when you don’t be prepared to adjust and react.

4. JUST DO IT! A lot of times what gets us hung up is just ourselves. We are nervous of rejection, of putting ourselves out there. We are nervous that we will lose or that people will look at our flier and laugh. But as progressives, radical, activists, and organizers we have no choice but to act because we see the problems of the world like other people don’t. And we see solutions. We see all the good our universities could do if they would put just a little bit of their vast wealth back into the community. So don’t be afraid. Like that horrible, sweatshop-powering corporation Nike says, “Just Do It.”

These are my four laws of (social) movement. In no way are these concrete or exhaustive. I’m sure every single one of you could come up with 20 more from your own experiences. But remember, the best way to start is just to make the commitment to yourself that you want something better. There are people out there who will help you and support you. If all else fails, REC is here to help you. Let’s move that money. To paraphrase Karl Marx (yea, I went there), we have nothing to lose but our chains; we have a world to win.
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Board Diversity is Corporate Responsibility: REC Joins 2020 Women on Boards

Who serves on American corporate boards? According to Catalyst, an organization that works to expand opportunity for women in business, the answer is unfortunately just what many people would expect. Their research shows that just eleven percent of corporate directors of Fortune 1000 companies are women and twenty-five percent of companies don’t have a single woman on their boards (“2009 Catalyst Census of the Fortune 500 Reveals Women Missing From Critical Business Leadership,” Catalyst).

The diversity of corporate boards is a important issue in its own right. Corporations, to best serve their customers and their workforce, should have a similar diversity to the population and at least to those people in the workforce. Research shows that higher proportions of women on boards outperform other companies financially, according to researchers and organizations like The Boston Consulting Group and Catalyst.

2020 Women on Boards LogoIn terms of environmental and social issues, a culture of better governance including more diversity in the boardroom can only have positive effects. That’s why REC became an affiliate of 2020 Women on Boards, a new initiative that will help define and promote gender diversity in the boardroom. The goals of the initiative are to raise awareness of board composition and increase the percentage of women who serve on corporate boards in the U.S. to twenty percent or greater by the year 2020. It may seem like a small amount, it is a big step up from today’s eleven percent.

Colleges and universities have implemented strong diversity policies, and should support diversity throughout society. With help from the Responsible Endowments Coalition and the people that we work with, they are also becoming more responsible investors. We hope that through our partnership with 2020 Women on Boards that universities can support efforts to make corporate boards more diverse, and that corporations can become more environmentally and socially responsible. Diversity at all levels from the top down is an essential step to ending oppression of all kinds and creating corporations that are more effective and accountable.
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Investors Take on Oil and Gas Companies' Fracking Practices

Investors led by the Investor Environmental Health Network and CERES filed resolutions on improving hydraulic fracturing practices. The risks of fracking are still being discovered, and while many believe that the practice shouldn't move forward until then, it already is. Investors are standing up to say companies should at least be be worried about the environmental risks of the practice.

According to the release:
“High profile water contamination incidents, new litigation, and public protests that include calls for moratoria on natural gas permitting all suggest sizeable and rising business risks to companies and attendant threats to shareholder value,” said Richard Liroff, executive director of the Investor Environmental Health Network (IEHN), which helped coordinate the resolutions. “Shareholders need assurance that companies are candidly disclosing these risks and are adopting best management practices to minimize them.”

Investors filing the resolutions include the New York State Comptroller (Cabot Oil & Gas, Carrizo Oil & Gas), Domini Social Investments (Southwestern Energy), As You Sow (ExxonMobil and Ultra Petroleum), Trillium Asset Management (Anadarko), Miller/Howard Investments (El Paso and Energen), and The Sisters of St. Francis of Philadelphia (Chevron). Cabot Oil & Gas, Carrizo Oil & Gas, El Paso, Southwestern and Ultra Petroleum are headquartered in Houston; Energen is based in Birmingham, Alabama; Anadarko in The Woodlands, Texas; Exxon Mobil in Irving Texas, and Chevron in San Ramon, California.

Read the whole release at IEHN .
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Turning Student Activism toward eastern Congo: Make your Campus Conflict-Free

Chloe Christman is the Raise Hope for Congo Campaign Assistant at the Enough Project, which works to end genocide and mass atrocities in eastern Congo, Sudan, and areas affected by the Lord’s Resistance Army.

The world’s deadliest war since World War II has been ravaging eastern Congo for over a decade. Nearly six millions lives have been claimed since 1998 - many due to famine, preventable disease, killings, displacement, and sexual violence. Armed groups use rape as a weapon of war to intimidate, control, and destroy entire communities, leaving hundreds of thousands survivors of sexual violence and displaced populations in their wake.

The conflict stems from long-standing grievances in eastern Congo and the region, a state failing to protect its citizens, and the proliferation of armed groups who thrive in areas where rule of law is weak. What has historical and regional roots, though, today is largely fueled by the illicit trade in Congo’s conflict minerals. Congo’s tin, tungsten, tantalum (the 3T’s) and gold make their way through the global supply chain and find their way into our cell phones, laptops, and iPods, and other consumer electronics and end products, and generate hundreds of millions of dollars in revenue for the militia groups that control the mines.

As responsible global citizens and consumers, we cannot allow our purchases to continue funding armed groups terrorizing communities in eastern Congo. There are solutions, and you as a university student have a powerful role to play.

Because we are the end consumers of Congo’s tin, tungsten, tantalum, and gold, we have the power to use our voice and demand that our products are not helping fuel the conflict by influencing U.S. companies and decision makers to take action. In order ensure our purchases aren’t benefitting armed groups, we need these actors to demonstrate leadership in the creation of an international certification system, similar to what we saw with the Kimberley Process for Blood Diamonds, that will help formalize the mining sector in eastern Congo and create the space for peace. We’ve already started to see companies engage in the processes to trace, audit, and certify their supply chains are conflict-free, but we haven’t seen enough from them yet, and now is the time to up the pressure.

The Conflict-Free Campus Initiative is a growing movement by university students across the country calling on their administrations to pass resolutions that change their procurement policies, use their proxy-voting power, or make strong statements of support in favor of conflict-free electronics. By encouraging your university to publicly support the conflict-free movement, you will not only send a message that you as an individual consumer demand that your electronics products are conflict-free, but also demonstrate that demand through a collective, institutional voice. Universities are especially influential over these electronics companies that have the most control over the supply chain of conflict minerals- both as a large contract-holder and a representative of a highly-coveted demographic of young adults.  Companies will have to pay attention, and we can actually bring about a shift in corporate and government policy to help bring peace to Congo.

Tackling the trade in Congo’s conflict minerals is not a silver bullet for peace in the region, but until the incentive to wage war is addressed, violence will continue. Together, we need to cut off the profit lines for these armed groups to create a space that favors peace instead of conflict, opening the space for essential reforms and fostering a minerals trade that delivers more benefits for the Congolese people.

We need your help to grow the demand for conflict-free. The more powerful the cry for change, the faster we’ll see action. Let us know if you are interested in getting involved and passing a conflict-free resolution on your campus by emailing
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HEI Victory at Brown: a Student Organizer's Story

by Haley Kossek, Brown Student Labor Alliance

Brown University’s Advisory Committee on Corporate Responsibility in Investment Policy (ACCRIP) has recommended that Brown not reinvest in HEI Hotels and Resorts, a company in which it is currently invested, until the university is confident that HEI is respecting the rights of the workers. HEI is a hotel management company that workers and students have been organizing against for the past two years in response to issues ranging from workloads to working conditions to management treatment of pro-union employees.

This is an unprecedented instance of labor rights standards being used to decide against the University investing in a company. (Previous University divestments have targeted tobacco companies and companies doing business in Darfur and South Africa due to health and human rights concerns.)

As per an email from the ACCRIP chairman sent to the Brown University Student Labor Alliance, the student group organizing our campus’s campaign in support of HEI workers, the committee’s specific recommendation stated that:
a persistent pattern of allegations involving the company’s treatment of workers and interference with their efforts to unionize, combined with repeated settlements, as described above, raised serious questions whether Brown’s continued association with HEI would be consistent with the ethical principles governing the university’s investments. ACCRIP has recommended, therefore, that Brown University should refrain from reinvesting in HEI until the Corporation is confident that HEI adheres to our high standards regarding respectful and humane treatment of workers, and that workers at HEI-operated hotels are able to seek union representation without fear of intimidation.

This victory is the culmination of two years during which Brown Student Labor Alliance members have protested outside of Brown Corporation meetings, walked picket lines with workers at HEI hotels, delegated university administrators, collected petition signatures, held a banner outside a university photo op in the rain, temporarily occupied the university President’s office, and performed a snarky mock wedding. Multiple waves of students have contributed to this campaign, not diverted by repeated admonishments from HEI and the University that our efforts were futile.

When Brown students first began fighting against our university’s investment in HEI, they were initially told that the university could not confirm or deny its investment in the company. As the student campaign continued, the university admitted that it was an HEI investor, but maintained that none of the company’s actions were objectionable. Students and workers refused to accept that response; HEI workers visited Brown multiple times to speak out against the university’s investment in a company that treats them unfairly, and students continued to lead public actions in support of them.

Eventually, in February 2010, following a recommendation from ACCRIP, Brown’s President Ruth Simmons agreed to write a letter to HEI CEO Gary Mendell, writing that “if there were to be any truth to the claims of the union and others that workers at some of your properties have been subjected to intimidation by managers due to their pro-union activities, this would be a matter of deep concern and contrary to our standards for investing.” And now, almost a year later, the University is finally beginning to make good on that claim, showing that HEI’s disrespectful treatment of workers is “contrary to our standards for investing” in practice.

Brown is the first university to take this stance, in a nationwide campaign that has spanned two years, almost ten college campuses, a sit-in at the investment office at Yale and a weeklong hunger strike at Notre Dame. The progress over time is tangible. Students successfully pushed a university all the way from refusing to acknowledge its investment in HEI, to recommending against giving the company more money in the future—a testament to the value of perseverance in student activist campaigns. Brown Student Labor Alliance members raised their objections about the university’s investment in HEI to Brown ACCRIP five times before this recent victory. Each time, the Student Labor Alliance’s concerns were dismissed as unsubstantiated or outside of the committee’s purview, and each time, students responded by organizing a public response to those dismissals, refusing to allow the ongoing injustices at HEI hotels to be ignored. That refusal to be discouraged by the naysaying of administrators ultimately delivered an unprecedented declaration that respect for labor rights must be a guiding principle for the University’s investments, a powerful reminder of what is possible in the movements for student power and worker power.

An awareness of that power might explain why HEI, like university administrators, has also been inclined to use dismissiveness as a favorite tactic, referring to the worker and student campaigns against it as “unjustified” and based off of mere “allegations.” Undeterred, workers at HEI hotels have continued to demand change, calling for consumer boycotts at four HEI hotels around the country and leading a one-day strike at the HEI-managed Embassy Suites Irvine this summer. Says Maribel Duarte, a housekeeper at the Embassy Suites Irvine, before workers there began organizing, “we were ignored and we were afraid to lose our jobs. That's why I want to have a union — so I feel like we can speak up.” HEI hotel workers have been “speaking up” for years. Brown ACCRIP’s recommendation to stop doing business with the company is a hopeful sign that HEI’s investors are finally starting to listen.
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by Dave Warnock, Midwest Student Organizer

I enjoy it when we make progress.  We met with our Chief Investment Officer recently and was very encouraged by it, which is very nice considering my initial worry.  However, our CIO, it would seem, enjoys being productive.  She is by no means about embrace every transparency policy that we’ve proposed no questions asked, but I feel confident that a proposal for a Committee on Investment Responsibility can be passed this year if the proposal is reasonably intelligent and thorough.

I feel fortunate that WashU’s CIO interacts with us in such good faith, when at so many other schools I have heard stories of dealing with administrators who are less receptive.  To the extent that the administration’s attitude can be influenced by students, I would give this advice.: usually, administrators are big macher types (that’s Yiddish for “big shot”) that are usually comforted when others find value in what they do.  So anytime you have time with them when you aren’t talking responsible investment, use it to take a genuine interest in what they do.  Your ideas may seem less risky if they believe that you take what they do seriously.

I have made it my business to maintain good relations.  There is power in being reasonable at all times, for two reasons.  The first is, there is no value in escalating situations for the excitement value (see also: the building occupation at NYU), so it is worth avoiding if your goal can be attained without it.  Second, if issues do escalate, allies are more easily found by the most reasonable side.  I’m determined to make sure that reasonable side is the one that we are on.

The lesson I would leave you with is that working within the systems of power is a generally more efficient option when it can be managed.  You can change your campus by finding the people with the power to give you what you want, and just starting a cordial rapport with them.  The caveat is to make sure you are taken seriously.  By this I mean, if you can present yourself as worthy of the time your targets devote to you, then you can win their favor, or at least make them sit up and pay attention to what you want.

So, as it is, I think that the most important thing for us right now is to make sure that our proposal we plan to bring back to our CIO meets the concerns she brought up at our meeting.  She has done plenty of research on this matter, so it had better be good.  But it is also important to me that the Committee on Investment Responsibility that we are proposing should handle our concerns, the student government’s concern, and the concerns of anyone else who cares about Wash U’s commitment to investing their money responsibly. All told, things for our campaign look promising.
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