Is it possible to use profit motive as a social change incentive? Friday November 18th, Leslie King, associate professor of Sociology and Environmental Studies at Smith College, came to log lunch to discuss shareholder activism. Shareholder activism is the attempt by holders of stock in a corporation to influence company policy. Some shareholders implement this power as a business tactic while others use it as a tool for social and environmental change. This tool has been a part of every social change movement since the 1960s. It is self-defined as reformist, focused on the promotion of incremental rather than wide-sweeping change.
As a sociologist, King approaches the research on shareholder activism from two angles: 1. How social movements are targeting companies rather than the State and 2. How social movements can reform more permanent organizations.
Theoretically, shareholders are the owners of a corporation. They vote for a board of directors, who then vote for the officers and CEO who actually run the entity. However, “in reality this legal system has become perverted.” Shareholders are trying to take back some power that they are legally owed by submitting resolutions that appear on the ballot that shareholders vote on. Historically, these resolutions have changed practices of discriminatory hiring at Kodak, the production of poisons at Dow Chemical, and improved consumer rights at General Motors. Currently, 300 social and environmental resolutions are filed each year.
The increased use of this tactic suggests decreased trust in the government’s ability to tackle these issues. A staff member of the Interfaith Center for Corporate Responsibility told King, “we use the investment model as a surrogate for what the government should be doing.”
King is currently researching a data set of 3,000 resolutions filed between 1999 and 2009. Her conclusions will provide insights into how seriously companies have taken these resolutions, and how much effect they have on corporate social responsibility.
Written by Claire Lafave, CES Reserach Assistant