Looking Toward the Future
BY TIM SMITH
Ibegan working for the Interfaith Center on Corporate Responsibility (ICCR) in the early 1970s, after I graduated from Union Theological Seminary in New York City.
I had the rare opportunity to be on staff when ICCR was created and to watch the organization expand from the six Protestant denominations who sowed the first seeds to also include Roman Catholic orders and coalitions. This included welcoming the Northwest Coalition for Responsible Investment (NWCRI) and its members to the work of shareholder advocacy led by faith-based investors.
This work is now coming up on 55 years of “witness in the marketplace.” In 2019, I was pleased to come to Seattle to participate as the keynote speaker at IPJC’s 25th anniversary celebration to commemorate years of faithful witness to social and environmental justice with the business community. In 2022 I stepped down from 22 years of work with the ESG investing leader, Boston Trust Walden, but I was fortunate to return to ICCR to help lead some of their programs. It has been decades of important and effective work.
Today, ICCR has grown to a broad coalition of approximately 300 institutional investors. This includes faith-based investors but also foundations, investment managers, unions, and nongovernmental organizations. And since our membership base now includes a number of large investment firms, ICCR members manage assets in the neighborhood of $4 trillion.
Our religious investors find common cause with other members who are equally committed to engaging companies on important issues such as climate change, diversity, health equity, lobbying and political spending, and human rights. Our combined voice urges companies to examine social, environmental, and governance issues as they pursue their business priorities. We believe that often these issues have an impact on the long-term profitability of companies, impacts that could actually have negative consequences on our investment portfolios. Thus, you will often hear investors working with ICCR make strong business cases for the issues they raise.
ICCR and its members know that our combined work has a distinct and demonstrable impact on company policies and practices as well as public policy. Our goal is not simply to raise a moral voice in company boardrooms but to prod, encourage, and convince companies to conduct their business fairly and responsibly.
As a result, thousands of businesses have responded positively on important issues like climate change, child labor in supply chains, and diversity in employment. We often point to corporate leadership on sustainability as an example when we engage companies. In our current age, leadership by businesses is more important than ever.
“Our goal is not simply to raise a moral voice in company boardrooms but to prod, encourage, and convince companies to conduct their business fairly and responsibly.”
Other articles in this issue outline the various strategies sustainable and responsible investors use to make these cases. Engaging companies through dialogue, investor statements and letters, and, of course, shareholder resolutions has been a central part of our work for more than 50 years.
With New Trends Come New Challenges
Despite the successes we have garnered over the years, we currently face sharply conflicting trends that profoundly threaten our work.
“ As people of faith, we are called to be courageous and persevere. We are long-distance runners who believe that the ’arc of history bends toward justice.’”
On the positive side, there are many things to celebrate about our current age. Many companies understand and affirm being a responsible citizen. The younger generation seems to embrace tolerance and social justice. There has been an increase in women investors who look for companies to operate responsibly. Groups of consumers have begun to speak out on social and environmental issues. And a global group of investors, with investments totaling over $100 trillion, now actively speak out using thoughtful business logic to address important issues like climate change, human capital, biodiversity, human rights, and governance with companies and governments alike.
But we are also experiencing widespread and growing threats to our work, something we are taking very seriously. Over the last three years, there have been growing attacks on both sustainable investing in general and specifically on issues like climate, human rights, or diversity; some people are arguing these are “woke” or politically correct issues that should be stopped in their tracks.
These attacks take multiple forms. At the state level, 28 states are attempting to pass legislation that would outlaw state pension funds from using any environmental or social criteria in making investment decisions or doing business with any investment firm that does any ESG investing. Few bills have been put into effect, and some that passed faced immediate lawsuits. But there is a relentless attempt to politicize the investment process in conservative states.
Fortunately, other states—including New York, California, Illinois, New Jersey, Vermont, Oregon, and Washington State—are pushing back, making common-sense arguments that they are protecting their pensioners by integrating the risks from climate change or employment discrimination into their investment calculus.
At the federal level, SEC commissioners and the expected new SEC chair are pushing agendas to limit shareholder resolutions or make it easier for companies to omit resolutions that have been filed. The SEC’s mission is to protect shareholders, but that does not seem to include standing behind the timehonored tradition of investors filing resolutions.
In Congress, conservatives have made a vigorous series of attacks on ESG-related issues and resolutions/proxy voting, with hearings populated by critics of our work and numerous examples of legislation. To date these have not passed, but they are continuing to surface.
Over the past two years, we have also seen a bevy of antiESG/anti-DEI (diversity) shareholder resolutions that use the resolution tool to attack companies. In 2024, there were close to 100 such resolutions filed. Meanwhile, politicians—either the governors of conservative states, leaders in Congress, or the current presidential administration—continue to champion the destruction of “woke policies.” Ron DeSantis, governor of Florida, says that Florida is “where woke comes to die.”
ICCR and numerous allies are not simply watching this tsunami wash over us. We are working daily to push back, publicly making our case and protecting our shareholder rights. There is too much history to protect to simply allow this to happen. As people of faith, we are called to be courageous and persevere. We are long-distance runners who believe that the “arc of history bends toward justice.”
Tim Smith is one of the founders of the Interfaith Center on Corporate Responsibility (ICCR) and also worked for 22 years for Boston Trust Walden, a leading investment firm in sustainable and responsible investing. He presently serves as senior policy advisor for ICCR.