Activists in the Boardroom: How Advocacy Groups Seek to Shape Corporate Behavior

Text.qxp 10/4/2006 1:27 PM Page 1 Activists in the Boardroom: How Advocacy Groups Seek to Shape Corporate Behavior Tom Price Introduction by Douglas G. Pinkham President, Public Affairs Council Text.qxp 10/4/2006 1:27 PM Page 2 Introduction To a job seeker, a corporation is a place to earn a living. To a shareholder, a corporation is a vehicle for investments. To a community, a corporation represents economic stability and a strong tax base. But political activists are increasingly regarding corporations as instru- ments for improving the environment, protecting human rights, saving the rain forest and helping the poor. Instead of looking to government to solve problems, advocacy groups are either enlisting the help of companies to meet societal needs or pressuring them to use their market clout to support their causes. Part of the reason for this shift is the sheer size of the world’s largest companies. According to the U.N. Conference on Trade and Development, at least 29 of the world’s top 100 economies are multinational corporations. Any organization as big as an industrialized nation is likely to have the capacity to change the world — or at least a corner of the world. To be sure, even without pressure from activists, many firms have sponsored wide-ranging social responsibility programs. They have donated millions of dollars in grants and millions of hours in volunteer time in an Text.qxp 10/4/2006 1:27 PM Page 3 effort to assist the communities where they do business. Over the past 20 years, community involvement at these companies has evolved from “checkbook philanthropy” into a sustained effort to integrate corporate citizenship into overall business operations. But the advent of the Internet fundamentally changed the way activists, shareholders, community leaders and others related to big corporations. Suddenly, the balance of power shifted and groups of like-minded indi- viduals could generate enough noise to organize boycotts, advance shareholder resolutions, create outrage in the media and embarrass $100 billion multinationals. Companies who used to be proud of their size and influence have found themselves wishing they could lay low until the next storm had passed. The result has been major changes in the ways companies try to manage their reputations and their relationships with employees, communities, shareholders and thought-leaders. This report, Activists in the Boardroom, explores how activists organize company constituents, encourage socially responsible investing, push for codes of conduct, and oppose corporate behavior that they feel is detri- mental to society. The report also examines recent cases in which activists have pressured corporations to use their lobbying prowess to advance a particular social agenda — to the consternation of equally strong-willed activists with a different social agenda. Our hope is that companies can use these case studies to learn how to anticipate challenges, manage their reputations, counter unfounded claims from opponents, and form effective partnerships. The successful corporation of the future will need proficiency in all of these areas. This study is sponsored by the Foundation for Public Affairs, the research affiliate of the Public Affairs Council. The Council, a non- partisan and non-political organization, is the leading professional association for public affairs executives. Its 600 corporate and non-profit members work together to enhance the value and professionalism of the public affairs practice and provide thoughtful leadership as corporate citizens. Douglas G. Pinkham President, Public Affairs Council Text.qxp 10/4/2006 1:27 PM Page 4 Copyright ©2006 Foundation for Public Affairs 2033 K Street NW, Suite 700 Washington, DC 20006 202.872.1750 www.pac.org President Douglas G. Pinkham Executive Director Brian P. Hawkinson Design by Bonnie Heiston The Foundation for Public Affairs conducts and supports research on important issues and emerging trends that affect the practice of public affairs and the ability of organizations to thrive in a dynamic business environment. 4 — Foundation for Public Affairs Text.qxp 10/4/2006 1:27 PM Page 5 Activists In The Boardroom: How Advocacy Groups Seek to Shape Corporate Behavior Contents Introduction .................................................................................................................2 Activists in the Boardroom........................................................................................7 Systematically Thinking Outside the Bun.............................................................10 Taking It to the Bank ................................................................................................12 When Shareholders Measure Value in More Than Dollars ................................14 When Advocates Collide .........................................................................................18 Choosing Partnership over Conflict.......................................................................22 The Power of Association ........................................................................................26 Social Responsibility as Business Strategy ............................................................30 No Room for Thinking in Silos ...............................................................................34 Activists in the Boardroom —5 Text.qxp 10/4/2006 1:27 PM Page 6 About the Author Tom Price has written three previous reports for the Foundation for Public Affairs: Creating a Digital Democracy: The Impact of the Internet on Public Policy Making, published in 1999; Cyber Activism: Advocacy Groups and the Internet, published in 2000; and Public Affairs Strategies in the Internet Age, published in 2002. Before becoming a full-time Washington-based freelance writer in 1996, Price worked for 20 years as a politics writer and Washington correspondent for Cox Newspapers. His most recent book, written with former U.S. Rep. and Ambassador Tony Hall, is Changing the Face of Hunger: One Man’s Story of How Liberals, Conservatives, Republicans, Democrats, and People of Faith are Joining Forces in a New Movement to Help the Hungry, the Poor, and the Oppressed (W Publishing Group, 2006). 6 — Foundation for Public Affairs Text.qxp 10/4/2006 1:27 PM Page 7 Activists in the Boardroom: How Advocacy Groups Seek to Shape Corporate Behavior I n late winter 2005, about 80 tomato pickers boarded governmental organizations. In ever-rising numbers, buses in Immokalee, Florida for a journey to Louisville, activists are seeking to achieve their goals by taking Kentucky, headquarters city of Yum Brands, the world’s direct action against corporations, rather than by largest restaurant company. Along their thousand-mile lobbying lawmakers or government regulatory agencies. route, the farm workers stopped in 15 cities to stir up While these kinds of campaigns are not new, activists support for their three-year-old boycott of Taco Bell, one are launching them much more often than they did in the of Yum’s restaurant chains. This “Taco Bell Truth Tour” past. was to culminate in a protest rally in Louisville, which also happens to be headquarters city for the Presbyterian As Mari Margil of the Business Ethics Network, an Church U.S.A., a major boycott supporter. advocacy group coalition, said, “It is through corporate campaigns, not the political system, that we are seeing When the time for the March 12 rally rolled around, the greatest achievements for workers, and in protection however, the farm workers scratched the protest and of the environment and public health.”1 staged a celebration instead. Earlier in the week, Yum and the Coalition of Immokalee Workers, as the tomato Activists are developing innovative tactics and strate- pickers call themselves, had announced an agreement to gies to carry the campaigns out. And businesses end the boycott. are being forced to craft innovative responses of their own. The two sides had hammered out an inventive resolu- tion to the farm workers’ campaign to increase their earnings, which the coalition said averaged less than “Pool-shot Activism” $8,000 a year. Even though the pickers worked for In the Taco Bell campaign, the farm growers, not Yum, the restaurant company agreed to pay workers practiced what some have the workers an additional penny per pound of tomatoes called “pool-shot activism.” The workers’ picked, an increase of 70 to 80 percent. ultimate target was the growers who employ them. Unable to win a traditional labor- “It is through corporate campaigns, not the management conflict with their employers, they directed their campaign against Taco Bell, hoping to pressure political system, that we are seeing the greatest Yum to pressure the growers to increase the workers’ pay. To pressure Yum, the workers sought support from achievements for workers, and in protection of the corporation’s most important constituents — its the environment and public health.” customers. In other types of campaigns: —Mari Margil, Business Ethics Network V Advocacy groups seek to influence their targets by or- ganizing other company constituents, such as employees, Shortly thereafter, the coalition asked McDonald's, shareholders or suppliers. These activists are often called Subway and Burger King to do the same. A year later, non-governmental organizations (NGOs) in political and having failed to reach agreement with those fast-food chains, the farm workers and their supporters launched a business circles. V new public campaign by riding buses

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