Greening the Media

How media technology contributes to the global ecological crisis.

The Myth of Green Shareholder Activism

Why activist shareholders won’t make media technology sustainable.

A conservative think-tank called the National Center for Public Policy Research recently issued a shareholder resolution to Apple demanding information on the company’s “associations and memberships and trade associations that work on [environmental] sustainability issues,” ostensibly to help other shareholders see how Apple has come under the ideological influence of anti-market forces. NCPPR lost the vote, but claimed victory for the stunt.1

The business press would probably have ignored the event if it weren’t for Apple CEO Tim Cook’s reaction to NCPPR’s market fundamentalism. He said “I don’t consider the bloody ROI [return on investment]” when designing devices for the blind, environmental betterment, or worker safety. “If you want me to do things only for ROI reasons,” said Cook, “you should get out of this stock.”2

U.S. shareholders (stockholders) have been submitting proposals to alter company operations since 1942. For the first thirty years of such activism, proposals targeted growth and profits, largely because the Federal government did not require companies to inform shareholders, via proxy statements, about “social issue” resolutions that were submitted to management.

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A legal decision in 1970 changed this, making it possible for shareholders to vote on proposals to modify corporate policy in ways that could have important social outcomes, like reducing environmental harm or expanding workers’ rights. This opened the door for individual and institutional investors, foundations, charities, religious and other organizations to file issue-oriented shareholder resolutions. Market fundamentalists have been fighting back ever since.3

Shareholders of Eastman Kodak prevented its executives from funding a black civil-rights group in 1972. But the following year, the Interfaith Center for Corporate Responsibility began ushering in a new shareholder activism, and as Shell invested more in the Arab world, it began to factor social responsibility into its analyses of risk. By the mid-1970s, activists were pressing for disinvestment in South Africa, and General Motors adopted a code of principles for dealing with apartheid in 1977.

But the turn of the 21st century saw the uptake of ethical principles by International Shareholder Services (ISS). ISS acts as the proxy advisor for many large institutional investors, such as mutual and pension funds. It exerts major influence on votes at over 20,000 shareholder meetings a year. Previously a stalwart of the right on issues of social responsibility, in 2002 ISS changed its position, astonishing outsiders by recommending votes in favor of renewal-fuel research and anti-sexual discrimination policies by ExxonMobil stockholders, and against child labor in Marriot hotels. ISS judged that being on the same side as environmentalists and unions made sense and cents, in keeping with studies that indicate higher stock valuations of companies with strong pro-environmental programs.

Enter the likes of NCPPR, a right-wing think tank created to promote ideas on behalf of investors who are “tired of supporting corporations that support the left.” A central tenet of the group is that “private owners are the best stewards of the environment”—zombie market fundamentalists and their cash-operated think tanks love this kind of talk.4

It’s not surprising that NCPPR’s proposal lacked traction with shareholders. Shareholder equity in Apple has grown steadily despite efforts to improve its environmental record: its net income grew six-fold since 2007, the year it started auditing suppliers’ factories. In fact, income has more than quadrupled since 2009, when the firm said it goaded suppliers to shield workers from exposure to mercury, lead, solvents, and flame-retardants. And income nearly doubled when it beefed up supplier audits after attempted suicides by 18 workers at a factory run by its biggest Chinese supplier, Foxconn.5

But let’s not get carried away. Apple’s environmental record is better in theory than in reality, notably in Chinese factories. The corporation’s supplier audits have been notoriously thin on facts about violations, including n-hexane poisonings of 137 workers at the factories of Lian Jian Technology Group, a supplier of iPhone touch-screens.

N-hexane poisoning causes damage to the peripheral nervous system, which is not only extremely painful but leads to numbness in the limbs, chronic weakness, fatigue, and hypersensitivity to heat and cold. In 2010, workers were poisoned while degreasing the Apple logo with n-hexane at the Yuhan Lab Technology Company and the Yun Heng Hardware & Electrical factory. Both subcontractors were among dozens of “suspected Apple suppliers” poisoning workers and polluting surrounding communities in China, according to the Beijing-based Institute of Public and Environmental Affairs.6

Social issue shareholder activism is not going to bring Apple’s suppliers into line with internationally recognized standards of occupational safety and pollutions controls. In fact, not a single shareholder resolution on environmental issues was approved last year by US corporations.7

And shareholder activism, even more than consumer activism, is plutocratic—the wealthiest get the most votes, as per the International Monetary Fun and the World Bank. It’s fundamentally anti-democratic.

If not shareholder activism, then what? The answer comes from non-governmental agencies like the Institute of Public and Environmental Affairs, China Labor Watch, and Students and Scholars Against Corporate Misbehavior. These organizations work with affected communities and workers and meet Apple and supplier representatives to press for more communication and transparency throughout supply chains. Those efforts don’t happen in Cupertino or at shareholder meetings. They happen on the ground through committed citizens whose interests are non-pecuniary, but often very material.

 Notes

 1. http://www.greenbiz.com/blog/2014/03/03/how-ge-and-apple-shareholders-became-tools-climate-deniers?

 2. http://www.businessinsider.com/tim-cook-versus-a-conservative-think-tank-2014-2

3. Maria Goranova and Lori Verstegen Ryan. “Shareholder Activism: A Multidisciplinary Review.” Journal of Management. Online December 17, 2013. http://jom.sagepub.com/content/early/2013/12/13/0149206313515519....

 4. http://www.nationalcenter.org/

 5. http://www.marketwatch.com/investing/stock/aapl/financials; https://www.apple.com/pr/library/2007/10/22Apple-Reports-Fourth-Q...

 6. Institute of Public and Environmental Affairs. “The Other Side of Apple: Investigative Report into Heavy Metal Pollution in the I.T. Industry” (Phase IV): 2011. http://www.ipe.org.cn/en/about/report.aspx

 7. See the Manhattan Institute Proxy Monitor report on corporate governance and shareholder activism for 2013: http://www.proxymonitor.org/pdf/pmr_06.pdf; you can find more information on their handy Score Card. http://www.proxymonitor.org/ScoreCard2013.aspx

Richard Maxwell, Ph.D., is Professor and Chair of Media Studies at Queens College, City University of New York. Toby Miller, Ph.D., is an interdisciplinary social scientist. more...

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