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The Planet
Sleeping With the Enemy

The Sierra Club does not accept gifts from major polluters or consistent violators of environmental laws. So it wouldn't make sense for the Club to invest in one of those companies either. Or would it?

The Sierra Club Board of Directors decided it would. At its July 2000 meeting, it voted unanimously to allow the Club to invest up to $40,000 in decidely ungreen companies, many of the same ones the Club has been fighting for years. In November 2000, the Club purchased stock in a handful of corporations - oil and timber companies, developers, animal factories, electric utilities and the like.

Larry FahnBoard member Larry Fahn, who's spearheading this effort, explains why: "The majority of environmental damage is carried out by publicly traded multinational corporations. By becoming shareholders in targeted companies, we have a chance to push them to be better environmental stewards. Long term, this will be good for their bottom line."

(Except for this corporate accountability fund, the Club's Investment Committee sets standards for which companies the Club can invest in. None of these companies meets those standards.)

Shareholders who hold at least $2,000 worth of stock for at least one year are eligible to introduce resolutions for a vote at annual meetings. The Club will be eligible to initiate shareholder actions in 2002 and is not publicly naming the chosen companies until plans are fleshed out.

Corporations are not democratic, but shareholders do vote on some company policies, though these resolutions are usually non-binding. (It's not one person, one vote; it's one share, one vote.)

For an example of what this new effort could accomplish, Fahn points to the successful shareholder action in 1999 urging Home Depot to phase out the sale of wood products made from old-growth timber. The shareholder resolution received the support of 11.8 percent of shareholders (113 million shares) at the company's annual meeting. While far from a majority, it was enough - combined with the grassroots pressure from numerous environmental groups, including the Sierra Club and the Sierra Student Coalition - to convince company management to phase out sales of all old-growth wood products.

These shareholder resolutions are only effective, stresses Fahn, if they are part of a broader campaign.

Shareholder actions first gained national attention in the 1980s when dissident shareholders filed dozens of resolutions urging companies to divest from South Africa until apartheid was abolished. Fahn asserts that this was a major factor in pressuring many U.S. companies to leave South Africa.

Today, there are similar actions aimed at companies doing business in Burma, which is razing rainforests and using forced labor to build a natural-gas pipeline. More than three dozen companies that formerly did business in Burma have pulled out, including Amoco, IBM, Disney and Texaco.

To decide which stocks to purchase, Fahn and fellow Club board member Charlie Ogle and volunteers Doris Cellarius and Nancy Rauch went to representatives of the Club's priority campaigns to be sure that potential shareholder actions were fully integrated with other efforts.

The target, says Fahn, must have an economically viable alternative to its damaging practices. So the Club wouldn't ask developers to refrain from building homes, but would pressure them to stop clearing farm land and open space for sprawling development and focus instead on constructing infill housing. "We can urge energy companies to increase efforts to develop renewable energy sources instead of drilling for oil in pristine areas like the Arctic Refuge," says Fahn.

Though the Club as an organization hasn't offered resolutions, individual members have, with much success. In 1998, Georgia Chapter Chair Sam Booher was among the shareholders who played a role in persuading DuPont to drop plans to mine titanium adjacent to the Okefenokee National Wildlife Refuge in Georgia. In 2000, Club leader John Osborn, from the Northern Rockies Chapter, introduced management-accountability resolutions at Boise Cascade (winning with 30 million shares to management's 19 million) and Potlatch, finding common ground between environmentalists and Wall Street's investors.

Okefenokee National Wildlife Area

Swamped by Shareholders: A resolution by DuPont shareholders was part of a successful grassroots fight against a mine adjacent to the Okefenokee National Wildlife Area.

The potential for using shareholder resolutions to influence corporate policy has barely been realized. There are approximately 15,000 publicly traded companies, and only several hundred shareholder resolutions are introduced each year.

Long term, Fahn says, the plan is to solicit fellow shareholders - Club members and non-members, individuals and institutions - to join in these actions, contending that good stewardship is in the best interests of the company.

"We believe that the corporations that keep environmental ethics at the top of their list will thrive," he says.

For more information, contact Larry Fahn at

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