Wednesday, November 09, 2005
William Baue reviews "The Challenge To Power" in SocialFunds.com:
John Harrington's writing, which springs from his long career in socially responsible investing (SRI) advocating social and environmental justice, walks a fine line between the kissing cousins of deep cynicism and deep hope. His cynicism stems from his encyclopedic identification (when does he find time to read all the sources he cites?) of how corporate actions systemically and systematically advance social and environmental injustice. His hope derives from his faith that SRI, working in coalition with other instruments, can effect change by holding corporations accountable for past actions while simultaneously creating a system that more actively requires companies to benefit society and the environment in the first place.
"SRI can be a progressive force of change," writes Mr. Harrington in The Challenge to Power: Money, Investing, and Democracy (Chelsea Green). "The goal is not simply to maximize financial return and feel good about it, or to have less guilt, but to understand that capital is a major source of power and authority in American culture."
A pattern develops throughout the text where Mr. Harrington introduces a problem, illustrates it by citing and quoting primary and secondary sources, then ends the paragraph with cutting sarcasm, isolating and exposing ethical failings like a surgeon's scalpel slicing out a cancer.
"Halliburton [ticker: HAL] disclosed in 2002 that one of its units made 'improper' payments of $2.4 million for favorable tax treatment to a Nigerian tax consultant who turned out to be an employee of a local tax authority," Mr. Harrington writes. "Gosh, Halliburton reported making a bribe!"
"It's unclear if Halliburton received a tax deduction for this," he adds, extending the irony.
Later, Mr. Harrington explains how Coca-Cola (KO) did an end-run around its own July 2003 pledge to stop marketing soda to children under 12 by replacing Coke with Swerve, a skim milk-based drink made with the same amount of sugar as Coke and double the sodium.
"[School] districts must wean the kids off Coke and onto Swerve--sort of like going from heroin to methadone," he states dryly.
There are no sacred cows for Mr. Harrington, who founded the SRI firm Harrington Investments Inc (HII) in 1982, and co-founded Working Assets Money Market Fund (now managed by Citizens Funds) in 1983 and ProgressiveAsset Management (PAM) in 1987. He is an equal opportunity critic of corporations, politicians, regulators, nonprofits, SRI, corporate social responsibility (CSR), and sustainability, among many other things. He calls the latter two terms "captives of 'corporate-speak,' now completely devoid of meaning, used primarily by marketers and public relations firms working for large corporations." In the next chapter he takes voluntary corporate codes of conduct to task, finding them "just that: voluntary."
"Without a comprehensive code enacted into law and enforced by national and international laws, and an international judicial system with the authority to levy penalties and mandatory sanctions, voluntary codes are a great waste of everyone's time, including the SRI community," he says.
Mr. Harrington also skewers nonprofits with progressive social and/or environmental missions that fail to put their money where their mouth is in that they lack SRI investment policies. He conducts an informal survey, asking the progressive organizations he belongs to (such as Citizen Works, Sierra Club, Nature Conservancy, Greenpeace, Amnesty International) for copies of their goals and objectives, investment policies, and schedules of investments.
"Most of the groups that responded had no social or environmental investment mission statement, and when they did, it could not be determined whether it was being implemented," he states in frustration.
Perhaps most importantly, Mr. Harrington exposes how free market capitalism as exercised in corporate America is essentially devoid of democracy.
"[O]ne of the major obstacles to shareholders improving corporate conduct [is that] shareholders have almost no power," he writes. "Even if large institutional shareholders and other owners could effectively coordinate massive serious shareholder vote challenges to management, resolutions are 'advisory,' amounting to begging; non-management nominations of board members are prohibitively expensive; and 'withhold' votes are worthless."
Mr. Harrington's sarcasm and cynicism would depress readers if it seemed intended to destroy the people, institutions, and practices he criticizes; however, his goal is to redeem them from the shortcomings he identifies with such acuity. In the final chapter, he lays out a vision of SRI working in collaboration to advance "corporate campaigns" or coordinated, comprehensive, long-term and wide-ranging efforts to promote positive progress in corporations.
"What is now needed is a strategy that is a 'systems' approach that coordinates all the stakeholder strategies at one time to overload the corporate system," Mr. Harrington. "Shareholder advocates will play a role, as will activists in the streets, NGOs in the community, labor in the workplace, and peasants, farmers, and workers in the fields of developing countries."
"Corporations will not be able to deal with campaigns coordinated at the local, state, national, and international levels," he adds. "We need to act now as investors, as voters, as philanthropists, as executives, as consumers, as activists, and most important of all, as human beings concerned about the survival of our planet, our economy, and our struggling democracy."
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