In business, economic leverage is a time-honored technique used to engage corporate management and effect corporate change. While economic leverage is often used to address a specific issue or transform industry practices, it can also serve as a business strategy that guides companies towards more socially responsible behavior and positions them as market thought leaders.
UCF started using economic leverage over 30 years ago with the launch of our socially responsible investing work – and today our efforts continue. Every time we engage a corporation in dialogue, vote a proxy or participate in a shareholder action, we use our power as shareholders to actively pursue corporate support of the spiritual and moral values of the UCC.
As an associated ministry of the UCC, UCF seeks to respond to resolutions passed by the UCC’s General Synod in its biennial meetings. When resolutions call for the use of economic leverage or phased divestment, UCF’s Board of Directors spends time understanding the issue in question and researching the range of impacts of the requested action.
United Church Funds’ Board of Directors believes that as faith-based investors, we bear a responsibility to use our economic leverage as shareholders to influence the policies, practices and behaviors of companies in which we invest to build a more just and sustainable world. With a range of actions available to us, we pursue the following strategies:
We believe engagement with company management – in collaboration with our ecumenical partners – provides the starting point for making a change around issues of concern to us, including human and worker rights, the environment, and compliance with international law. In many situations, a dialogue has proven to be a successful process, bringing about positive change in policy and corporate operations.
When corporate dialogues do not produce the desired results over time, we believe we must explore the unique opportunity available to us as shareholders in sponsoring or co-sponsoring shareholder resolutions. We seek to collaborate with our ecumenical partners and other shareholders in these filings, harnessing our combined “power of the proxy” to change corporate practices we believe to be morally, ethically or economically unjust.
In the unique situation posed by the ongoing Israeli Occupation of the Palestinian Territories, we believe we can complement engagement through positive investment. We recognize, however, those appropriate investment opportunities in Palestine remain extremely limited. We believe positive investment to be a supplemental rather than an alternative strategy for engaging with corporations profiting from the Occupation.
Due to their long-term nature, social justice struggles often require an array of coordinated strategies, and we recognize years may pass before change begins. When all other actions have not produced the desired results, however, UCF believes we may best serve our investors by divestment from a particular company’s stock. While we remain reluctant to pursue this strategy, as divestment eliminates our opportunity to influence company policy and practice, we recognize divestment as a potentially viable strategy.