Legal challenges to “corporate personhood” are mounting. Should shareholder activists weigh in?
In 2011, Occupy Wall Street and its progeny captured the world’s imagination with its resistance to the growing corporate occupation of our political system. As many within the socially responsible investment (SRI) community rightly noted, the values of Occupy are aligned with many of the social and environmental justice goals that SRI has sought for years.
A catalyzing motivation of Occupy is a growing sense that corporations and their wealthiest leaders have become far more effective at harnessing the political system to do their bidding than the 99 percent. Recent legal developments (Citizens United vs. FEC) have unleashed the ability of corporate treasuries to participate in the electoral process, and thus to skew an already broken system further away from the needs of most of us.
January brings the second anniversary of the Supreme Court's Citizens United decision, and with it, growing grassroots momentum and pressure for a constitutional fix. Organizations including People for the American Way, Public Citizen, Move to Amend and Free Speech for People are escalating a grassroots campaign for a constitutional amendment.
Legal Challenges to Citizens United
I believe that in the coming year the SRI community will need to decide whether to Occupy Personhood, that is, should they stake out a position regarding the proposed constitutional amendments that would rectify the corporate dominance of our political and civic culture?
This is a very different approach from the predominant model of a disclosure-oriented campaign undertaken by the Center for Political Accountability. It requires a more fundamental consideration of the role of the SRI community as leaders in our civic discourse and consideration of an array of concerns that do not have to be pondered in a disclosure-only campaign.
Some of these amendments would simply amend the Constitution to eliminate the notion that money should be considered protected political speech . H.J.Res. 72, introduced on July 13, 2011 by Rep. Kurt Schrader, proposes a constitutional amendment affirming the power of Congress and the States to regulate contribution of funds to candidates and the expenditure of funds intended to influence the outcome of elections.
Others would redefine personhood so that a corporation should not be considered a person under the Bill of Rights, such as H.J.Res. 88, introduced on November 15, 2011 by Rep. Jim McGovern. That bill proposes an amendment that would overturn the Supreme Court ruling on Citizens United v. FEC and to make clear that corporations are not people.
Still others would carve out an exception, preserving the constitutional rights of certain corporations, namely nonprofits and the press, while otherwise eliminating so-called personhood rights of for-profit corporations. S.J. Res. 33, introduced on December 8th by Rep. Bernie Sanders proposes an amendment to expressly exclude for-profit corporations from the rights given to natural persons by the Constitution of the United States, prohibit corporate spending in all elections, and affirm the authority of Congress and the States to regulate corporations and to set limits on election contributions and expenditures.
What Can SRI Do?
In considering the potential role of SRI firms in this growing movement to fix the underlying problems created by Citizens United, it will be essential to consider what SRI can bring to the table, as well as to parse and debate the implications of the various proposals for the work of SRI firms.
When it comes to the potential benefits of SRI participation, the value is clear.
Certainly, the constitutional amendment campaigns desire inclusion of allied business interests. Moreover, one of the things that SRI shareholders do well is to exert influence within the business community to recruit additional business support, and to discourage strident opposition.
In terms of the different proposals, consideration is needed regarding how they might affect the ability of SRI firms themselves to engage in their own speech that is so core to the firms' advocacy. It is also essential to consider how the various proposals may be treated by mainstream investing institutions, such as pension funds, and in the face of their evolving understanding of their fiduciary obligations.
But, in order to remain relevant as momentum builds, these issues seem fundamentally worthy of consideration. What is your fund or firm doing to address these issues and which of the constitutional amendment proposals do you favor?
Next: Jeffrey Hollender looks ahead at 2012. Will it prove to be a year of possibilities?
2011 in Retrospect: CSR & Sustainability News, Views and Trends
Part II: What Luxury Brands Teach Us about Sustainability
Part I: CSR in the News