By Daniel Rosan

Corporate Examiner Vol. 35, No. 8

Introduction

It was a beautiful October day in San Francisco when ICCR's delegation pulled into a small parking lot at the nondescript headquarters of biotech company Gilead Sciences. Inside, we had two hours to press Gilead's senior executives for substantial management reforms. We held a strong hand; at the company's last annual meeting, almost a third of shareholders had supported our plans.

Our delegation - Sister Judy Byron, a Dominican Sister representing the Northwest Coalition for Responsible Investment, Sister Susan Vickers, a Sister of Mercy representing Catholic Healthcare West, and myself - was not lobbying for the usual shareholder concerns: a share buyback, industry consolidation, or a proper expensing of stock options. Instead, we wanted to ask why faith-based organizations and health care providers in Africa could not find a steady supply of the Gilead drugs tenofovir and emtricitabine - two key anti-HIV medicines - for their patients.

This is the story of how those two nuns, backed by a coalition of 275 faith-based institutional investors with $110 billion in collective assets, and supported by nearly a third of Gilead's owners, came to be in that room back in October 2005, and what came of their presence.

The Movement for Responsible Investing

In the shadow of the war in Vietnam, church pension funds began to ask hard questions about their investments in companies that were profiting from the war. In 1973, they came together to find some answers. Out of those conversations arose the Interfaith Center on Corporate Responsibility (ICCR). The coalition of faith-based institutional investors discovered that some of their portfolio companies benefited from environmental pollution, war, and apartheid in South Africa.

Religious institutions, through ICCR, began to wrestle with these issues in three key ways: screening, engagement, and investment. All three tactics remain in use today, with $2.3 trillion in U.S. assets -almost 10% of the market - employing one or more of them. (The total U.S. asset management market size is about $24.4 trillion).

Investors who screen refuse to invest in companies that are antithetical to their organizational missions - tobacco companies, for example, or weapons producers.

Investors may also pro-actively invest in for-profit enterprises with social benefits, such as micro-finance or affordable housing.

Investors who engage go a step further, and are willing to invest in companies acting irresponsibly, while working for improvements from within the organizational structure. Two such techniques of engagement are corporate dialogues and shareholder resolutions. As owners of a corporation, investors have the right to take part in a firm's management by participating in annual meetings. A company's management proposes issues to be voted on at these meetings, while shareholders have the right to place their own proposals on the ballot. These resolutions can request reports from management or propose that the company consider changes in practices or policies.

The faith community was eventually joined by foundations, unions, and mutual funds in using these three strategies. ICCR shifted from being the movement for socially responsible investing to leading that movement. In the 36 years since its founding, ICCR has grown from six to 275 members, including religious denominations and communities, pension funds, asset management companies, and foundations.

Access to Health Care as a Human Right

The faith-based investors who gave birth to ICCR started a global movement, prompting religious institutions around the world to evaluate their relationships to - and culpability in - corporate misbehavior. In 1995, a group of investors led by Methodist minister Rev. David Schilling (Director of ICCR's human rights programs) co-authored the Principles for Global Corporate Responsibility. Their goal: to articulate what the global faith-based investment community expects from corporations.

With authors spanning five continents, the Principles - now in their 3rd edition - articulated an agenda of common concerns from diverse faith traditions. The Principles took a rights-based approach, arguing corporations have an obligation to respect human rights. Doing so avoided the pitfalls plaguing much of U.S. politics, where faith concerns are narrowly defined by contentious issues such as homosexuality and reproduction.

While the Principles were being drafted, the AIDS movement was changing. Predominantly white and wealthy homosexual men from the West and poor, heterosexual women from sub-Saharan Africa began forging global partnerships. In the face of mounting skepticism about expanding access to treatment, they called for a human rights approach requiring universal access to HIV treatment. ICCR members then took that approach to the pharmaceutical industry.

In a series of meetings in spring 1999 with Pfizer, Merck, Abbott, and Bristol-Myers Squibb, ICCR members, such as the Unitarian Universalist Association, told company management they "could not be silent in the face of the greatest pandemic the world has ever experienced." As one Jesuit official explained, "As faith-based investors, we are looking at combining the mission of the Society of Jesus with our financial investments. Basic human dignity and the right to life are two principles upon which our work and our faith is based. We decided that our investments can also support these principles."

The Unitarians, Jesuits and others shared a common fear: a failure to adequately respond to the HIV-TB-Malaria pandemic would create risks for pharmaceutical shareholders, as well as needless human suffering. The moral case was clear, but it was not enough to move pharmaceutical companies to take action. ICCR needed to make the business case clear to them.

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