Sister Patricia Wolf remembers the embryonic days of faith-based shareholder activism.
"In the 1970s and '80s, when the movement was about 10 years old, our approach was to file a shareholder resolution, you hoped for dialogue with the company, you probably didn't get it ... then you went to the annual meeting and hoped for 3 percent of the vote," she said.
Wolf is the executive director of the Interfaith Center on Corporate Responsibility, a coalition of 275 faith-based institutional investors, including Roman Catholic, Protestant and Jewish groups.
Its members are pushing scores of shareholder resolutions throughout corporate America this annual meeting season, and engaging in behind-the-scenes discussions with countless companies, as they try to capitalize on heightened attention to corporate behavior in the wake of months of headline-grabbing scandals.
Shareholder activism on all fronts is mushrooming in this post-Enron era, with a marked jump in the number of shareholder resolutions filed this year on a variety of subjects, from HIV in Africa and global warming to separating chairman and chief executive positions and expensing stock options.
Faith-based investors have positioned themselves to play an increasingly influential role on social and corporate governance issues, and various leaders of the movement said corporate responsiveness has increased noticeably--although not universally--in recent years.
"What I think has been a great opportunity is that we've had a set of tragic circumstances that have proved what socially responsible investors have been talking about for decades," said Mark Regier, stewardship investing services manager for Mennonite Mutual Aid in Goshen, Ind., whose mutual funds and shareholder advocacy efforts promote, in part, the pacifist tradition of denominations with Anabaptist roots.
Companies are learning, he said, that ethical practices directly affect the bottom line, and executives cannot be motivated solely by self-interest.
"If you only rest on that, you really do send yourself down a river that will really bite you," he said.
Behind this intensifying push are years of experience and good-size portfolios. Members of Wolf's ICCR have roughly $100 billion in combined assets, including more than $10 billion at the Evanston-based General Board of Pension and Health Benefits of the United Methodist Church.
Their frequent allies, socially conscious mutual funds, meanwhile had record investment inflows last year, according to data from fund-tracker Lipper Inc., adding $1.5 billion, to more than $17 billion.
Shareholder advocacy by faith-based investors takes many forms.
Perhaps foremost is screening.
Many faith-based investors decline to invest in companies involved in alcohol, tobacco, gambling, armaments or pornography. Islamic investors, including the prominent Azzad Asset Management funds, extend this to avoiding interest-based businesses, including banks and insurers, plus bonds and Treasury bills.
Once they invest, their strong social justice traditions have led many to engage companies over the years on such issues as investment in South Africa, global labor and human rights standards, pay disparity and living-wage proposals, drug affordability and diversity issues.
Aside from meeting with companies and sponsoring resolutions, faith-based groups also advise investors on how to vote on other shareholder resolutions pending across corporate America.
Amid heightened concern about corporate governance issues, many experts have seen a blurring of those issues with the social issues that historically concerned faith-based investors.
The influential Methodists' General Board, for example, has for many years focused on improving board diversity at companies in which it invests, said Vidette Bullock Mixon, director of corporate relations and social concerns. It also is sponsoring resolutions this year on financial analyst independence and separating chairman and CEO positions.