Friends Fiduciary’s Winter Newsletter featured the below article from Executive Director Ethan Birchard, highlighting the impact of active ownership.
Engage or Divest?
At Friends Fiduciary, the work of corporate engagement, or what we call active ownership—being in dialogue with the companies we hold a stake in, to push for positive change in line with Quaker values and long-term business success—is central to our mission. Active ownership stands alongside the pursuit of the strongest possible financial returns for our Quaker constituents as a twin pillar of what we do.
In my early months with Friends Fiduciary, I have heard and sat with occasional questions about why we don’t divest from a specific company or companies. Some Friends view divestment as a meaningful form of activism; others are uncomfortable with the idea that ownership makes them complicit in activities they don’t agree with.
These concerns are valuable and weighty. Indeed, they are among the reasons Friends Fiduciary divests explicitly from companies whose core businesses run counter to our values, such as weapons manufacturers and fossil fuel companies.
But in cases where we disagree with a particular approach or decision without disavowing a company’s entire business model, we believe that to focus only on divestment risks walking away from greater opportunities for change through dialogue. For nearly ten years, Friends Fiduciary has honed our approach to such dialogue, becoming a recognized leader in shareholder advocacy. We continue to pursue this approach because, again and again, it has produced significant, measurable results.
Sometimes these results have been realized in the short term, as when we helped a global online dating service stop doing business in Russia due to concerns its platform could be facilitating the human trafficking of displaced women and children from Ukraine. More often progress takes longer, as in Amy [Carr]’s example of a semiconductor manufacturer that recently agreed, after multiple years of dialogue with us, to publish a global human rights policy and disclose the steps it is taking to prevent its chips from being used in weaponry. Often engagement on one issue can open further dialogue, as when we helped a major rail company publish a Climate Transition Action Plan detailing how it will meet its climate targets, and then pivoted to focusing on worker safety following the derailment of a train carrying hazardous materials. In these and countless other cases, our dialogue led to meaningful, real-world impact.
Historically, divestment campaigns have made important contributions to public awareness on issues like South African apartheid and fossil fuel emissions, helping, over decades, to stigmatize these issues in the public consciousness. But as research has shown, even these prominent divestment campaigns—unlike boycotts—have not had a financial impact on targeted companies. . [1]
In weighing divestment, therefore, we must discern where we are likely to have the most impact. Will our voice speak loudest by walking away, for instance because we cannot expect a company to repudiate its core business model, and must therefore protest the business itself? Or are we more likely to contribute to change by remaining in relationship with a company, pursuing a disciplined, long-term active ownership campaign that leverages our unique position as shareholders to complement grassroots, legislative, and other efforts?
Most companies would much rather see us walk away than continue to use their time and resources in engaging difficult questions with us. But as Quakers, we inherit a long history of bringing those with whom we disagree into impactful dialogue. Shareholder advocacy allows us to champion Quaker values and aligned causes by capitalizing on our unique ownership role, in a way others are not able to. Those familiar with Bill Moyer’s four roles of social activism may recognize, in Friends Fiduciary’s active ownership, the role of “Advocate” or “Reformer.” According to Moyer, George Lakey, and other seasoned change campaigners, this role is crucial in communicating with those who have the power to change a policy or practice.[2]
Active ownership is not work we undertake lightly. Engaging a single company, especially over the years many campaigns will require, can take scores of hours annually in regular strategy sessions with like-minded asset managers, developing communications, meeting with reluctant executives, petitioning other shareholders and asset managers for their support, overcoming regulatory hurdles, coordinating with activists, and responding to evolving social and geopolitical realities. But when we believe an opportunity for meaningful change is present alongside a positive long-term investment thesis, it is work we prioritize.
These issues are constantly evolving. We do our work in the spirit of continuing revelation, knowing that not all will agree with every choice we make. But we make our choices in good conscience, in order to maximize the impact of Quaker values on the world—just as we strive to maximize the financial stability of Friends doing their own good work.
[1] https://www.gsb.stanford.edu/insights/why-divestment-doesnt-hurt-dirty-companies
[2] https://www.dailygood.org/story/1325/what-role-were-you-born-to-play-in-social-change-george-lakey/