Trillium News

It Seems to Me: How Far We Have Come, How Far We Have To Go

Milton Moskowitz

Investing For a Better World: Spring 2013

I feel a little bit like Philip Roth who announced this year, at age 80, that he had written his last novel. Roth was immediately feted by his hometown, Newark, New Jersey, where many of his 27 novels are set. I find myself at 85 wondering whether it’s time for me to curb the avalanche of words, many of them set in the context of corporate social responsibility. My column has appeared in these pages for 30 years. Beyond that, I wrote a three-times-a-week column that ran for 18 years in 30 newspapers across the country. And beyond that, I have written for half a dozen other periodicals, including the New York Times and a newsletter, Business & Society, that I published myself for six years. I also wrote or co-authored seven books.

That amounts to something like 3,500 columns, but I don’t think I am going to be feted by my home town, the South Bronx, which, along with Newark, could use a little help these days from socially responsible corporations.

What might be appropriate is a summation. What progress have we made? What remains to be done? I am not very good at this kind of analysis. I would have made a lousy consultant. John le Carré, the British author who has written 24 novels, many of them set in the context of the espionage world, recently looked back over 50 years in the afterword to a new release of his most celebrated book, The Spy Who Came in from the Cold. He described what his fictional head of British intelligence would be saying today: He “can be heard explaining away the catastrophic illegal war in Iraq or justifying medieval torture techniques…or defending the inalienable right of closet psychopaths to bear semiautomatic weapons, and the use of unmanned drones as a risk-free method of assassinating one’s perceived enemies…Or, as a loyal servant of the corporation, assuring us that smoking is harmless to the health of the Third World and great banks are there to serve the public.”

Surveying this scene, le Carré quietly concluded:

“What have I learned over the last fifty years? Come to think of it, not much. Just that the morals of the secret world are very like our own.”

I am not as cynical as le Carré, but I share his views on the unchanging mores of the political and business worlds. In fact, that is why I got into this business in the first place. It struck me as ludicrous that Jackie Robinson had integrated major league baseball in 1947 and 20 years later not a single major corporation had an African-American on its board of directors. Today, 86 companies in the S&P 100 have at least one minority director, usually African-American. As a percentage of total directors, it is still not very high, but I look at it from the standpoint of a 43-year continuum. Whatever the percentage, it’s up from zero.

As the inventor of such lists as “The 100 Best Companies to Work For” and “The 100 Best Companies for Working Mothers,” I am quite familiar with workplace improvements. When the Working Mother list was started in 1985, we could find only 30 companies worthy of recognition. There were virtually no child care centers at corporate sites. Reflecting the times, when we published our first list of the best companies to work for in 19XX, we singled out as outstanding benefits the free cigarettes passed out by Philip Morris to employees and the $3,000 adoption aid provided by Leo Burnett. The standard 401k plans of today were in their infancy.

I am embarrassed to read today the column I did for the first issue of this newsletter, which was then called Insight. Writing in the winter of 1983, I sought to explain “How to Rate Companies on Social Responsibility.” I offered a checklist that included such naïve howlers as these:

· Does the company take its philanthropy seriously enough to have professionals on staff to ensure that they do a good job of giving away their money?

· Is the company noted for its nauseating commercials?

· Is employee turnover high?

· Is the company always acquiring other companies?

· Did the company cave into the Arab boycott?

I can imagine the bemused look on the face of a corporate executive confronted with these rating tools. But let’s remember that there wasn’t a large market for this kind of information. At the time, only a handful of mutual funds—Calvert, Pax World, and Dreyfus Third Century—used social responsibility criteria in its investment process, and they were all very small.

Since then, there has been an explosion in SRI (Social Responsible Investing) activities: new funds, hundreds of proxy resolutions, never-ending rounds of conferences, campaigns challenging corporate practices, growing numbers of ethical chairs at colleges and universities, a thunderstorm of books and articles billowing out from academia, and, yes, we now have professional research from outfits like MSCI to help investors evaluate companies through a socially responsible lens.

I think it’s fair to state that this movement was sparked, to a great extent, by the late Joan Bavaria, founder of Trillium Asset Management (then called Franklin Research & Development). A whole alphabet soup of organizations, from the UN Global Compact to SIF and Ceres, GRI, and SVN, has evolved to carry out this work.

I could bore you with a long list of initiatives that have resulted in changes in corporate practices: increased financial support for adoption, domestic partner benefits, flexible work schedules, on-site child care, on-site medical care, beefed-up safety standards, the end of apartheid in South Africa, increased number of African-Americans and women on boards of directors, and improved working conditions in contract plants overseas, to name a few.

Two recent actions surprised and delighted me. The board of directors at Chevron cut the compensation of CEO John Watson and several other top executives in the wake of a series of accidents at the oil company’s facilities in California and overseas. In 2011, Watson earned a total of $24.7 million. The pay cuts may have knocked that down to $22 million. It’s not exactly penury, but it sends a message. The second action was Wal-Mart’s announcement that in the coming year it would hire every veteran who applies for a job with the company. Size matters. What other company could make such a pledge? Neither of these two actions could have been imagined in 1980. We have changed the conversations in board rooms.

Despite the successes, however, the questions that bother me are these: If social responsibility has made such giant strides,

· How were supposedly trustworthy companies able to take such misguided actions as to drive our economy into the worse financial crisis since the Depression of the 1930s?

· How was it possible for the heads of giant corporations to grab so much of the spoils for themselves that we now have a yawning gap between what the top 1% makes and the meager amount made by low-income workers?

· Why is it that Fidelity Investments, which offers customers more than 200 mutual funds, hasn’t a single one with a social responsibility platform?

· Why does the social responsibility of companies rarely merit any attention from the chatter boxes on CNBC or the commentators in financial periodicals?

It appears that as much as we congratulate ourselves on the progress we have made, social responsibility does not have a place in mainstream business life. Financial pundits continue to hew to the Milton Friedman dictum: the social responsibility of business is to make as much profit as possible.

This was confirmed in the recent Harvard Business Review scorecard identifying the top-performing CEOs in the world, the main measures being shareholder return and growth in capitalization. The authors of the survey, three faculty members at the European business school, INSEAD, also extended their survey to cover performance in social areas, as measured by MSCI. Morten T. Hansen, who teaches at the University of California at Berkeley in addition to INSEAD, reported that the correlation between the two sets of data, financial and social, “is, well, zero.”

In other words, one has nothing to do with the other. Professor Hansen concluded, “Everyone in the business world seems to agree that executives should be less obsessed with quarterly earnings and more focused on the long term—everyone, that is, except the decision makers who hire and fire executives and the people who buy and sell company stock. This short-term emphasis won’t change until a new paradigm for evaluating performance emerges.”


Milton Moskowitz is a journalist and author, who began publishing the newsletter Business & Society in 1968. This publication later evolved into the journal Business and Society Review, where he served as senior editor for 25 years. Mr. Moskowitz has written or co-authored seven books including The 100 Best Companies to Work for in America, which manifests itself today as an annual survey in Fortune magazine. The Moskowitz Prize, awarded annually at the SRI Conference to the most outstanding quantitative work in social investing, is named for Mr. Moskowitz.