Traditional corporate raiders adopted the term “shareholder activism” to make hostile takeovers focused on boosting their short-term financial returns sound friendlier, while calling for corporate changes to. The other side of the coin is “shareholder advocacy,” which describes investors advocating to build a better company for all stakeholders by reducing the long-term material risks of corporate actions and their consequences to the environment and society.
As I discuss in my new book, The Profiteers: How Business Privatizes Profit and Socializes Cost, one leading organization in this field is As You Sow, a Berkeley, California-based nonprofit founded in 1992 to harness the power of shareholders — groups and individuals — and create lasting change by insisting that corporate leaders address the impacts of their policies and actions that create material risks while also aligning with people and the planet.
To learn more about the company’s work and its vision, I talked to Andrew Behar, CEO of As You Sow. Below are some key points from my Forbes article on As You Sow:
Behar believes solid data and cogent business plans are the keys to As You Sow’s success. “We never ask a corporate executive to “do the right thing,” Behar says. “We sit down with company executives after we’ve already done a great deal of research. Inevitably the company will agree that our analysis and plan make good business sense. They often thank us and tell us that we are like ‘McKinsey for free.’”
As You Sow was founded by Thomas Van Dyck in 1992 to serve as the plaintiff in legal actions with companies that had carcinogens and reproductive toxicants in their consumer products. After winning several settlements, the founding team realized the potential of shareholder advocacy to change the world for the better. It has pushed major companies including Coca-Cola, Nestlé Waters, and PepsiCo to set sustainability goals.
Research is an important part of As You Sow’s work. “We start with research to understand where risk lies with regard to corporate action and which companies are the leaders and which are the laggards in a particular area. To do this we develop key performance indicators (KPIs),” Behar says. “We really get down to the nitty gritty and we check our assumptions with experts inside and outside of industry. It’s important that they describe the real-world and offer a feasible set of criteria that companies can achieve.”
More recently the company placed a heavy focus on the DEI related issues. “Our Racial Justice and DEI scorecards have a total of 57 KPIs that are metrics by which a company can measure itself. The best score a company can get is a zero, which means the company is doing no harm,” Behar says. “On DEI, companies are graded based on disclosure of recruitment, retention, and promotion rates cut by gender, race, and ethnicity. On Racial Justice, 20% of the score is based on what a company says and 80% on what they do.”
As You Sow has also been working on a technology that allows citizens to demand changes from companies. “Our invest your values tools let people see exactly what they own. Every person will be empowered to stop asking what they can do about climate change and racial justice and direct the power of their money,” Behar says. “We can all be investing in companies that are creating a regenerative economy based on justice and sustainability.”
As Behar says, companies that adopt a stakeholder framework to benefit more than just shareholders will create lasting value for all stakeholders and strengthen the bottom line. By encouraging individuals to examine their investments and working with shareholders to engage corporate leaders to undertake broad risk analysis and identify how they can change, As You Sow has shown meaningful progress can be made within the system.