Social activism is often just waving a sign or shouting slogans at a public demonstration. Some faith-based healthcare systems take it a lot further and head straight to the boardrooms of some of the nation's largest companies.
Armed with stock portfolios worth billions of dollars, these systems are trying to influence corporate America on everything from environmental issues to equal employment opportunity to cigarette advertising and prescription drug pricing.
One way they're doing this is by filing shareholder resolutions with the companies in which they own stock, calling on management and boards to adopt new policies or halt practices the religious organizations consider troubling.
Although some Catholic orders and their healthcare systems, such as San Francisco-based Catholic Healthcare West or Irving, Texas-based Christus Health, have been practicing this kind of shareholder activism for years, others, such as Denver-based Catholic Health Initiatives, are just getting involved.
So when companies such as pharmaceutical giant Merck & Co., and cigarettemaker Philip Morris Cos. hold their annual meetings this spring, shareholders will be voting on resolutions from CHI and other healthcare providers. This is the first time CHI, with its $3.5 billion portfolio of investments, has filed shareholder resolutions.
CHI co-filed its resolutions with other mission-based organizations to ask pharmaceutical companies to restrain prescription-drug prices and push tobacco companies to stop aiming their advertising at young people.
The goal of a shareholder resolution is to bring an issue to a company's attention and get the chance to talk with company leadership. Shareholders vote annually on resolutions, and if support is strong enough such measures can prompt a company to react.
"We're trying to influence policy; we're trying to change the behavior of corporations," says Sister Regina Murphy of the Interfaith Center on Corporate Responsibility, a New York-based not-for-profit association of 275 mission-based organizations, including Protestant, Jewish and Catholic institutional investors.
CHI, CHW and Christus, along with other Catholic healthcare systems and religious orders, are all members of the nearly 30-year-old association, which helps coordinate the shareholder activism of its members, including the filing of resolutions.
CHI targeted tobacco and drug companies for its first resolutions. "We wanted to focus on issues we thought really were aligned with who we are as an organization," says Colleen Scanlon, senior vice president for advocacy at 68-hospital CHI. "We're an organization committed to building healthier communities."
Scanlon says CHI owns the minimum amount of stock-$2,000-in two tobacco companies that enables them to file shareholder resolutions. The companies are Philip Morris, which makes Marlboro cigarettes, and Loews Corp., which owns the manufacturer of the Newport brand.
The resolution CHI co-filed asks the tobacco companies to hire an independent testing company to study their advertising campaigns to make sure they aren't appealing to people younger than 18.
Tim Kellogg, a spokesman for New York-based Philip Morris, says the company wouldn't issue a response to the resolution until the company's proxy statement is published next month.
Taking on the drug giants
CHI co-filed its drug pricing resolution along with other investors from Murphy's group at six pharmaceutical companies. That resolution asks the firms to create and implement a policy of pricing restraint on prescription drugs to keep prices at "reasonable levels."
Last year, Merck's board of directors recommended that shareholders oppose a similar resolution, citing the high cost of drug research. Officials say the company supports adding an outpatient prescription drug benefit to Medicare. People should benefit from "the free market and have access to the competitive pricing that comes with prescription drug coverage," according to the company's 2000 proxy statement.
Merck's response to this year's resolution is still unknown because the company's 2001 proxy statement won't be published until next month, and the company doesn't comment on pending resolutions. Such shareholder activism has the support of the St. Louis-based Catholic Health Association, which represents more than 2,000 Catholic healthcare providers.
The Rev. Michael Place, the CHA's president and chief executive officer, says Catholic healthcare providers have an obligation to use their investments in a manner consistent with their overall missions.
"Our mission is one not only of service but transformation of society," Place says.
In addition to filing resolutions, other mission-based investing strategies that healthcare systems are using include casting shareholder votes, called proxies, according to an established set of socially responsible guidelines and screening out certain companies, such as weapons producers and those that manufacture abortion products, from their investment portfolios.
CHW is a longtime member of the corporate responsibility center and a regular filer of shareholder resolutions, averaging about 20 annually, says Sister Susan Vickers, the system's director of advocacy.
The 47-hospital system is effective in getting a company's attention not only because of the size of its stock portfolio-$2 billion-but also because it is a major purchaser of goods and services. Supply purchases totaled $634 million in the fiscal year ended June 30, 2000.
Vickers says CHW's resolutions have helped lead to some successes. They include Bank of America setting goals for lending to low-income and minority communities; Baxter International looking at alternatives to medical products that use PVC, a type of vinyl that some groups say pollutes the environment; and the Knight Ridder newspaper chain setting voluntary criteria for accepting cigarette advertising.
The batch of resolutions CHW filed with companies for consideration this year includes one on prescription drugs, one demanding that Exeter, N.H.-based Tyco International, a medical products company, phase out its use of PVC and a request that grocery store chain Albertson's adopt an environmental-disclosure policy.
Christus Health, which has more than $1.5 billion in its investment portfolio, has taken its shareholder activism international. Included in the 13 resolutions the company filed this year are two that ask American companies doing business in Northern Ireland to refrain from discrimination against Catholics in hiring, says Donna Meyer, director of community health for Christus.
Meyer says the system also has filed resolutions urging companies that open factories just across the U.S.-Mexico border to pay a "living wage" to Mexican workers.
However, CHW's Vickers acknowledges that change can be a slow process, especially for large companies. "Just like you or I can't change overnight, neither can the organizations we work for," she says.