Ministry organizations press corporations to weigh common good in decision making

September 15, 2011

Health reform advocacy stimulates social activism in other areas

By MICHAEL ROMANO

With the recent national debate over health reform as a catalyst, Catholic health care organizations across the U.S. have stepped up their corporate activism and advocacy to influence big businesses to become better citizens.

A handful of large Catholic health systems have filed dozens of shareholder resolutions over the last year on environmental and social justice issues that range from drug pricing to human trafficking. Although such shareholder resolutions are rarely passed, they do draw attention to issues.

For decades, faith-based organizations have pressed corporations to consider the social, ethical and environmental consequences of their actions. But the fractious national debate over health reform has heightened that effort, particularly among members of the Catholic health ministry.

"As an integral part of their mission, Catholic health care organizations have always been very active in promoting the common good through our shareholder activism," said Colleen Scanlon, senior vice president for advocacy at Catholic Health Initiatives. "The debate over health access and insurance coverage, however, really galvanized this community. It's led to a truly coordinated, cohesive effort across the Catholic health care ministry."

In many cases, this collective social activism is coordinated by the Interfaith Center on Corporate Responsibility, a global coalition that includes more than 300 faith-based organizations with combined assets of $100 billion. Its members include some of the largest Catholic health systems in the nation — CHI, Ascension Health, Trinity Health, Catholic Healthcare West, Catholic Health East, Catholic Health Partners, CHRISTUS Health, St. Joseph Health System and Bon Secours Health System among them.

"The ICCR has always worked under the assumption that specific institutions can have a far greater impact if they work with others," said Rev. David M. Schilling, the ICCR's director of human rights and resources.

What's more, the growth of large systems such as CHI and Catholic Healthcare West, among others, parallels their increasing corporate influence. "Many religious congregations were involved in socially responsible investing before the consolidation of some systems," said Kevin Lofton, CHI's president and chief executive. "It's part of our heritage. So when a CEO receives one of these letters from a group with the collective power of Catholic health care, they have to listen."

Like Scanlon, Schilling said the focus on health issues has prompted an "escalation" in socially responsible investing and shareholder activism among Catholic institutions. "The health reform debate not only activated Catholic health institutions, but activated other ICCR members as well," Schilling said.

Active influencers
The ICCR, which sponsors more than 200 shareholder resolutions each year on behalf of its members, has helped to lead a concerted campaign to persuade major pharmaceutical companies to exercise "price restraint" — that is, to limit increases to the annual rate of inflation as a way to make drugs more affordable for all.

In the spring 2011 proxy season, a coalition of Catholic investors challenged the drug pricing strategy of Johnson & Johnson. Led by the Sisters of Charity of St. Elizabeth, who sponsor several health ministries including the Suffern, N.Y.-based Bon Secours Charity Health System, the Catholic investor group cited research showing more than 400 brand-name drugs, some of them made by Johnson & Johnson, had "extraordinary" price increases between the years 2000 through 2008 — and that most of the hikes ranged from 100 percent to 499 percent. In its proxy statement in opposition to the resolution, the company said, "we must balance patient access and competitive dynamics" with a need to fund drug discovery and provide a fair return on shareholder investment. Most of its shareholders agreed; fewer than 4 percent said yes to the Catholic group's price cap proposal.

Still, the years-long effort to call attention to the surge in drug prices has resulted in several concessions by major drug companies, including the spread of free drug programs, especially in the global community, according to officials in the Catholic health care ministry.

"The weight of all of these Catholic health ministries has helped get people's attention," said Ed Gerardo, director of community commitments and social investments at Bon Secours Health System in Marriottsville, Md.

Drug pricing is just one of many issues at the forefront of wide-ranging advocacy efforts across the ministry. Other key areas include human trafficking; access to water and water sustainability; human rights and working conditions; and a broad array of environmental justice issues, said Dan Nielsen, director of socially responsible investing for Christian Brothers Investment Services, which has about $4 billion in assets under management for more than 1,000 Catholic institutions worldwide.

The fundamental issue, noted shareholder activist Sr. Nora Nash, OSF, director of the corporate social responsibility program for the Sisters of St. Francis of Philadelphia, is "calling on corporations to respect and protect human rights.

"The economy is to serve the human person," said Sr. Nash, who has been referred to variously in newspaper headlines as the "shareholder nun" and the "nun who won't put up with being seen and not heard."

"We expect our investments to be both socially successful as well as financially successful," she said.

Talk it out
Often, it's not the size of the proxy vote but the high-exposure impact brought by a coalition of Catholic institutions rallying under the ICCR's expansive umbrella that gets the attention of corporate leaders. In fact, the total number of shareholder resolutions filed in recent years by the ICCR has decreased as shareholder advocates increase the use of "dialoguing" — a strategy that might also be described as persuasive engagement. Top corporate officials are becoming more open to face-to-face discussions.

In the 2011 proxy season, for instance, San Francisco-based Catholic Healthcare West engaged 34 companies on corporate governance, social and environmental issues, said Sr. Susan Vickers, RSM, that ministry's vice president of community health. Of those, 19 took the form of dialoguing.

With this subtle but effective approach, corporate heads including William Weldon, chairman and chief executive of Johnson & Johnson, are sitting down with socially responsible investors to discuss key concerns.

"Typically," said Sr. Vickers, "institutional investors associated with the ICCR are the 'early warning systems' for corporations; we tend to have a view to what will be issues that really pose some risk to these companies."

"The ultimate success is a change in a company's policy, practice or product," said CHI's Scanlon, pointing in particular to work involving tobacco company policies on direct advertising to youth.

Promoting health reform
For many Catholic health systems, the emphasis on socially responsible investing is a natural outgrowth of the founding congregations' missions to build healthy communities and promote the common good.

CHI, which has filed shareholder resolutions in each of the last 10 years, screens investments to ensure that it is not supporting companies whose products, policies or operating principles are inconsistent with Catholic values. But it also purchases nominal amounts of stock in companies such as tobacco companies so that it can help spearhead change in areas such as advertising. For instance, CHI held 100 shares of stock in Phillip Morris International when it co-filed a shareholder resolution calling for the company to conduct a study on how tobacco use contributes to food insecurity among the poor, particularly in the developing world. Trinity Health, Novi, Mich., was the lead sponsor of the proxy initiative.

While the resolution received less than 4 percent of the vote, Scanlon said CHI believes the message was heard.

"If you don't own shares, you don't have a voice," said Scanlon. "Our goal is to merge investment decisions with social values."

During the height of the health reform debate, many Catholic health care ministries filed shareholder resolutions requesting that corporations endorse the basic concept of expanded access and coverage. The effort prompted several major businesses, including Aetna, McDonald's and Starbucks, to issue public endorsements supporting the effort to expand coverage. Over a period of years, said ICCR's Schilling and others, a Catholic coalition also helped convince Walmart to embrace expanded access and coverage for its employees.

"They came around to health reform," said Bon Secours' Gerardo. "There was a lot of negativity from the U.S. Chamber of Commerce, but they couldn't get Walmart to leverage its size against the (Affordable Care) act."

Miles to go
In recent years, Catholic health organizations have pressed Hollywood film studios to eliminate gratuitous smoking in films designed to appeal to young audiences. After years of dialoguing, most major studios now are sensitive to this concern, working with directors, actors and prop masters to significantly reduce depictions of smoking in these youth-oriented films.

"We took this issue to the movie studios and told them, 'This is a public health issue — you're driving kids to smoke,'" said Cathy Rowan, director of socially responsible investments for Trinity Health.

While Scanlon and other leaders point with pride to some significant successes in recent years, the struggle continues in many areas — including the effort to reduce greenhouse gas emissions. This global, ministry-wide effort to promote the common good, it appears, is far from over.

Said Sr. Vickers: "I don't think our job will ever be done."

 

Copyright © 2011 by the Catholic Health Association of the United States
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