Manufacturing activity along the U.S.-Mexico border is a key interest of many Socially Responsible Investment Coalition members. Houston-based Cooper Industries is an important player in the El Paso-Juarez area and, for several years, shareholders, led by the Benedictine Sisters of Boerne, have tried to engage it concerning its practices there. The company, however, has generally refused to participate in dialog with these shareholders. The shareholders, in turn, have submitted resolutions seeking a stronger code of standards for its international operations. But, the most recent resolution, in 2001, failed to obtain the minimum shareholder support necessary under Securities and Exchange Commission rules for it to be brought up again.

Confronted with this reality, Sr. Susan Mika, who leads the Benedictines’ corporate responsibility efforts, decided on a different approach. At the 2002 meeting of shareholders, held in Houston on April 5, she presented a resolution that was supported by fellow SRIC member, the Congregation of Holy Cross-Southern Province, and five other religious and social investors. This resolution spoke of the challenge faced by global corporations in creating sustainable development in the communities in which they operate and, specifically, requested that the board prepare a report dealing with the triple- bottom line—economic, social, and environmental—associated with sustainability. Management responded that it thought this was a good idea but it opposed the resolution because, it claimed, it was already doing everything in this area that could be expected of it and that its Web site is full of reports of one sort or another that anyone and everyone can look at. (The full text of the resolution and management’s response appears on pages 23 and 24 of the company’s proxy statement. This document may be viewed at www.cooperindustries.com/inv_center/index.htm.)

But the real story was how the resolution fared. Shareholder resolutions must get 3% of the vote in the first year to come back the next. In the second year this threshold moves up to 6%, and then, on up to 9% in years after that. A rule of thumb among religious and social investors, however, says that at 10% an issue begins to get attention and becomes something that management must seriously deal with. Well, the Benedictines’ resolution pulled down a whopping 21.85% of the vote!

Sr. Susan observed afterward that the concept of sustainability and the triple-bottom line seems to be catching on fast. She also noted that a major proxy voting service had highlighted the fact that the company had consistently refused to meet with shareholders. Maybe you can’t do that so easily in a post-Enron world. Cooper CEO H. John Riley, Jr., announced at the meeting that he’ll be meeting with shareholders now.

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