|Secretary of Conscience|
Does socially responsible investing make any difference? This was the question addressed by former secretary of labor Robert Reich in a Sayles Hall talk he gave to kick off a September conference on the subject. The conference was presented as part of the ongoing Stephen Robert ’62 Initiative for the Study of Values.
“Do I want [the retirement investor] TIAA-CREF to maximize the value of the returns on my shares?” he asked the audience of about eighty students and faculty members. “Yes, of course I do. But at the same time there is a part of my brain that doesn’t want a company to treat its workers badly.”
Reich, who was appointed to the labor post by President Clinton, outlined the ways in which investors try to be socially responsible. Some people, he said, simply don’t buy shares in companies whose policies or products they find morally repugnant. “That’s an appropriate thing for people to do,” he acknowledged, but “it’s not going to change corporate behavior.” Other investors use their shareholder status to pressure corporations to change their ways. However, Reich noted, companies are more likely to respond to pressure from the public than from small investors.
A better weapon, Reich argued, is to enact laws that create incentives for companies to be good citizens. He admitted, however, that more and more businesses are hiring lobbyists and using selective campaign contributions to fight such laws—overwhelming and distorting the political system with money. In the end Reich suggested countering such tactics by demanding campaign finance reform laws. Such laws, he argued, are the first step in correcting the imbalance of power that now exists between the ability of corporations and individuals to effect political change.