Tag Archives: corporate responsibility

A Reply to Dan Blondeau

6 Replies

When I sat down to reply to a comment from Dan Blondeau of Eagle Mine on my Mining Renaissance post, I found that I’d written what is, essentially, a new post. So I’m running my reply here instead of in the comments thread.

Here is Dan’s comment:

Louis and others commenting here – is there any way you would support mining anywhere? I highly doubt it. Large, long-life deposits are few and far between now. Smaller projects such as Eagle, Polymet and so on are becoming the typical scale of mining. Instead of just bashing the industry and focusing on events that happened decades ago, perhaps you could take a more positive and collaborative approach to your concerns. Thank you

Here’s my reply:

I take it that by “events that happened decades ago,” you are referring to the story told in my film 1913 Massacre. That story from what you correctly characterize as a bygone era of mining first drew me to the Upper Peninsula, and it would be dishonest or disingenuous to say that it doesn’t still color my thinking. But since completing that project I’ve tried to stay focused on what’s happening in the area now.

At the same time, the unresolved past and the present are not so easily kept apart. For example, the conversation after our screening of 1913 Massacre at the DeVos Art Museum last October went almost directly and without any prompting to the new mining up around Big Bay and across the Peninsula. I believe the film resonates with people in the UP (and in other parts of the country) not just because the immigrant experience it documents is the quintessential American experience, but also because the basic questions it raises are still very much alive today.

That aside, I am not sure why you read me as “bashing the industry” here. My post focused on sloppy and hopelessly compromised journalism. I don’t think of mining as something I would “support” or not support.  It would never occur to me to put it that way, and I’m not for or against mining per se. In some of my posts, especially those on Shefa Siegel’s work, I try to acknowledge mining’s crucial role in what Orwell calls “the metabolism of civilization”; and I’m trying to understand how bigger changes in the commodities markets and the global economic picture are driving the new mining around Lake Superior. But I also think it’s important to appreciate the real risks and the potential cost of copper and nickel mining operations in the Lake Superior watershed, and to question whether it really will create lasting prosperity for the UP or the Lake Superior region. Those are (for me) the big issues the new mining raises, and I think they are issues that any honest conversation about mining (or the development that mining brings) needs to take into account.

As I tried to suggest in my post, Kocazek just ignores them, and I wondered why she didn’t try to take them on – especially since she writes for a publication dedicated to water issues. And not just any publication: Circle of Blue, which was founded by J. Carl Ganter (who served as vice-chairman of the World Economic Forum Global Agenda Council on Water Security) and which has ties to – it is a “non-profit affiliate” of – the prestigious Pacific Institute.

As for taking “a more positive and collaborative approach,” I am all for it, or at least I am all for genuine collaboration. I don’t really know what a “positive…approach” would entail in this case apart from boosterism. As I say, I don’t consider myself a mining booster or a mining basher, but an observer, still (and no doubt always) an outsider, despite my many trips to the UP, exploring a place and trying my best to document what’s happening there. I’m open to having my views challenged and being shown where I am wrong or where there’s a better way to talk about or do things. (And for that reason I appreciate you taking the time to comment here.) I don’t think there can be any collaboration unless each party is willing and able to listen and – this is important – ready to yield to the other. In other words, listening goes beyond making concessions to the other in conversation: it means doing things differently in response to the other’s demands. (This is a theme I’ve been exploring in my posts on The Power of Asking, and one that I come up against over and over again when I write about mining issues.)

Am I often critical of what mining companies are doing in the UP and around Lake Superior? Sure, and I am troubled, as well, by the almost hubristic level of confidence the mining industry places in technology and engineering, even in the face of disasters like the Bingham Canyon collapse; its worrisome record on environmental and human rights issues nearly everywhere in the world mining is done; and the power and distorting influence it exerts on politicians and public debate – in the UP and elsewhere.

I still think there’s plenty of opportunity for collaboration and dialogue. If I did not, I would just call it quits; but giving up on dialogue is tantamount to giving up on people. In the area of human rights, for instance, I believe there’s still opportunity for collaboration around the Ruggie principles (despite the doubts I’ve expressed about them) and – in the Lake Superior region – around the United Nations Declaration on Indigenous Rights. Both frameworks (as well as the work done by the Lake Superior Binational Forum on Responsible Mining in the Lake Superior Basin) are decent places to start enumerating in a serious way the responsibilities and obligations that mining companies have in a region where human rights concerns and freshwater issues are intertwined.

In fact, I think genuine and ongoing collaboration on these efforts is essential, because I don’t think the mining industry can do it alone, or is the appropriate party to set the agenda here.

God and Mr. Dimon

1 Reply

While protestors at the JP Morgan Chase annual shareholders meeting in Columbus, Ohio braved the rain and faced off with police, inside the McCoy Center there was a remarkable exchange.

“As a person of faith, my God believes you shouldn’t take advantage of people when they are down,” said Dawn Dannenbring, of the community group Illinois People’s Action, addressing CEO Jamie Dimon. “Do you believe in the same God I believe in?”
Dimon answered: “That’s a hard one to answer.”

Of course, whether Jamie Dimon believes in a merciful God is a matter for him to decide and settle with his own conscience. Whether he believes in the same merciful God Dawn Dannenbring believes in is probably impossible to answer, or would, at least, require an extended theological discussion. And neither Dimon nor Dannenbring seemed ready to have that conversation. The JP Morgan Chase CEO obviously wanted to get on with the business of the shareholder meeting. And Dannenbring was less interested in knowing the secrets of Mr. Dimon’s heart than in playing Portia to his Shylock and shaming him.

Dannenbring’s motives aside, her question echoed other recent criticism of Mr. Dimon. On the blog Credit Slips, Adam Levitin attacked Dimon a couple of weeks ago for having no concept of mercy after Dimon said, in an exchange with CNBC’s Maria Bartiromo, that some people find themselves in better financial circumstances after foreclosure, and that, moreover, foreclosure is a form of debt relief: “Giving debt relief to people that really need it, that’s what foreclosure is.” Levitin was baffled:

For real?… “Debt relief” requires a forgiveness of debt. It’s a gift, not an exchange. There’s no quid pro quo….I can’t fathom how Dimon conceives of foreclosure as an act of mercy.

Over at Naked Capitalism, Yves Smith picked up on Levitin’s criticism: “the Dimon moral calculus is fascinating. If foreclosures are kind, is it even kinder to restore debtors’ prisons? After all, those people who lose their homes would be assured of getting shelter.” If today’s bankers believe in God, Smith says, they must believe in the angry God of the Old Testament, the same God who strips Job of his possessions and reduces him to sackcloth and ashes.

That Jamie Dimon is now being put in the company of Goldman’s Lloyd Blankfein and other tight-fisted ministers of vengeance is all the more remarkable because Dimon is regularly held up in management literature (like this Introduction to Leadership[pdf]) and in the business press as an example of great leadership.

“Outspoken, profane, fearless,” as one CNN Money profile describes him, Dimon is regularly praised for having steered JP Morgan Chase away from the subprime crisis, exiting the business of securitizing subprime mortgages at the height of the boom and forgoing both Structured Investment Vehicles and Collateralized Debt Obligations, or CDOs. Notably, neither New York Attorney General Eric Scheiderman nor Senator Carl Levin, who are independently investigating criminal wrongdoing in the subprime crisis, have named Dimon or JP Morgan Chase as a target of their investigations. Even Matt Taibbi has focused his pieces for Rolling Stone on Goldman, not JP Morgan Chase.

For some, no doubt, it is a question of degree: while certain CEOs led their banks into criminal activity, others offered little relief to those caught up in the mortgage crisis. Perhaps both are to blame, and thanks to Levin and Schneiderman at least some of the criminals will now face justice.

But rather than expect the CEO of a global bank to forgive debts, or bear witness to his faith in a merciful God, I would prefer to know what constructive steps, if any, the banks are taking now to help the American middle class regain its footing and rebuild trust – not necessarily in God, but in the everyday workings of the American economy.

In other words, why ask for mercy when you can demand responsibility? I wish Maria Bartiromo would press Mr. Dimon in their next interview to talk specifically to this point, and to articulate clearly the obligations his company has, and the steps his bank will take, to help restore — what else to call it? — the common wealth. The exchange might be one for the leadership books.

2011 Proxy Season: Social Investment at the Threshold

1 Reply

Ernst & Young estimates in a new publication [pdf] that half of all shareholder proposals in 2011 will deal with environmental and social issues, and support for these proposals is growing. In fact, “83 percent of investors now believe environmental and social factors can have a significant impact on shareholder value over the long term.”

Last year, E & Y finds, approximately one quarter such social investment proposals won 30 percent support –which E & Y calls a “threshold” number, where “many boards take note.”

Perhaps they’d better. Typically, when proposals reach a second threshold — garnering 50 percent support– directors who oppose them start losing their seats.

Things may not yet have reached a tipping point, but these are promising developments. With the enactment of Dodd-Frank in 2010, mandatory say on pay provisions became law; that means fewer executive compensation proposals are on the table, and it’s easier to introduce social issues into the conversation.

There are even some early indications of the trend toward social investment in the 2011 data reported so far on ProxyMonitor.org. (ProxyMonitor – the Manhattan Institute database I relied on in a previous post about why boards say they don’t back human rights proposals — is keeping a “scorecard” of the 2011 proxy season.)

Now the ProxyMonitor data is special, and there might be reason to expect it to tell a unique story. ProxyMonitor documents only proposals made to Fortune 100 companies. Can we reasonably expect Fortune 100 shareholders to set the trend or lead in the area of social investment? On the one hand, investors in the Fortune 100 might tend to be more conservative –and risk averse — than the average shareholder. On the other, these high-visibility public companies with strong brands are likely to attract activist investors and funds with a social agenda. The likely outcome is more proposals, less traction.

Be that as it may, so far, a clear majority of shareholder proposals made to Fortune 100 companies in 2011 target social investment issues.

And there is another encouraging trend here. More and more shareholder proposals ask boards of directors to report on corporate political spending and contributions. The Findings page on ProxyMonitor notes that among Fortune 100 companies, “the share of social policy proposals focusing on political spending has increased 84 percent in 2011 from the three previous years (2008-2010)” [emphasis mine].

A few examples give some sense of where things are heading. Two proposals requiring Valero Energy Corporation to report on its political contributions received 26 and 27 percent support, edging closer to the 30 percent threshold of boardroom visibility. A proposal by AFSCME asked IBM to disclose “direct and indirect spending to influence legislation as well as grassroots lobbying communications to influence legislation”; it received 28.5 percent support in the 2011 vote. It will be hard for the IBM board to ignore or resist this much longer.

All is not sunshine. It’s worth noting that when AFSCME advanced similar proposals with Prudential and Bank of America, both proposals met with zero support. [Update 5/16/11: this is incorrect. Please see this post.] Prudential made the case that the information is already available; Bank of America complained that it would be burdensome and redundant, and, besides, “our company does not engage in grassroots lobbying.”

Make of that statement what you will. It’s clear that forcing disclosure of so-called “indirect” and “grassroots” spending will be an uphill battle, in part because it is difficult to define or track grassroots spending, or distinguish it from legitimate trade association activity.

But the focus now on corporate political spending brings welcome relief. As I suggested in an earlier post, some social investors are trying to do what Congress is unable or too cowardly or too compromised to do: take back some of the ground that was lost or – as I prefer to put it – given away by the courts in Citizens United. The boldest of these proposals, requiring Home Depot not only to disclose its political expenditures, but also to submit those expenditures to a shareholder advisory vote, will come to a vote on June 2nd. Maybe this measure will make it past the threshold.

StarKist Cans Samoans

Leave a reply

The economic news from faraway America is grim. Unemployment in the U.S. territory of American Samoa now sits at around thirty percent. More trouble is on the horizon.

In a bid to save jobs at the StarKist tuna cannery, the Territory’s big employer, American Samoa had asked to be exempted from the minimum wage increase to $7.25 an hour. Congress rejected that plea. StarKist predictably responded with a fresh round of layoffs, and the company is likely to follow Chicken of the Sea to Thailand and other places in Asia where cannery workers earn as little as 75 cents an hour.

Congress is not indifferent to the lot of the American Samoans, of course, so it has proposed $18 million in new spending for the tiny, remote island territory of 65,000 people . An editorial in the Wall Street Journal the other day observed, with some justice, that this “taxpayer handout” amounts to foolishly attempting “to undo the damage Congress’s economic illiteracy has caused.” The editorial then went on to blame the Democrats, the unions, and the minimum wage for the layoffs and all the Territory’s economic woes. Apparently even the South Pacific cannot escape the socialist scourge.

Of course, that’s not the whole story. First, the $18 million set aside in the new spending bill was already being given away, to StarKist. Or, more precisely, StarKist would have already been entitled to that amount – up to $18 million dollars — in “30A” tax credits for 2010 if it had operated “at a profit” in American Samoa. In the language of the proposed legislation, this “economic development tax credit” was intended to reward StarKist for “the corporation’s employment and capital investment in American Samoa.”

The proposal now is to channel that same $18 million in credit directly to the American Samoan Government “for purposes of economic development.”

“Development” is a tricky word in this context — everybody’s doing it — and it’s hard to imagine that $18 million can buy the kind of development American Samoa needs. The Territory is still recovering from last year’s 8.0 magnitude earthquake and tsunami, which wreaked havoc all over the island.

We might get a better fix on the word if we were able to specify what will be entailed in the program of “economic development” to which the $18 million will be dedicated. The answer seems to be pretty straightforward: keeping StarKist in American Samoa. Last month, Eni Faleomavaega, the non-voting House Delegate from American Samoa, worked with Carl Levin of Michigan and Max Baucus of Montana “to convert the 30A tax credit in a way that will provide a direct payment” to the American Samoan Government. The Territory’s government would, in turn, use the money “to help StarKist until we can put a more long-term solution in place.” There go those Democrats and their anti-business agenda again.

As a headline in the Samoa News put it, StarKist would get the $18 million as an inducement to stay, “in lieu of” its tax credit, even though it was operating at a loss. One reader of that paper asked its editors to “please explain to your readers what lieu means– not all our folks know the word.” Of course, to explain the word is to reveal the sleight of hand it is meant to cover up. But Samoa is in a tough spot. “Without help,” Faleomavaega said, without exaggeration, “StarKist will be forced to close its operations in American Samoa and, if this happens, the Territory’s economy, which is barely hanging by a thread, will collapse.”

The fight over the minimum wage has put Faleomavaega in a tough spot, too, and that’s probably why he is now taking a more conciliatory position than ever before toward StarKist. Just a few years ago, in May of 2007, Faleomavaega penned an angry letter to Richard Wolford, President and CEO of Del Monte, StarKist’s parent company, in which he railed against “corporate greed” and “hypocrisy,” and noted that Wolford’s own compensation amounted to “over 400 times more per year than the average cannery worker in American Samoa.”

According to my calculations, you have approximately 3,000 employees and an increase of $0.50 per hour equates to about a $3,000,000 increase per year for StarKist and Chicken of the Sea. Considering that you do not pay health care benefits to our cannery workers which in itself is un-American, and also given that after 20 years of dedicated service you only pay out $160 a month in pensions to Samoan men and women who stand on their feet and clean fish for 8 hours a day, I believe your wisest course of action is to join with me in supporting a one-time increase of $0.50 per hour.

Faleomavaega ended his letter by taking issue with Del Monte’s notion of “responsibility” – which the company defines as “an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders” – and reminded them of other obligations: “I believe higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us.”

I leave it for others to decide whether securing $18 million on behalf of a multinational corporation that is probably going to pull stakes anyway amounts to following the golden rule. The real question in American Samoa is whether that $18 million transfer amounts to development, at least in any meaningful sense of the word.

I have my doubts, unless by “economic development” Faleomavaega and associates merely mean saving jobs – or making a desperate bid to save jobs — at the StarKist cannery. That would seem to be the very antithesis of sustainable development, and though it may be politically advantageous for Faleomavaega in the short term, it does little for Samoa’s long-term prospects.

Worse, the proposed arrangement will launder the StarKist payoff through the American Samoan government. Corruption, as one CNN report put it, is “endemic” in American Samoa, which receives about $250 million in federal funding every year. Governor Togiola Tulafono has been accused of bribery; so have sundry government officials. In early 2007, one year before the quake and tsunami hit, Department of Homeland Security inspectors found that millions in disaster-preparedness had been diverted to other uses – flat screen televisions, expensive leather chairs, trips to Las Vegas, and miscellaneous entertainments. In response, our government temporarily froze all federal funding to the island. (That freeze did not and could not last. In the wake of the 2009 tsunami, President Obama declared an emergency and directed federal aid to the Territory.)

There has been some speculation that corruption made the natural disaster much worse than it could have been. The Homeland Security funds squandered by government officials in American Samoa were intended to pay for an early-warning system, which included thirty towers with thirty sirens that could have been activated with the push of a button in the event of a disaster. None had been put in place when inspectors arrived in 2007; Governor Tulafono claimed there was “never a plan for a system.” So disaster struck, and nobody was able to sound the alarm.

No surprise, then, that there are no viable economic recovery plans in place should StarKist decide to pull out of American Samoa. The Territory has relied on a mix of corporate interests and federal assistance for too long, counting on help from greater powers without making any long-term plans of its own. Maybe that’s what makes this remote island territory quintessentially, and uncannily, American.