The Common Good
May 2008

Wall Street and Christian Conscience

by Susan Wennemyr | May 2008

Why I'm a shareholder activist.

My father-in-law, a Swedish Baptist missionary, did not invest in stocks on principle. As he was also the most joyous person I’ve known, I responded to his abstention like the woman in the deli scene of When Harry Met Sally: “I’ll have what he’s having!” Maybe I, too, should own no stocks as a point of Christian conscience. As a freshly minted Quaker theologian when this question first crossed my path, it sounded good to me.

Since then, I have added to my Ph.D. a “FINRA Series 7,” the registration that stockbrokers get. As a financial planner, I sometimes recommend stocks to clients. I’ve moved from a puritanical concern with avoiding temptation to an activist’s preoccupation with transforming what is rotting in my world. Thinking of the barbarous abuses in sweatshops, of the killing fields that border mineral deposits, and of the disease that emerges downstream from carcinogenic effluents, I am reminded of the poignant passage: “Jesus wept.”

In this mood, I still often want to have nothing to do with those corporations that create suffering to bolster revenues that, in turn, are distributed in absurdly imbalanced ratios between executives and other employees. To abstain from corporate ownership by avoiding stocks, though, is to take an Amish-style stance of not touching what is compromised in the world. This posture is rooted in the insight that subjecting oneself to temptation is playing with fire. It’s an admirable choice. Undeniably, maintaining a pure spirit was central to the teachings of Jesus, who would always shift attention from the letter to the spirit of the law—without ignoring the former.

Reading Walter Wink changed everything for me. His work Engaging the Powers made me see that taking a separate, superior stance was to abdicate the Christian duty to be “in the world, but not of the world.” Opting out of that vital tension by abstaining from stock ownership was choosing simply to be “not of the world.” Where was the engagement with the “powers and principalities” that Wink brought to life as vividly as Jesus had done?

In today’s world, I knew, power meant access to capital. How could I tap into that power in a way responsive to the call of Christ? I decided to learn the language of finance and advise those whose capital could make a difference. Today I’m the principal of Alabaster Financial Planning, helping progressive Christians use their capital to advance our shared vision of the reign of God.

Upon entering this profession, I had to decide if I would recommend stock ownership to my clients. Could it be done responsibly, or was it intrinsically corrupting? Publicly traded stocks are essentially really big co-ops; people share ownership of an enterprise whose profits they then divide. But they differ from co-ops, because trading in secondary markets (in stock exchanges) creates distance between the eventual owners and the actual operations of the enterprise. I drive by my CSA field every day. If I were to see school-age children in rags tilling the land, I could screech to a halt and protest. In contrast, with stock in an international corporation I don’t see the laborers, the work conditions, or the billowing smokestacks from which I enjoy the profits. I’d have to do a lot of research to learn what “my” companies were up to.

What are the benefits of doing that research? When companies behave badly, they justify it by appealing to their fiduciary obligation to stockholders—i.e. by law they owe their shareholders the highest possible profits, whatever it takes. But what if the stockholders themselves protested bad corporate behavior? I can think of few more effective ways to practice discipleship in the modern economy.

This relatively new practice of shareholder activism organizes minority shareholders to request changes in corporate conduct. The oldest technique in socially responsible investing is simply to screen against stocks that are polluting, for instance, or selling weapons. It offers a Puritan’s solution, keeping my conscience clean but leaving “the powers and principalities” unchecked. By contrast, telling a CEO that a lot of shareholders will dump the stock (reducing both the price and prestige of the stock) unless the corporation changes its conduct—now that’s transformative! Historically, the mere threat of a shareholder campaign often creates change, and it’s doing so at an increasing rate. Management typically requests a pre-emptive dialogue with activists, who may agree to call off a proxy battle if certain conditions are satisfied.

MY THOUGHTS return to my father-in-law, that man so free of all fear. His face in the frame on my desk shakes me from complacency with my own conclusions, reminding me of the danger along the path I’ve forged: greed. I know that avarice is no small threat, a temptation mentioned abundantly by Jesus as a grave danger to our love of God.

Activist shareholders have already curbed greed, to a degree. They know that paying a living wage, for instance, will cut into their returns. They’re telling a company’s managers, “We’re willing to take a hit of x percent on profit in order to keep drinking water clean near our factories.”

Still, owning stocks can foster greed by its very nature. One buys them alongside bonds—which are loans with a fixed rate of repayment—because one wants the opportunity to get more than bonds are paying, which is predictable and limited. As wealth is addictive, one is at risk for finding oneself a year from now wanting limitless gain, setting aside activism altogether in the zeal to boost earnings. Replacing “limitless” with “infinite,” it becomes clear that we have entered the theological territory of idolatry, forgetting Martin Luther’s crucial lesson: that God is God, and we are not. Surely this is a danger to be taken seriously, even in a post-puritanical paradigm.

With this in mind, I recommend Christian participation in the stock market with a second caveat: We must seek to transform the companies we own and be vigilant practitioners of the spiritual disciplines. Consider following the advice that Richard Levin, the president of Yale, gives to graduating seniors: Choose someone now that you will call in the future when you need an ethical friend. In Christian community, one can make a pact with a pastor, spouse, or friend, asking them to stop us when they see that greed has pulled us into its undertow.

Is the stock market compatible with a Christian conscience? I’ve come to believe that it is. But it is not to be entered into casually. It requires research and engagement on your part, or by your adviser or fund manager. More important, stock market participation calls for spiritual discernment in the context of the broader body of Christ. If a share of Google would keep you from living like the lilies of the field, it’s overpriced at any cost.

Susan Wennemyr (swennemyr@finsvcs. com) is a registered representative of—and offers securities, investment advisory, and fee-based financial planning services through—MML Investors Services, Inc., member SIPC, 1500 Main Street, 12th Floor, Springfield, MA 01115, (413) 781-6850. Insurance offered through Massa­chusetts Mutual Life Insurance Company (MassMutual) and other companies.

The views expressed here are those of Wennemyr and are not necessarily those of MML Investors Services Inc. or MassMutual and should not be construed as investment advice.

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