wfn.org | UCC/Church agency protests S.E.C. policy

[powellb@ucc.org]

April 30, 1997
United Church of Christ
Office of Communication                         
(216) 736-2222                                  
In New York:
William C. Winslow
(212) 870-2137                                              
E-mail:  william.winslow@ecunet.org
On the World Wide Web:
http://www.ucc.org      
                                          
United Church of Christ agency protests restrictions
on stockholder resolutions

      NEW YORK CITY -- An investment agency of the United
Church of Christ is protesting the Security and Exchange
Commission's policy allowing companies to omit employment
policy shareholder resolutions from proxy statements.
      Last week the United Church Foundation sent a letter to
its members urging them to write to the S.E.C.'s four
commissioners to reverse the policy, claiming it limited long
held shareholder rights.  The church agency manages common
investment funds for the United Church of Christ family.  Most
of its members are local churches, of which there are 6,100 in
the denomination.
      At issue is a decision by the S.E.C. to exclude
employment resolutions on the grounds that these issues are
"ordinary business" and the sole responsibility of management
and that investors have no right to sponsor shareholder
resolutions on these issues.
      "We believe this position by the S.E.C. staff is
extremely shortsighted and destroys a basic right as
stockholder," says Donald G. Hart, financial vice president
and treasurer of the United Church Foundation.  "One of the
ways in which our church has expressed its positions as an
ethical investor," he notes, "is by filing shareholder
resolutions with companies where we wish to raise an issue."
      The S.E.C.'s blanket exclusion means companies can duck
shareholder concerns about discrimination in employment in the
United States, sweatshop conditions overseas, fair and living
wages for employees working in Mexico for American companies
and fair employment in Northern Ireland.
      The policy goes back to 1992, when the S.E.C. made a
dramatic about-face and announced in a "no action" letter to
Cracker Barrel Old Country Stores that shareholder resolutions
on "employment policies and practices" for companies' "general
workforce" could be omitted from proxy statements on ordinary
business grounds.  The New York City Employees Retirement
System had challenged the company on its proposal to fire
homosexual employees.  The company, in turn, appealed to the
Commission, which reversed the long held policy requiring
companies to include shareholder resolutions that "have
significant policy, economic or other implications inherent in
them."
      Led by the Interfaith Center for Corporate
Responsibility, an umbrella group representing religious
investors, the S.E.C. was sued, but the plaintiffs lost on
appeal. In February 1997, the S.E.C. refused to hear an appeal
from religious organizations asking for a reversal of the
socially insensitive policy reflected in the Cracker Barrel
decision.
      The United Church of Christ was one of the first
denominations to use its ownership in American corporations to
dialogue with them for social change.  In the 1980s, it was a
leader in persuading U.S. firms to withdraw from South Africa
because of apartheid. Over the years, the UCC has raised
issues dealing not only with employment, but also with the
environment, human rights, nuclear power and military
spending.
      This summer, the church will try and broaden support for
the S.E.C. appeal through a resolution offered at its General
Synod by asking all church investors, including local
churches, regional conferences and the four main national
agencies with investment portfolios -- United Church Board for
Homeland Ministries, United Church Board for World Ministries,
Pension Boards and the aforementioned United Church Foundation
-- to protest to the S.E.C. and Congress.
      The biennial General Synod is the denomination's main
deliberative body.
      The Cracker Barrel decision has long rankled religious
groups, and thousands of religious investors and other
non-profit organizations have written to the S.E.C. of their
dismay at such a policy.
      The United Church of Christ, with national offices in
Cleveland, has more than 1.5 million members in some 6,100
congregations in the United States and Puerto Rico.  It was
formed by the 1957 union of the Congregational Christian
Churches and the Evangelical and Reformed Church.
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