New York’s Irving Place is just a mile or two from Wall Street, the heart of capitalism, and a stone’s throw from Union Square, where the socialist Wobblies used to make their speeches and America’s unionists held their rallies. Today, the Council on Economic Priorities makes its home at No 30, using its $1.2 mn annual budget to bridge the gap between Union Square’s social activists and Wall Street’s institutional investors.
CEP is a non-profit research group that tracks the ‘social performance’ of S&P 500 corporations and a growing number of smaller ones. Their performance is assessed on ten issues: the environment, women’s advancement, minority advancement, charitable giving, community outreach, family benefits, workplace issues, social disclosure, weapons contracts and animal testing.
Stephen Dyott, CEP’s 27-year-old director of research, says it currently has around 60-70 clients. Among them are mutual funds – such as Parnassus, Citizens Trust and Pax World Fund – that specialise in so-called socially responsible investments. Other clients, he says, include investment banks that manage funds for individuals, such as Merrill Lynch and New York’s United States Trust Company.
But the 37-year-old CEP is having to adjust to changing times. On the international front it is trying to extend its scope by building relationships with similar groups around the world, in the hope of creating a global umbrella organization. That’s not easy, since such groups guard their autonomy jealously, but a number are at least participating in talks. The willing few include the Asahi Foundation in Japan; Eiris (Ethical Investment Research Service) in the UK; Ethibel in Belgium; IMUG in Germany; and InfoCentre in Switzerland.
But CEP faces changing demands from investors and analysts back home as well. When it started out in 1969, CEP’s reports on individual companies’ environmental behaviour were typically 40-50 pages long. But Alice Tepper Marlin, CEP’s president and founder, says that today few people want such in-depth information and even fewer will pay for it. ‘Now they want everything in bite-size pieces, and they want very broad coverage – like an S&P sheet,’ she says.
In response, CEP has replaced its lengthy studies with its Screen programme which grades companies. To arrive at its ‘grades,’ CEP combs through press reports, government databases and information from the labour movement and environmental groups. A company scores points for each category and its grade reflects which of the five percentiles it falls into.
Microsoft recently got three As (environment, workplace issues and social disclosure), two Bs (women’s advancement and family benefits), and three Cs (minority advancement, charitable giving and community outreach). Intel fared far less well. It did get two As (minority advancement and workplace issues), but it scored no Bs, four Cs (environment, charitable giving, community outreach and social disclosure), and one D (women’s advancement).
Tepper Marlin says that however hard CEP tries to be even-handed, it is still widely seen as being anti-business. That’s hardly surprising given Tepper Marlin’s own background as a ‘labour economist’ and the fact that CEP’s first report in 1969 – during the Vietnam era – was called Efficiency in Death – Manufacturers of Anti-Personnel Weapons. To offset the aura of radical chic, the group goes out of its way to project a pro-business image, with literature focusing more on companies that perform well by CEP standards than on those that don’t.
CEP’s 1994 annual report, for example, gives top billing to the companies awarded its America’s Corporate Conscience Awards: Colgate-Palmolive, New England Electric, Polaroid, Coca-Cola and Merck. Each has a star next to its name.
But the report is relatively gentle to the poor performers, whose names (marked with an ‘x’) appear in much smaller type at the bottom of the page. It isn’t even immediately obvious that these are the bad guys, since the heading reads simply, The 1994 Campaign for Cleaner Corporations.The small type explains that the following were identified as ‘egregious environmental offenders’: Exxon, International Paper, Maxxam, Southern Company, Texaco, Union Carbide, Westinghouse and Westvaco.
Tepper Marlin says that CEP’s rankings are supposed to be the equivalent of a securities firm’s buy and sell list and, as she says, securities firms ‘don’t go around touting their sell list, they talk about their buy list.’
There is good reason for CEP trying to present a pro-business image. About two-thirds of its financing comes from foundations, but funds from this source have been declining and CEP hopes to increase its income in the future by selling more research to corporations. Dyott says a handful of companies, including Levi Strauss, Monsanto and Avon, have been buying intelligence from CEP to benchmark their own performance on specific social issues.
