Rejecting bad company

DaimlerChrysler chairman Jürgen Schrempp agreed at the company's annual meeting last October to begin an independent investigation into the disappearances that took place at the Mercedes-Benz factory in Argentina. Mr. Schrempp, on the advice of Amnesty International, appointed Christian Tomuschat, a respected German law professor who headed the United Nations Truth Commission in Guatemala, to look into the allegations against the company.

Mr. Tomuschat arrived in Buenos Aires in March to begin the investigation in earnest. His report to DaimlerChrysler is due next October.

Families of the disappeared workers claim they have testimony from colleagues describing the way company managers passed the names and addresses of workers to the police, and company documents linking Mercedes-Benz to a government strategy of ridding the factory of "subversives."

The company strenuously denies the charges, alleging that they are "part of a campaign against us," a spokeswoman said. "We don't feel that there was any wrongdoing by people from our company.... We are very sure that our people acted correctly."

Shareholder activists are wielding increasing influence over corporate decisions. Regarding the antisweatshop campaign in the US, David Vogel of the Haas School of Business at University of California, Berkeley, says: "There's no question it's had a big impact on company practices." He points to Nike's creation of an elaborate system to monitor working conditions at the 800 factories around the world that make its products.

In another example of companies being obliged to take responsibility for human rights abuses in the past, in 1999, the German government and German firms, including DaimlerChrysler, agreed to pay $5.2 billion in compensation to survivors of Nazi-era slave labor programs.

The socially responsible investment movement got its start in the 1970s among religious organizations that objected to having their endowments invested in companies doing business in South Africa under apartheid.

"If you look at the charter of any corporation in the United States," says the Rev. Séamus Finn of the Interfaith Center on Corporate Responsibility, "the right was always there for a shareholder to bring a resolution." What's new, he says, is that socially responsible investors are "expanding the universe that corporations are concerned about: not just the financial bottom line, but the social bottom line, the human bottom line, the environmental bottom line."

The movement has grown far beyond its religious roots. Today, according to the Social Investment Forum, an industry trade group, $2.3 trillion is invested in the US under guidelines that take into account the human and environmental consequences of company policies.

Mr. Rothbauer, the spokesman for the DaimlerChrysler shareholder activists, says of the DaimlerChrysler case: "At first, no one took us seriously." However, over time, even traditional investors like banks and funds began to see virtues in the group's proposals to investigate allegations of human rights abuses, end landmine production, and develop a more fuel-efficient car, called the Smart.

Socially responsible investing, he says, "is growing, since more and more investors don't want to make profits out of 'bad and unsound products' or out of unethical behavior."

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