Do you know the political slant of your portfolio?

Smith: A number of investors – these are not just socially concerned investors, it's also some trade unions, some state and city pension funds, religious investors – have joined together to ask companies to be transparent about their political spending. This would be political spending that they would make directly, for example, in a state or a city campaign or initiative. But what's also very interesting to track is trade associations and how trade associations, like the US Chamber of Commerce, may be doing the work of their members by doing political spending, lobbying, and activism. So we're asking companies really to track and be public with information about where those monies go as well. We now have about 30 companies that have agreed to do this.

What other trends are you seeing?

Smith: The [spectrum] goes all the way from resolutions on political contributions to resolutions on climate change. We have close to 40 resolutions that are challenging companies in this day and age to look at their greenhouse-gas emissions, to put limits on them, to be transparent about what those emissions are and what they're doing to try to remedy [the situation]. This is an issue that has just exploded in interest. We have investors with $40 trillion [in assets] internationally who have supported a questionnaire to companies asking them to report on what they're doing on climate change. It's an issue that affects the bottom line of companies. And investors want to know what companies are doing to address it.

There's also a shareholder battle over the safety of cosmetics?

Compere: We're sort of at the tipping point when it comes to the issue of chemical safety. There's been legislation in California on safe cosmetics that came into effect in January. There's also the European Union REACH legislation, which affects companies that sell products in Europe [by requiring safety checks on commonly used chemicals]. This whole industry, the cosmetic industry and the chemical industry in general, has been highly unregulated.... Shareholders are saying this is a risk-management issue.

And you targeted CVS?

Compere: Last year, we filed a resolution with [drugstore chain] CVS on cosmetic safety. We refiled the resolution again this year after we got an 8 percent vote in favor, which is fairly good for a socially oriented resolution. They didn't want this resolution on the ballot. We just withdrew the resolution at CVS in negotiation to have a substantive dialogue on this issue. They're going to be looking at adopting a policy on reporting out to shareholders on their actions.

Critics say such initiatives are turning companies into social organizations. Have you seen a pushback against these efforts?

Smith: I see very little pushback from the business community now on being a good corporate citizen. You remember that Milton Friedman said the job of a company is to make profits for its shareholders and that was its primary purpose. You hear very few executives say that that is the only responsibility that they have now. They would talk about, as we might, a double bottom line – making returns for shareholders but also working as a responsible entity in society.

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