Making Change, One Share at a Time

The setting was something out of George Orwell’s 1984. Outside, armed guards stood on the auditorium’s roof watching over environmental protestors; inside, an enormous TV screen dominated the room with its Big Brother image of "The Great and Powerful Wizard of Saws," as one attendee described Home Depot Chairman Bernard Marcus. The event was the 1999 stockholders meeting of Home Depot, the $62 billion, Atlanta-based home improvement retailer. On the agenda was a shareholder resolution urging the company to stop sales of old-growth wood products. The tension in the room was palpable.

<b><i>Rainforest Action Network"s shareholder pressure on Home Depot influenced the company"s dramatic decision to stop selling old-growth wood.</i></b>© Rainforest Action Network

The resolution coming to vote was the culminating point in a year of relentless protests by activists from Rainforest Action Network (RAN). RAN’s vigorous efforts had slowed the opening of new stores and captured the attention of existing franchises with guerilla tactics such as popping up mischievously on store intercoms to announce, "Attention shoppers, there’s a special in aisle 23 on products made from old-growth timber."

As the armed guards suggested, Home Depot management expected the worst. But the worst, as it turned out, came from the guards themselves: When RAN’s Michael Brune attempted to speak, security guards shoved him away from the microphone. And the guards blocked Native Americans from Canada’s Nuxalk tribe from even entering the room—publicly embarrassing the company when the strong-arm tactics showed up in a Wall Street Journal headline two days later ("Home Depot Meeting Bars Indian").

Yet, somehow, the combination of pressures ultimately worked. Although the old-growth resolution received just 11.8 percent of shares voted at that May meeting, by the end of August, Home Depot had relented. After years of stonewalling, CEO Arthur Blank made a sudden about-face and announced that Home Depot would phase out three kinds of endangered wood.

It was an extraordinary victory, and the ripple effects are still transforming the timber industry. Home Depot is the largest home-improvement retailer in the world and controls a significant portion of the global lumber market. And if that weren’t enough, Lowe"s—the number two home-improvement retailer—followed Home Depot’s lead by also committing to phasing out old-growth wood.

Following suit were the big chains Wickes Lumber and HomeBase, which committed to nearly identical terms. "It’s truly remarkable," says Brune, who is now executive director of RAN. "Every large wood supplier acknowledges the impact Home Depot’s action has had and is having. The whole industry is changing." Ultimately, he concludes, "We feel this is the beginning of the end for logging old-growth wood. It’s a dying practice."

This unprecedented victory offers an inspiring example of the power of social investing. "It’s an important model for shareholder activism," says Conrad McKerron of the As You Sow Foundation in San Francisco, which co-filed the resolution. In fact, he added, "It’s as close to a perfect model as you can get. You need the impact of a grassroots campaign, and then you have shareholders adding a different element of pressure." In the case of Home Depot, that added pressure was substantial. McKerron and co-filer Simon Billenness of Trillium Asset Management in Boston together sent out letters to the top 4,000 or so shareholders, and called 150 institutional investors, urging them to vote. The shareholder resolution "played a very powerful role," RAN’s Brune agreed. "It was the final straw in the campaign."

Opening another front, the Sierra Club, which has long used publicity campaigns and lobbying to fight for the Earth, is now mobilizing behind shareholder activism. The Sierra Club has purchased shares in oil, timber, industrial agricultural and auto companies, and is using its stock position to augment ongoing campaigns to promote the use of wind and solar energy, end commercial logging, protect water from toxic pollution and demand more fuel-efficient cars.

"We have not historically gone after the special corporate interests that are destroying our natural heritage," says the Sierra Club’s president, Larry Fahn. The group has sent shareholder resolutions to four companies (Tyson Foods, Seaboard, Weyerhaeuser and Louisiana Pacific) since Fahn was elected president last May.

Building materials supplier Louisiana Pacific and paper giant Weyerhaeuser are being asked to lower emissions of carbon dioxide and other gasses that cause global warming. The environmental group is asking Tyson and Seaboard, the nation’s largest pork producer, to improve corporate management by splitting the position of chairperson and chief executive. Fahn says the group’s resolution was one step towards changing how the companies manage factory farms.

Animal waste from corporate-owned factory farms has polluted 35,000 miles of rivers in 22 states and contaminated groundwater in 17 states, according to the San Francisco-based Sierra Club.

—Joanna Sabatini, Marshall Glickman and Marjorie Kelly