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Shareholder Engagement in the Embedded Business Corporation: Investment Activism, Human Rights, and TWAIL Discourse

Published online by Cambridge University Press:  23 January 2015

Aaron A. Dhir*
Affiliation:
York University

Abstract:

The expansion of extractive corporations’ overseas business operations has led to serious concerns regarding human rights–related impacts. As these apprehensions grow, we see a countervailing rise in calls for government intervention and in levels of socially conscious shareholder advocacy. I focus on the latter as manifested in recent use of the shareholder proposal mechanism found in corporate law. Shareholder proposals, while under-theorized, provide a valuable lens through which to consider the argument that economic behaviour is embedded within social relations. In doing so, I situate my analysis within Third World Approaches to International Law (TWAIL) scholarship. Elsewhere, I have supported the use of corporate law tools in advancing the international human rights enterprise and argued that investment activism can be an essential component of this advancement. This paper represents a reflexive pause. Using the case study of a recent proposal submitted to Goldcorp Inc., I seek to problematize the shareholder proposal as a human rights advocacy tool and to examine it as a site of contestation.

Type
Special Issue: Human Rights and Business
Copyright
Copyright © Society for Business Ethics 2012

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References

Prior versions of this paper were presented at workshops and conferences held at Harvard Law School, the Harvard Kennedy School, UCLA School of Law, Emory University School of Law, the School of Oriental and African Studies at the University of London, University of Oregon School of Law, and Jindal Global Law School. I am indebted to colleagues at each meeting for their constructive feedback. I also wish to thank Shin Imai, Obi Okafor, Larry Mitchell, James Gathii, Tony Anghie, Sara Seck, Catherine Coumans, Michael Fakhri, Vincent-Joël Proulx, Mercedes Perez, Faisal Bhabha, the three anonymous referees, and the guest editors of the special issue, as well as Peter Chapman and Jennifer Coulson for their critical engagement with aspects of this paper. Finally, I acknowledge, with appreciation, the research assistance of Jessica DiFederico and the editorial assistance of Chad Travis.

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9. I should note that this is my own description and that shareholders who engage with social policy and human rights issues may not describe their activities in this manner. There are a range of interests, aims, and strategies at play and these shareholders form a diverse group.

10. The use of the term “Third World” in this context is meant to include “the group of states and peoples who ‘self-identify’ as such.” See Okafor, O.C., Marxian Embraces and De–couplings in Upendra Baxi’s Human Rights Scholarship: A Case Study, in INTERNATIONAL LAW ON THE LEFT 253, n. 4 (Marks, S. ed., 2008).Google Scholar That said, there are of course complexities associated with this term. As Alvarez notes, the term has “historical baggage” and no longer exists “as an identifiable geographic space on which all agree.” See Alvarez, J.E., My Summer Vacation (Part III): Revisiting TWAIL in Paris (Sept. 28, 2010),Google Scholaravailable at http://opiniojuris.org/2010/09/28/my-summer-vacation-part-iii-revisiting-twail-in-paris/. Others, however, have argued that “although the concept may no longer have much coherence in a strict geographic sense, it may have significant use in conceptualizing an anti-subordination politics” and that “it allows us to critique the strictly hierarchical ordering of the global community on both state and, importantly, non-state levels … [and] also locates the origins of this hierarchical ordering of states and regions in the direct experience of subordination occurring under colonialism and imperialism.” See Aoki, Keith, Space Invaders: Critical Geography, The ‘Third World’ in International Law and Critical Race Theory, 45 Villanova Law Review 913, 924, and 926 (2000) (citations omitted).Google Scholar

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13. The Public Service Alliance of Canada Staff Pension Fund, the Ethical Funds Company, the First Swedish National Pension Fund and the Fourth Swedish National Pension Fund.

14. Shareholder Association for Research and Education, Shareholder Resolution Database, available at http://www.share.ca/en/node/1461 (SHARE, “Database”).

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20. Id. at 138–39. The proposal mechanism is an alternative to simply raising an issue from the meeting floor, which “often gets a nonresponsive reply … [and] [e]ven if [the shareholder’s] question is answered … his efforts will generate as much noise as a tree falling in an uninhabited forest.“ See Schwartz, Donald E., & Weiss, Elliott J., An Assessment of the SEC Shareholder Proposal Rule, 65 GEORGETOWN LAW JOURNAL 635, 641 (1977).Google Scholar

21. Canada Business Corporations Act, R.S., c. C-44, §137(2) (1985) (Can.) (CBCA).

22. Id., §137(5)(b), (e), (a); §137(1.1)(a).

23. Id. (prior to the 2001 amendments).

24. Id., §137(5)(b.1).

25. This trend has occurred in other jurisdictions as well. See Guay, T., Doh, J. & Sinclair, G., Non-Governmental Organizations, Shareholder Activism, and Socially Responsible Investments: Ethical, Strategic, and Governance Implications, 52 JOURNAL OF BUSINESS ETHICS 125 (2004).Google Scholar

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38. As previously alluded to, the shareholder groups at issue may not see themselves as using the firm as a venue for political discourse; this is my own characterization of their activities. See note 9 above. In that regard, I view the Goldcorp proposal as having a two–fold purpose. First, the language of the proposal itself references mitigating risk to shareholder value. See SHARE, “Database,” supra note 14. Second, when considering public statements made by consortium members, it is clear there is also a political/human rights agenda at play. See infra note 62 (“We laud Goldcorp for embracing this tool as a foundation for protecting human rights and addressing community concerns in Guatemala”).

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64. Id. For a discussion of the increased presence of Canadian mining firms in Latin America generally, see Munarriz, G.J., Rhetoric and Reality: The World Bank Development Policies, Mining Corporations, and Indigenous Communities in Latin America, 10 INTERNATIONAL COMMUNITY LAW REVIEW 431, 440 (2008)Google Scholar (citations omitted).

65. Dhir, , “The Politics”, supra note 12 at 5253 (citations omitted).Google Scholar

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69. As noted above, the parties eventually chose On Common Ground Consultants to perform the impact assessment and International Alert to provide peer review. See CSRWire, Human Rights Impact Assessment Contractors Selected and Website Established (Oct. 7, 2008), available at http://www.csrwire.com/News/13376.html.Google Scholar

70. Rights Action, Open Letter from Rights Action to Goldcorp Inc. and Shareholders (May 1, 2008), available at www.rightsaction.org/articles/Goldcorp_Open%20Letter_050108.html.Google Scholar

71. Correspondence from Catherine Coumans, MiningWatch Canada to the consortium et al. (Dec. 4, 2008), 1, available at http://www.miningwatch.ca/updir/Shareholder_ltr_2008-12-04.pdf. (“Coumans”).Google Scholar

72. Id. at 1-2.

73. Id. at 2.

74. Correspondence from ADISMI, Parroquía de San Miguel Ixtahuacán, the Alcaldía del Pueblo and the Mam Maya communities in resistance (Ágel, San José Ixcaniche, Salitre) to the consortium et al. (Sept. 4, 2008), available at http://groups.google.com/group/GuatemalaStoveProject/browse_thread/thread/12018bd4b10f97b4 (“ADISMI et al.”).

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80. I, of course, acknowledge that this example does not provide conclusive proof of the argument. There may be other reasons why Goldcorp circulated the impact–assessment proposal, but not the informed consent proposal. But it is certainly plausible that the firm’s acceptance of one over the other was at least partially rooted in its interpretation of the legislation and the notable difference in the language of the two proposals. A similar proposal was submitted to Goldcorp in 2010. While the firm did not exclude it, it failed to provide the full text in its management proxy circular and recommended that shareholders vote against the proposal. See SHARE, “Database,” supra note 14, at http://www.share.ca/en/node/2201 and Goldcorp, Notice of Annual Meeting of Shareholders and Management Information Circular (Mar. 26, 2010), Schedule B, available at http://www.goldcorp.com/_resources/Management-Information-Circular_2010.pdf.

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82. ADISMI et al., supra note 74. Mayan Mam community leader Javier de Leon recently highlighted this tension in response to my request for an evaluation of the Goldcorp proposal. See Nathanson Centre on Transnational Human Rights, Crime and Security, Press Conference: Goldcorp Operations in Central America (May 18, 2010), video available at http://nathanson.osgoode.yorku.ca/events/goldcorp-press-conf/.Google Scholar

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84. supra note 12, at 406, 402 (citations omitted).

85. ADISMI et al., supra note 74 (“We will demand that the company be closed down and not be given the opportunity to continue polluting and destroying the lands of this ancient people”).

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99. Id. at 203.

100. Id. at 204.

101. Id.

102. Id. at 207.

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106. Anghie notes that such a self-reflective process is essential for the TWAIL movement itself: “TWAIL scholarship … needs to be self-critical, aware of the limitations of its own analytic framework, and the voices it has excluded and suppressed.” Anghie, A., What Is TWAIL: Comment, 94 AMERICAN SOCIETY OF INTERNATIONAL LAW PROCEEDINGS 39 (2000).Google Scholar

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109. This term is employed by numerous academics writing from a TWAIL perspective to “refer to the different methods employed by the West to justify intervention in the affairs of Non-western societies/‘the Other.’” See Kangave, supra note 94, at 390, n. 6 (citation omitted).

110. Supra note 86.

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112. Supra note 62.

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115. Id.

116. Id.

117. Imai, “Breaching Indigenous Law,“ supra note 15, at 110 (citations omitted).

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134. Id. at 17.

135. Id. at 18.