Thursday, January 22, 2009

Opportunity 4: Shareholder Resolutions and Safer Babies

"Socially responsible investing" is trying to do good for a lot of environmental causes.

For a good example of how business can respond to the challenge, see this article about Baxter Healthcare and its CEO, Harry Kraemer.

It would be a good thing  if the SRI movement was trying to do as much to encourage businesses to support their employees who are parents or caring for young children, and to support child abuse prevention efforts in their communities.

Googling didn't find one counterpart of SRI activitists working to prevent child abuse.  That's surprising, because it's obvious that preventing abuse is not just something that's good for parents and children: it's good for the bottom line.

Each year, the direct consequences of child abuse cost federal and state taxpayers over $110 billion.  That's about 1% of GNP, and it includes federal, state and local government tax dollars being spent on investigating and prosecuting child abuse, incarcerating the prepetrators and treating the survivors for the immediate costs of medical and rehabilitation services.

If that's not enough, add the cost of lost consumers: according to the Council on Economic Development, an average American would earn roughly $600,000 over a lifetime, and pay about $200,000 in taxes to federal, and local governments. 

So, assume that each of the 1400 children who don't survive abuse each year and the tens of thousands who do survive with physical and mental disabilities would have contributed $400,000 from their earnings to the economy and paid $200,000 in taxes to governments.

Divide that sum by a company's share of sales and that's lost sales.

Still not enough?  Add the collateral damage: increased costs of health and education services for survivors of inflicted injuries; reduced productivity and socially constructive behaviors as a consequence of abuse and neglect.  Add the cost of criminal justice and penal services that follow survivors of abuse and neglect.

When a corporation earns $1,000,000, it writes a check for $10,000 in taxes to pay for the direct costs of abuse and neglect.  In that case, the costs to shareholders are obvious.

However, the costs are not nearly as obvious when a corporation doesn't earn those dollars in the first place.  

And they're certainly not obvious or clear when a child doesn't grow up to become a customer, an employee or  an executive.  Or when the folks who make up its work force suffer the social consequences of inflicted injuries or cope with those who do.

So there's plenty of reason for socially responsible investors to insist that corporations do more to support parents and caregivers.

Mac Bledsoe pointed out an important truth: preventing child abuse is not just about telling someone what not to do.  It's necessary, but not sufficient.  

They need the opportunity to learn what to do.

So, anyone in the SRI community willing take up the challenge?

Email your nominations.

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