JOHN KARVEL, A COORDINATOR
MINNESOTA CITIZENS FOR CORPORATE RESPONSIBILITY
BEFORE THE STATE OF MINNESOTA
SENATE JUDICIARY COMMITTEE
FEBRUARY 19, 2004
Honorable Chairman, thank you for giving us the time for this hearing.
Honorable Senators, it's great to be here.
My name is John Karvel, and I am a coordinator of the grass roots organization,
Minnesota Citizens for Corporate Responsibility. We work in coordination
with a rapidly growing number of citizens, organization and businesses
in our state, 11 other states and other nations.
I have brought with me today my motivating force, my daughter Julia.
She turned twelve on Valentines Day. I, like you, want to pass on a
living planet and just society to her.
My work is that of a self employed contractor. I and all of the members
of our purely volunteer organization have over the past two years sacrificed
the financial bottom lines of our families and given many hundreds of
hours our time to bring you an elegant solution to the imbalance between
Wall Street and our streets.
Senators, take off you partisan hats. SF 1529 is an elegant win-win
bill for 10 elements of society. It is a permissive bill and creates
no new Private Right of Action.
Element 1, Directors
While it expands the duty of corporate directors it actually cuts back
the liability of directors by limiting the right of shareholders to
sue directors when they choose to not operate at the expense of other
stakeholders in the corporate community.
In a speech to Wall street President Bush said, "In the long run
there's no capitalism without conscience." SF 1529 will allow directors
to operate with conscience. They will be more, not less, willing to
SF 1529 does not increase directors' liabilities. As amended it drops
both the Private Right of Action under which an individual or a public
interest group might have sued and the right of the Attorney General
to sue. That those rights existed in the original bill and were then
dropped makes it clear to any Judge that the intent of this legislature
is to not have such Rights of Action. Anyone wanting such rights would
have to come to this legislature with a separate amendment asking for
Elements 2 & 3, Stockholders and Employees
This bill is good for stockholders and will increase jobs in Minnesota.
According to a Harvard Business School Study, ethical firms, which consider
additional stakeholders, out perform those, which do not. "Over
an eleven-year period, the former increased revenues by an average of
682% versus 166% for the latter, expanded their work forces by 282%
versus 36%, grew their stock prices by 901% versus 74%."
This bill doesn't penalize anybody who continues to operate like Enron
or Worldcom, with their focus on next quarter's stock price. The bill
suggests that you would be a lot smarter if you considered other stakeholders.
It says that we are going to relieve directors of liability when they
Element 4, Governmental Regulatory Expenses
Our biosphere is severely threatened. The regulatory system, our current
response, can not keep up and is itself indicative of the design flaw
in the law that is addressed by this bill. SF 1529 encourages and frees
responsible directors and corporate officers to eliminate or internalize
costs to the environment and the public health.
All of us, citizens, NGO's, GO's, businesses and corporations, need
to recognize that we are interconnected. We all need accept responsibility
and examine our every act in terms of its effect on the environment,
human rights, the public health and safety, our communities, our workers
and our shareholders.
It is obvious that when corporations do this it will reduce the expenses
and burdens of governmental organizations.
Elements 5 - 9, The Environment, Human rights, The Public Health
and Safety, Our Communities, and Our Employees
When these elements are recognized as true stakeholders in the corporate
equation they will benefit.
None of us wanted to drive here today in a car that pollutes the environment.
The technology exists to do otherwise. Why then did we?
One, there has been a design flaw in the industrial revolution. We
modeled our businesses and industry after the machine instead of nature.
In nature waste equals food, everything lives on current solar energy
and biodiversity is respected. Instead of reducing waste we can eliminate
it. There are already companies like Ford and Nike that are beginning
to try to work with this idea.
The second major reason is that there has been a design flaw in our
corporate charter law. There is a vast amount of pent up energy in corporations.
The individual people in corporations, like everybody in this room,
want to serve the public good while making a profit. This bill evolves
the corporate infrastructure to release the conscience of those working
in the corporation from the tyranny of the bottom line. The maximization
of profit as the only indicator of corporate success is no longer acceptable
in the 21st century.
Your Constituents want this Bill
The American people are ready for and want this change. A 2000 Business
Week/Harris Poll showed that 95% of the people surveyed thought that
corporations should have more than the one purpose of making a profit
and to quote from the survey "should sometimes sacrifice some profit
for the sake of making things better for their workers and communities."
Minnesota Citizens for Corporate Responsibility has collected over
500 individual, organizational and business endorsements for this bill.
If any member of this legislature has any doubt where her or his constituents
stand, our organization is willing to volunteer its man and woman power
to help you conduct a poll or survey of them. We are confident the people
of this state understand and want this bill.
Element 10, The Most Important, Our Children
The final and most important winners from this bill are our children.
They say the greatest gift you can give is hope. Let's give our children
hope that we can balance Wall Street and Main Street; business and the
environment; human rights, the public health and safety, and the bottom
line; the dignity of employees and shareholder compensation.
Our greatest opposition to this bill is cynicism. Together let's overcome
our cynicism and create the world we are going to give to our children.
Senators, look our children in the eye and give your to support to