TESTIMONY OF
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 serve.

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 those rights.

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 do so.


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?

Two reasons:

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 SF 1529.

Thank you.