An inquiry into the green disciplining of capital

`Following the money' has become a popular strategy for many NGOs trying to change corporate and institutional practice. Individual shareholders, pension funds, banks, and other investors capitalize projects that cause ecological degradation or social injustice. Pressuring shareholders to divest, invest responsibly, or encourage executives to alter undesirable practices has become de rigueur for civil-society groups working for social change. Such strategies produce value or norm change, greater accountability, activist networks across national boundaries, and improvements in environmental management. Disinvestment helped bring down apartheid in South Africa. But how far can these `disciplining' strategies go in terms of significantly ameliorating ecological destruction and violations of human rights? I explore this question using the case study of the campaign by Friends of the Earth against the operations of Freeport ^McMoRan Copper and Gold Inc. in Irian Jaya (West Papua). DOI:10.1068/a3428 (1) Mol and Sonnenfeld (2000, page 5) ascribe to ecological modernization theory the following broad perspectives: ``(i) moving beyond apocalyptic orientations to see environmental problems as challenges for social, technical and economic reform, rather than as immutable consequences of industrialization; (ii) emphasizing transformation of core social institutions of modernityöbe it not beyond recognitionöincluding science and technology, production and consumption, politics and governance, and the `market', on multiple scales (local, national, and global); and (iii) positioning in the academic field distinct from counter-productivity/deindustrialisation, postmodernist/ strong social constructionist, and many neo-Marxist analyses''. with less top-down, command-and-control regulation. These theorists claim that social movements increasingly are involved in public and private decisionmaking, in contrast to having been limited to the periphery or even outside of such processes and institutions in the 1970s and 1980s (Mol and Sonnenfeld, 2000, pages 6 ^ 7). But how much change can we expect from a reformist process targeting investment? In his analysis of the efforts of Friends of the Earth (FoE) to change the way multilateral banks do business, Wapner concludes that, although the World Bank has `̀ budged a bit in its commitment to environmental issues'', these measures ``have not made the World Bank a model environmental institution'' (1996, page 140). We know from studies by institutionalists like North (1990) or, perhaps more specifically, by American business and legal historians (Bernstein, 1955; McCraw, 1984), that public policy and government regulation have improved corporate practices. Individuals and corporations learn, cultures change, and exploitative practices are stopped or dampened (see, for example, Alston et al, 1996; Kuttner, 1999; Roe, 1994). Many companies have become more responsive to shareholder activism. The world's biggest lumber retailer, Home Depot, for example, decided under pressure from shareholders to stop selling wood products from endangered forests. The Disney Corporation has committed, under shareholder pressure, to audit its subcontractors around the world for labor issues. Nevertheless, the most important objective of a corporation is to maximize profits, usually over the short term. What happens when this raison d'ea tre conflicts with other, socially desirable, objectives? Will shareholders be willing to forego dividends to achieve such objectives? Will corporate leadership even consider such possibilities? My objective in this paper is to examine, with the aid of a case study, the implications of the strategies environmental NGOs are employing to `discipline' corporations financially. FoE has been organizing NGO lobbying of multilateral banks and transnational corporations (TNCs) since at least the early 1980s. Their shareholder campaign against Freeport ^McMoRan Copper & Gold Inc., a large North American mining company operating primarily in Irian Jaya, offers a typical natural-resource-based case study of NGOs attempting to alter the `bad practices' of a TNC operating `offshore'. My intent is to illustrate some of the possibilities and limitations of these types of strategies and to provoke questions about the assumption in ecological modernization theory that existing institutions need only be reformed to reconcile economy, environment, and social justice. The paper is organized as follows. In section 2, I review some of the reasons why NGOs are concerned about corporate power and practice. In section 3, I look concretely at what I am calling financial disciplining strategies and review some on-going examples of these strategies. In Section 4, I turn to a specific case study from the goldmining industry which involves campaigns by FoE and other NGOs against Freeport ^ McMoRan Copper & Gold Inc. and the company's mining operations in Papua, or Irian Jaya, Indonesia. In the conclusion, I try to draw out the implications of the particular campaign against Freeport and of financial strategies in general, keeping in mind my questions regarding the potential of ecological modernization. 2 Why corporate campaigns? Concerns about the economic, political, environmental, and social consequences of large corporations have existed for more than a century in the United States. Environmental activists in the 1970s and 1980s focused campaigns upon corporations and industry sectors, both domestic and transnational. Consumer-based NGOs conducted boycotts against infant-formula companies that targeted Third World mothers in their advertising. There were campaigns against Dole, United Fruit, `Ma Bell', and many 828 J Emel