Shareholder actions against the tobacco industry

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Who undertook action: Father Michael Crosby and coalition

Type: Religious organizations

Size: Small

Years: 1980-1991

Scope: International

Targeted companies: Philip Morris (PM) principally

Focus of action: PM's legitimacy / reputation

Concurrent events: World Health Organization (WHO) report on expanding third world cigarette market; growth of responsible investment movement; challenges to corporate management before Securities and Exchange Commission (SEC)

Industry behavior change sought: Put health warning labels on all packages of cigarettes sold worldwide

Smokers / smoking a focus? No

Main strategy: Shareholder resolutions at annual general meetings

Supporting strategies: Publicity

Well-funded? unknown

Breadth of campaign: Activists introduced resolutions; enlisted support of institutional investors; generated press

Evidence of effectiveness: Resolution got more support than any previous proposal not supported by management

Industry response: Opposed resolutions; then agreed to demand when it realized it could gain by doing so

Resolution: PM "voluntarily" adopted policy of labeling all product by end of 1992

Industry gains/losses: By agreeing to label, PM enhanced reputation as responsible corporate citizen and thwarted delegitimacy campaign; its action helped counter divestment movement by eliminating an argument for divestment, and enhanced relationships with institutional investors.

Community gains/losses: Advocates focused attention on PM's bad practices, but PM's "capitulation" gave it a public relations victory; labeling as implemented was largely ineffective.

Good for tobacco control? No, tobacco companies can give the appearance of accommodating public health demands while securing strategic advantages.

Observations: Negotiating with tobacco industry can enhance its legitimacy, facilitating its marketing ability with little benefit to public health.