For the past couple decades, on of the responses to corporate irresponsibility has been to demand that public funds invested for pensions and other purposes divest themselves of their holdings of companies which have been reckless or irresponsible.
From the first I saw such recommendations, it seemed completely wrong and backwards as a response.
As a stockholder, these funds have the right and responsibility to hold the management accountable, and the power to enforce such demands.
Divestiture removes their right and power to make such demands and changes.
Corporations are bound by law to obey their bylaws and to act to preserve their stockholders financial interests.
Few corporate by-laws include requiring corporation management to be responsible to the community, their employees, suppliers and customers. If they did, their management could easily be dismissed for failing to do so.
It is far more effective to create and enforce corporate responsibility as a stockholder group than from outside the organization.
The most effective way to change the current corporate situation is not to refuse to participate in the corporation, but rather to acquire the largest possible share of the company and cooperative shareholders and force the corporation to modify by-laws and internal regulations to ensure that they behave responsibly.
If major pension plans and other major public stockholders were to work together to acquire large percentage blocks of shares they could easily reinvent the corporation in a responsible manner through changes to corporate by-laws.
Changing corporate behavior through changes to the legal system permit groups of corporations to fight together against any such changes, whereas effecting change through ownership means such such change cannot be resisted by any but the individual corporation, and such resistance is limited due to the legal requirement that the corporation act to fulfill the requirements placed upon them by the owners.
Demands that funds divest themselves of ownership in "irresponsible corporations" has been routine for over thirty years, and yet there has not been any evidence that such actions have had any long-term positive effects. At best, such actions temporarily reduce stock prices, providing bargains for corporate by-backs and investors who care more about profit than responsible action.
Corporations are not inherently evil--they're behavior is governed both by law and by their internal by-laws. If you want them to be responsible, you can change the law, or you cna change their by-laws. Changing the law is far more difficult than changing an individual corporation.
By by-laws a corporation can be required to pay environmental fines without, or before appealing them. It can be required to limit executive compensation, eliminated "golden parachutes" and other measures implemented by professional managers to protect their own interests at the cost of the owners, fire people responsible for bad decisions, pay living wages to all workers, pay suppliers fairly, require purchases only from responsible suppliers, treat customers and the community fairly. And far more. Many of these things are difficult or impossible to to by changing the laws, and difficult to maintain against the monied interests.
Ownership permits you to demand change, non-ownership permits the owners to ignore you. Ownership is far more effective than divestiture, boycotts or any other methods currently used to attempt to reign in irresponsible corporate behavior.