The latest issue of First Affirmative’s Deeper Thinking newsletter is a report on the ongoing shareholder advocacy efforts of the firm and the financial advisors working within its network. A somewhat lesser known aspect of the socially responsible investing (SRI) process, shareholder advocacy is the process by which SRI investors actively engage with the companies they invest in, urging them to become more responsible corporate citizens.
The shareholder advocacy process revolves around the “proxy season.” Most public companies schedule their annual shareholder meetings in the spring. Shareholders have the opportunity to voice their opinions about their companies’ business practices at these meetings by presenting resolutions that are voted on by all shareholders. Planning begins in the summer, resolutions are written and filed in the fall, and are voted on at the spring annual meetings.
Company representatives, knowing that particular resolutions are pending, often enter into productive dialogues with resolution sponsors. Shareholder resolutions, and the dialogues they elicit, result in significant changes for the better in corporate business practice. Indeed, shareholder advocacy is arguably the most influential process facilitating corporate improvement in environmental, social, and governance metrics.
First Affirmative network financial advisors play varying roles in the shareholder advocacy process. Most educate their clients about the process and how their investment assets contribute to corporate responsibility. Some write and sponsor resolutions on behalf of themselves and their clients. Deeper Thinking reports that New York-based advisor Gary Matthews attends and presents shareholder resolutions at corporate annual meetings. His first meeting was almost a decade ago at Honeywell, where he presented a compensation disparity resolution for an order of Catholic nuns. After his presentation, “I received a standing ovation from the 200+ shareholders present at the meeting. I was astounded.”
Gary has been presenting resolutions ever since, including a particularly adventurous trip to Dallas in 2010 to present a resolution at ExxonMobil related to the company’s tar sands oil drilling in Alberta, Canada, on behalf of Green Century Funds. That resolution received 27% of the shareholder vote at a company not noted for its environmental stewardship.
Gary remarks, “My participation in the shareholder advocacy process enhances my SRI practice, providing me with rich and rewarding experiences I can share with my clients about the positive impact their investments are having.”
Mention of specific companies or securities should not be considered a recommendation to buy or sell that security.