SHAREHOLDER ENGAGEMENT
Introduction to Shareholder Advocacy
Shareholder activism uses the power of stock ownership to change corporate behavior.
Proxy Impact provides custom shareholder advocacy services to individuals and the non-profit, socially responsible investment and foundation communities. Our staff have engaged the nation’s largest investors and corporations on key social, environmental, and governance issues. We provide the following services to promote more responsible corporate behavior.
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Research issues, corporations, and shareholder engagement options
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Produce reports, scorecards, benchmarks and best practices
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Develop shareholder engagement plans
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Send detailed letters of concern to corporations, the SEC or other appropriate agencies
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Conduct company dialogues with senior management
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Coordinate expert briefings with stakeholders, scientific or NGO leaders
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File shareholder resolutions
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Recruit resolution co-filers
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Defend resolutions at the SEC
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Conduct shareholder solicitation/investor education
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Speak at the company annual meeting
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Conduct media outreach
Credit: SEARCH Foundation, from the collections of the State Library of New South Wales. 1 February 1969. License
HISTORY
In the 1970s, religious shareholders and public pension funds became concerned that their investments were supporting South African Apartheid and asked their companies to cease operations in that country. Few corporations responded which led to a divestment campaign that grew nationwide especially among U.S. college campuses. Nearly 10 years after it started, some 200 U.S. companies had divested from South Africa. Both Nelson Mandela and Archbishop Desmond Tutu publically acknowledged the important role that investors played in the fight to end the Apartheid movement.
That was the start of a shareholder movement that for more than 40 years has successfully engaged companies to implement better environmental, social and governance (ESG) policies and practices.
Shareholder pressure has led to increased transparency and reporting, education and training of staff and management, and implementation of new policies and practices on a wide range of issues including climate change, political spending, human rights, product safety, children’s health, sustainable agriculture, forestry, animal welfare, sweatshops, predatory lending, waste and recycling, renewable energy, forced labor, income inequality, sexual orientation discrimination, workplace diversity, gender pay gap, excessive executive compensation, and shareholder’s right to nominate board members, among many others.
Shareholder activists recognize that they have both a right and a responsibility to monitor their corporation’s performance, policies, and practices. Companies give serious consideration to the concerns of their investors and the financial community and consequently shareholder advocates use dialogues, shareholder resolutions and proxy votes to send a message to management.
Proxy Impact staff have been engaging corporations for 25 years and have seen significant change over that time. Few corporate managers had even heard of ‘sustainability’ back then or considered issues such as climate change, worker conditions in foreign factories, or gender diversity as impacting their bottom line. Yet large corporations now produce annual sustainability reports and have a Sustainability or Corporate Social Responsibility director – a position that was unimaginable 20 years ago. Similarly, many companies and investors have changed how they identify costs and now calculate in environmental, social and reputational risk factors when evaluating a company’s financial liabilities. There has also been an increase in mainstream shareholder support for environmental, social and governance resolutions particularly on issues such as greenhouse gas emissions reduction, political lobbying disclosure, sexual orientation policies, and proxy access.
Even small investors have the potential to be important advocates that can move corporations, industry sectors, and the financial community. In short, shareholder advocacy is an effective tool to engage corporate management in creating policies that can have wide-ranging social and environmental impacts, yet it remains poorly understood and gets little recognition for its impact.