How do investors persuade a company to use fewer chemicals, set zero emissions goals, or enhance workers’ rights at factories in its supply chain? Selling shares of a company is certainly an option, but it may not get the intended message across clearly. An alternative approach is to use shareholders’ resolutions and dialogue to alter a company’s practices and behavior. This tactic is known in the investment industry as “engagement,” and over the last year it became clear that many more shareholders are getting involved with the companies in which they invest. They’re prodding companies to increase environmental responsibility, and their persuasive techniques are paying off.
As You Sow, the nation’s non-profit leader in shareholder advocacy, was really busy over the last year conducting engagements. These contacts were made with companies to address shareholder concerns regarding numerous issue areas. Their advocacy included letters, emails, video conferences, phone calls, and meetings.
In proxy year 2022, As You Sow:
- conducted 196 engagements
- identified 156 companies
- analyzed 11 program areas
What were the results?
- A total of 99 of these engagements were escalated, and shareholder resolutions were filed on behalf of 79 shareholders.
- The non-profit successfully withdrew 56 resolutions in instances where companies agreed to take requested actions.
- 32 proposals went to a vote, with 10 majority votes and median support of 41.4%.
- A total of $2.18 trillion of share value was voted in support of the As You Sow resolutions.
- Companies challenged 15 resolutions at the SEC; As You Sow won 14 of those challenges, or the proposal was withdrawn during the SEC evaluation period, with only one proposal being omitted.
The 196 engagements addressed the following issue areas:
- climate change (78);
- diversity, equity, and inclusion (40);
- racial justice (24);
- ocean plastics, single use plastics, and recyclability (18);
- political spending (10);
- petrochemicals (6);
- pesticides (5);
- antibiotics misuse and overuse (4);
- corporate misalignment with investing (4);
- governance (4); and,
- water use (3).
What Engagements Showed the Greatest Cleantech Responsibility Initiatives?
The 2022 Shareholder Impact Review report covers data from any corporate annual general meeting that occurred between 7/1/2021 – 6/30/2022.
This kind of active ownership covers a wide assortment of tactics used by investors to influence the companies they own on questions of corporate social responsibility. What is implicit in this work is an acknowledgement of the responsibility that comes with stock ownership. Shareholders need to ensure that management is doing what it can to improve its performance both financially and in terms of environmental, social, and governance (ESG) measures. Ensuring ESG is a fundamental driving force of a company is forward-thinking and has direct implications for communities where they operate and throughout their global supply chains.
In the case of As You Sow, the non-profit has the goal to work collaboratively with companies to raise and address shareholder concerns about material risk.
Unless there are extenuating circumstances, they generally begin by sending a letter. That begins a process that involves one or more dialogues with a company to attempt to resolve the issue prior to escalation of the issue by filing a shareholder resolution. Many times the questions are answered during an engagement, and the company agrees with the terms presented. That typically involves public disclosure of material information.
In other instances, a company will agree to investigate an issue or take other actions. If a company is not willing or able to address the concern, As You Sow may submit a resolution to be voted on at the company’s annual general meeting. Engagement and dialogues often continue after the proposal is filed and then again after the annual general meeting.
Here are some of the As You Sow shareholder engagements that the cleantech community will want to analyze.
- Autozone: 70.4% in favor to reduce operational and supply chain GHG emissions in alignment with Paris Agreement’s 1.5 degree Celsius goal.
- Boeing: 91.4% in favor of a Net Zero climate transition plan. (Note: This resolution was supported by the company.)
- Chevron: 38.7% in favor to improve climate related accounting disclosures and assess impacts of Net Zero by 2050 scenario.
- Chubb: 72.2% in favor to reduce GHG emissions from underwriting, insuring, and investment activities in alignment with the 1.5 degree Celsius goal.
- DTE Energy: 28.1% in favor to improve GHG emissions reduction targets.
- ExxonMobil: 51.0% in favor to improve climate related accounting disclosures and assess impacts of Net Zero by 2050. 36.5% in favor of reducing petrochemical risks through single-use plastics.
- Sysco: 92.1% in favor of Net Zero target and climate transition plan reporting.
- Tesla: 46.4% in favor of greater disclosure of material corporate diversity, equity, and inclusion data – 86.5% of independent shareholders voted in favor (46.4% of total shareholders voted in favor).
What’s the Mission behind As You Sow?
As You Sow was founded in 1992. They harness shareholder power to create lasting change by protecting human rights, reducing toxic waste, and aligning investments with values. Their mission is to promote environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies.
They envision a safe, just, and sustainable world in which protecting the environment and human rights is central to corporate decision making.
When corporations focus on the short term and ignore the wider impact of their policies and actions, they create risk for their customers, employees, shareholders, and themselves. Corporations are responsible for most of the pressing social and environmental problems the world faces today. As You Sow believes corporations must be a willing part of the solutions, and the non-profit makes that happen. As shareholder advocates, they directly engage corporate CEOs, senior management, and institutional investors to change corporations from the inside out.
As You Sow has been raising the shareholder voice to increase corporate responsibility on a broad range of environmental issues such as waste reduction and waste management, as well as social issues including racial justice, diversity, equity, and inclusion in the workplace. Shareholder advocacy works.
As shareholder advocates, they press corporations to understand this broader risk. They work directly with corporate executives to collaboratively develop business policies and practices that reduce risk, benefit brand reputation, and increase the bottom line, while bringing positive environmental and social change. Ultimately, companies that view the world in years, decades, and generations reduce their risk and improve success.
As You Sow changes corporations for good.
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