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Investors push stakeholder protections with shareholder resolutions



ImpactAlpha, June 23 – This season, shareholder resolutions involving human rights and worker rights made up the largest category for the first time, edging out climate-related concerns.

With resolutions prepared months in advance, management skirted flashpoint issues such as worker health and safety, inequality, and racial justice set off by the COVID crisis and the killing of George Floyd. Proxy veterans expect these issues to dominate annual general meetings next year. Also likely to be on the agenda: excessive stock buybacks and scrutiny of executive pay at companies that laid off employees.

“Investors need to be engaging companies and pushing companies much more about addressing systemic risk rather than chasing short-term profit,” the Interfaith Center on Corporate Responsibility’s Josh Zinner told ImpactAlpha. “The COVID crisis and the movement for racial justice have exposed and accelerated the urgent need for a real form of stakeholder capitalism.” 

Stakeholders stake new claims on corporate cash to finance an inclusive recovery

Protecting shareholder voices

The proxy process has helped move issues like gender diversity and emissions reporting from the fringes to corporate policy. But new rules proposed by the Securities & Exchange Commission would make it harder for investors to file resolutions and get independent advice.

The changes amount to “the biggest attack on shareholder rights in its history,” write the Council of Institutional Investors’ Ken Bertsch and US SIF’s Lisa Woll in a guest post on ImpactAlpha.

The rules, which could be finalized this summer, “would move power from investors to company management” and “prevent emerging environmental, social and governance issues from receiving the attention they merit,” they write. The pair urge the S.E.C. to withdraw the proposals and “continue to honor its mission to protect investors.” 

SEC vote weakens corporate accountability and shareholder engagement

Workers and consumers

Americans for Financial Reform last week called on SEC chair Jay Clayton – who is being considered as a replacement for fired Manhattan U.S. attorney Geoffrey Berman – to mandate that companies publicly disclose steps they are taking to protect workers, prevent the spread of the Coronavirus, and responsibly use any federal aid they receive.

The COVID crisis has shown that human rights, worker protection and supply chain matters are relevant to companies’ financial performance, said the letter, which was signed by 98 investors, state treasurers, labor unions, asset managers and others. “Businesses that protect workers and consumers will be better positioned to continue operations and respond to consumer demand throughout the pandemic.”

Climate wins

Climate resolutions won record support this year. That may have been helped along by BlackRock, a recent Climate Action 100+ signator. Although its full voting record has not yet been disclosed, BlackRock logged key votes against companies on the climate group’s target list.

‘Stewardship’ under scrutiny as shareholder season gets started

Among them: votes against two Exxon board members for insufficient progress on climate reporting and action; and votes in favor of disclosure of climate-related lobbying at Exxon and Chevron. The giant asset manager has come under fire in past seasons for not taking a stand.

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