Thinking Capital™

By Matt Patsky, CFA
Fall 2014:  When I meet folks who are exploring how to align their investments with their values, the perception of “shareholder advocacy” is often that it is an antagonistic relationship between shareowners and company management. Historically, that is a fair assessment and even today some companies try to convince the Securities and Exchange Commission to omit shareholder proposals from concerned investors. It is also true that some companies dig in their heels on an issue for years, contrary to their own best interest. ExxonMobil’s ongoing 15 year refusal to update their non-discrimination policy to protect LGBT employees, stubbornly remaining an outlier in their industry, is an example of this behavior.
Over the past decade, however, we have seen a shift in company managements’ view of shareholder engagement. Remember, as shareholders we want the companies we own to do well – increasing in both value and share price. There is a growing awareness, even in long-established companies, that we exist in a rapidly changing and resource-constrained economy and that companies willing to adapt are better positioned to grow and thrive.
If you visit the “Shareholder Proposal” page on our website, you will notice that proposals that we file or co-file are often successfully withdrawn following discussions with companies. Proposals regarding the disclosure of political and lobbying spending, which were controversial and antagonistic a few years ago, are now routinely withdrawn after a company commits to a meaningful change. The same goes for recent proposals filed on board and executive diversity.
Enormous challenges remain. More than three decades after our firm was founded, climate change remains the defining investment issue of our generation. During the 2014 shareholder season, concerned investors – including Trillium – filed 142 climate-related shareholder proposals with 118 companies. We are asking companies to adopt and report on company-wide goals for reducing greenhouse gas emissions. Individual successes, however, may not be enough when compared to the devastating consequence of inaction. Unfortunately, I suspect that we will have to continue pressing companies, and lawmakers, to take action on climate change for decades to come.
Editor’s Note:  This column was originally published in the Fall 2014 issue of Trillium’s newsletter, Investing For a Better World.