Shareholder advocacy encompasses a variety of strategies responsible investors can use to engage with companies in their investment portfolios about environmental, social, and corporate governance issues. Shareholders are owners of the public corporations they invest in, and this comes with a set of shareholder rights which enable investors to engage with corporate leadership on issues of concern. Faith-based investors have a long history of using shareholder advocacy to bring attention to important corporate social responsibility issues to prompt companies to take action and contribute to positive outcomes for society.
A dialogue is a meeting between investors and company representatives to discuss key environmental, social, and/or governance concerns. Shareholders may identify certain risks within a companies business activities that should be addressed and we seek to raise awareness of the issue, understand how the company is addressing it, and encourage adopting or amending a policy, conducting a risk assessment, or increasing transparency in public disclosures. Company representatives from relevant business functions and investor relations may participate. IASJ approaches these dialogues to build relationships and shared understanding, and our goal is to be constructive rather than antagonistic, as investors have an interest in the company’s long-term performance alongside an interest in pursuing specific advocacy goals.
When investors identify a risk that is not being properly managed within a company and are unable to influence the company through other strategies, they may file a shareholder resolution, which is a proposal that all shareholders have an opportunity to vote on at the company’s Annual General Meeting (AGM). This process serves to bring more attention to the issue within the company and its Board of Directors, while raising awareness among the investor community. Investors that have held at least $2,000 worth of shares for at least one year, and will hold those shares through the AGM have the right to file. Shareholder proposals are limited to 500 words and are subject to rules governed by the Securities and Exchange Commission (SEC), known as Rule 14a-8 or the Shareholder Proposal Rule. Investors must attend the AGM to move the resolution. Resolutions allow responsible investors to raise important social, environmental, and governance concerns that would not otherwise be raised by management at an AGM. See recent IASJ shareholder resolutions here.
All investors have the right to cast a ballot annually on the proxy statement of companies where they hold shares. Proxy voting allows investors to vote on resolutions proposed by corporate management as well as other shareholders. Management proposals typically include a vote on Board of Directors slate, executive compensation, and approval of the auditor. While most companies hold in-person meetings, investors generally cast their votes online. The establishment of proxy voting guidelines that are aligned with principles of socially responsible investing enables investors to ensure that they are electing boards with diverse and independent members, supporting fair executive compensation packages, and shareholder proposals seeking to address social and environmental concerns.
Shareholders of record in a company can attend the AGM, which presents an opportunity to ask a question or meet with Board members or senior management e member. Investors may provide a proxy to stakeholders interested in attending the AGM.
Investors often communicate with companies via investor letters, which may be sent by an individual institutional investor or a group of investors. Letters provide an opportunity to commend a company, raise an issue of concern, or request a dialogue.
Investors may weigh in on public policy as appropriate when it pertains to actions by legislators to strengthen or weaken regulations that govern the activities of corporations. This may take the form of submitting feedback during public comment periods, attending hearings, or meeting with representatives on Capitol Hill.