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The Votes Are In: Proxy Season 2013
By Holly Testa, Director, Shareowner Engagement

First Affirmative recently reported on a very productive proxy season. However, we are but a small piece of the shareowner engagement puzzle, so let’s take broader look at proxy season 2013.

The Big Picture

Research from Sustainable Investments Institute (SI2) finds strengthening investor support for shareholder resolutions. Over 400 environmental and social policy resolutions have been filed year-to-date. Resolutions requesting reports on the governance of and contributions to political campaigns and lobbying activities accounted for almost one third of the total in 2013. Average shareholder support is over 20%. About 100 resolutions earned over 20% of the vote, which is remarkable considering the fact that a decade ago average support was 10% and fewer than 30 resolutions exceeded 20% support.

Companies are now more likely to respond to shareowner concerns—more than one-third of proposals were withdrawn after successful negotiation. According to Heidi Welsh, Executive Director of SI2, “Companies can’t ignore these votes, and the growing number of negotiated agreements shows they increasingly are listening to their investors. This trend puts more pressure on firms that don’t pay attention to these initiatives.”

It’s Global Warming, Stupid

Some might quibble with details in the widely read Bloomberg Businessweek article, but few would deny the catalyzing effect of Hurricane Sandy and the subsequent focus on climate change as a primary contributing cause. Investor members of CERES, including First Affirmative, have capitalized on the renewed scrutiny of climate change risk. Ceres members filed 110 resolutions engaging companies on issues related to climate change and sustainability.

A groundbreaking new resolution introduced at CONSUL Energy by As You Sow asked the company to address impacts of the possible write-down of two thirds of fossil fuel reserves that would be left in the ground if regulation limited global warming to 2° C. It received 20% support—a very strong showing for a first time resolution that sets the stage for future filings at companies vulnerable to the emerging carbon bubble stranded asset risk.

Members of Investors Environmental Health Network (IEHN) focused on specific environmental issues, filing 14 resolutions focusing on hydraulic fracturing risk, lead acid battery recycling, and toxics in consumer products. Over half were withdrawn.

Political Spending

Two investor coalitions led by the Center for Political Accountability and Interfaith Center on Corporate Responsibility continue to press companies on appropriate oversight and disclosure of political expenditures. The tide may be turning, as many companies have responded to investor pressure and now disclose campaign spending.

There is now a drive to mandate such disclosures for all public companies. A petition to the SEC asking them to issue rules on political spending received a staggering half-million comments. The related campaign on lobbying expenditures saw over 40 resolutions go to a vote, achieving average support of over 25% and a first majority vote.

Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: September 4, 2013