Monthly Archives: August 2016

The Impact of Equity Engagement

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By Timothy Smith, Director of ESG Shareowner Engagement at Walden Asset Management, a division of Boston Trust & Investment Management Company

One of the approaches used by investors to engage companies in which they own shares has been a combination of dialogue and shareholder resolutions. For over 45 years investors have utilized their right as shareowners to file resolutions for a discussion and a vote at a  company’s  annual stockholder meeting . These resolutions have included a wide range of governance , social and environmental issues. Many of them ask for companies to expand their reporting and disclosure on an issue. Others seek a change in company policies or practices.

Companies respond in very different ways to these “ petitions”. Some are defensive and hostile, others are polite but still reserved, others see this as a positive opportunity for dialogue with an investor and seek to find a win/win agreement.

Increasingly companies have responded with constructive discussions with investors.  Often these resolutions are the foundation for discussion and are  withdrawn when an agreement is reached . On other occasions the resolution is included in the proxy and voted on at the annual stockholder meeting.

One of the often asked questions is whether engagements and resolutions have any positive impact or if they are just an example of a Don Quixote shareholder tilting at corporate windmills .

I have had the opportunity to be part of such shareholder engagements for over 45 years so can point to numerous examples of this “ exercise” bearing no fruit while others are very effective and result in long term changes by companies. We believe the record shows that such prodding/persuasion by investors has resulted in significant and specific changes by many companies on a wide range of issues.

The “ impact “ of such engagement is chronicled in a 2014 report by the Croatan Institute in concert with a number of investors including Walden . For those interested in this strategy this report is a very useful resource.

These other materials from Walden help make the point about the effective impact of shareholder engagement.

Hear more from Timothy at our upcoming ESG Impact Investing track on August 23. The track is part of CFA Society Minnesota’s annual investor conference, investMNt. Learn more here & register today!

 

Since 1975, Walden Asset Management has specialized in managing portfolios for institutional and individual clients with a dual investment mandate: competitive financial returns and positive social and environmental impact. Walden is an industry leader in integrating ESG analysis into investment decision-making and company engagement to strengthen ESG performance, transparency and accountability. Walden is a division of Boston Trust & Investment Management Company, a PRI signatory.