Home Depot and endangered wood, Wal-Mart and sweatshops, Monsanto and genetically engineered foods. Besides being the targets of activist protesting, these companies have all had pressure from their investors to do the right thing.
A year ago, Greenpeace made a decision that caused ripples in the environmental community. The group, known for daring tactics against corporate polluters, decided to invest in a company it was targeting—Shell Oil. Buying $250,000 in stock allowed Greenpeace to become a shareholder and file a resolution asking the company for a substantial increase in renewable energy technology investment.
Since then, many individuals have been contacting the Shareholder Action Network (SAN), a project of the Social Investment Forum in Washington, D.C., to find out how to get in on the shareholder action.
There are a plethora of options, from co-filing a resolution (if you own $2,000 of stock) and voting your proxies (ballots mailed to every shareholder) to writing letters to the CEO. Or you can choose to be involved in dialogues with corporate executives, convince your pension plan or portfolio managers to contact a company about an issue or temporarily “loan” your stock to an environmental nonprofit to file a proposal on your behalf.
Filing a Resolution
Filing a shareholder proposal requires legal savvy and expertise, and many socially responsible investing (SRI) professionals recommend getting guidance. “Start with co-filing a resolution under the direction of people like the Interfaith Center on Corporate Responsibility (ICCR),” recommends Carsten Henningsen, chairman of Portfolio 21, an environmentally focused mutual fund. ICCR has been at the forefront of filing resolutions since the 1970s, when it took action to pull companies out of South Africa during the apartheid era. “If you have people filing that don’t have political sensitivities, or that aren’t aware of others’ strategies, it could cause harm to shareholder efforts,” he stresses.
David Todd, a resident of Austin, Texas, co-filed several resolutions in 2001 and agrees that having an organization file on your behalf, and keeping informed of their progress, is the best way to learn. “Management takes resolutions extremely seriously because negotiations are with shareholders—who are the ultimate owners,” says Todd. “And the companies are publishing the resolution at their own expense.”
Proxy ballots, adds Todd, are key to putting your foot in the corporate door. “Shareholders have a responsibility to read and vote their proxy, but the process can be overwhelming,” says Henningsen. “Individuals can become members of organizations like ICCR and get a directory of resolutions. It makes it easier to wade through the materials.”
Pension Plans and Mutual Funds
What if you don’t own your investments directly but have stocks in a mutual fund or pension plan managed by others? “Ask for its voting policy, or speak with your money manager and get the proxy voting record from the previous year,” says Simon Billenness, Trillium Asset Management’s senior research analyst. “And if a mutual fund company refuses to disclose its proxy policies, you should switch to a fund that will.”
But be tenacious. “Only after a hundred calls from individuals will some fund managers take notice and do something,” says Conrad Mackerron of the As You Sow Foundation, a nonprofit emphasizing shareholder actions. “But companies need to hear from real investors, not special-interest groups, about their concerns.”
Become Pen Pals with a CEO
Indigo Teiwes-Cain, a research analyst with Portfolio 21, advises activists to use their communication skills. “Writing letters to the CEO is effective for individuals if your money manager is not taking action,” she says. Dozens of websites allow you to send a personalized letter instantly. The SAN homepage, for instance, features letters on sweatshops, genetically modified foods, global warming and predatory lending. Shareholder action goes beyond social screening to avoid preaching to the choir, says Todd. And, he believes, that’s more important now than ever. “We have an MBA [Masters of Business Administration] running the country,” he says. “And if America becomes more corporate, I want it to be a socially responsible corporation. Shareholder activism is one way to cast your vote—especially if it wasn’t counted last November.”