Responsible Investing
Open MIC’s work in media justice intersects with one of the fastest growing segments of the investment industry – Socially Responsible Investing (SRI). SRI investors consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. In recent years, the field has often also come to be referred to as sustainable investing, impact investing, ethical investing, triple-bottom-line investing or green investing.
Whatever one calls it, the Financial Times notes, “underlying these differing names is a common theme focused on long-term value creation. Value in this context refers not only to economic value, but to the broader values of fairness, justice, and environmental sustainability.”
And the sector is expanding dramatically, increasing more than 76 percent over a recent two-year period, to $6.57 trillion or more at the end of 2013, according to the US SIF Foundation. That means one out of every six dollars under professional investment management in the United States today is involved in some form of socially responsible investing.
Shareholder Engagement
One aspect of socially responsible investing involves shareholder engagement.
Owning shares in a company enables investors to raise environmental, social and corporate governance issues with corporate management. They often do this by filing or co-filing shareholder proposals (also called resolutions) which are voted on annually by a company’s shareholders.
The very act of filing a proposal can lead to productive discussions with a company, sometimes leading to withdrawal of a proposal. US SIF, the professional association for socially responsible investment firms, notes: “Often, a shareholder resolution will fail to win a majority of the shares voted, but still succeed in persuading management to adopt some or all of the requested changes because the resolution was favored by a significant number of shareholders.’
As the advisory firm Domini Social Investments puts it: “We use our stock funds to talk to the companies we own, discussing everything from global climate change to sweatshop issues to making products in a safer way. Gradually, companies are coming to understand what we already know — that they can improve their behavior and still make a profit.”
Most shareholder proposals will not gain majority support. Once submitted for a vote, a proposal must win a certain minimum threshold of voting support, as set by the Securities and Exchange Commission, before it can be resubmitted again in a subsequent year.
Shareholder engagement can also involve building investor coalitions to press for broad changes on a particular subject or involving a particular industry. Investors can also work with regulatory agencies, collaborate with non-governmental organizations, and testify before legislative bodies.
In 2016 institutional investors filed some 442 shareholder proposals on environmental, social and governance issues, according to Proxy Preview. Among the most common concerns: climate change; corporate lobbying and political spending; human rights; CEO pay; sustainability reporting: and how companies can avoid risks in conflict zones and their global supply chains.