How can you use your investments to create a greener world? If you own individual stocks in a company, you’re a shareholder, and can use that power to push for greater corporate responsibility.
If you own stock, you have a voice in how companies are run. As a stockholder, you can be a shareholder activist for social and environmental issues you care about that are affected by the companies in which you invest. Take any or all of these steps to improve corporate conduct:
Strategies for Shareholder Activism
1. Vote your proxies
If you own direct company stock in a publicly traded company, not stock through a pooled investment like a mutual fund, you will receive an invitation to the company’s annual meeting of shareholders and a proxy ballot for voting your shares. To make sure that corporate managers know that shareholders want improvements in social and environmental performance, not just increased profits, it's important to vote your proxies.
Proxy ballots arrive together with the proxy statement, which is a booklet that presents the details of the proposals that shareholders will vote on. Proxy voting is the primary forum where management seeks affirmation of what it is doing, and where shareowners weigh in on important issues. You can vote at the in-person meeting or you may use postal or electronic means.
2. Write letters and work with others
If you’re unhappy with corporate behavior, request a conversation with management about your concern. Letters from individual investors and consumers calling for specific changes to corporate conduct and or policy can be very useful. In a letter, shareholders identify their concerns and let management know that the company’s behavior and impacts are being monitored.
As a consumer, you can bolster current shareholder campaigns by writing letters to company management, communicating your concerns. When consumers and citizens join shareholder activists to pursue corporate reform, the combined pressure can achieve far more than either group would separately.
If conversations go nowhere, or if a company refuses to discuss issues with shareholders at all, concerned investors (mostly institutional investors) will introduce shareholder resolutions. Please see our Shareholder Resolution Focus List. Resolutions are different from letters sent to management because they have the opportunity to be voted upon by all the company's investors. Do vote your proxies!
Green America is proud to co-sponsor the annual Proxy Preview, produced by As You Sow, the Sustainable Investments Institute, and Proxy Impact. This booklet encapsulates recent shareholder trends and describes upcoming shareholder resolutions on social, environmental, and corporate governance issues. Hundreds of social and environmental resolutions are filed each year, ensuring that many of the concerns raised by consumers, civil society organizations, and others are heard by corporate management.
3. Attend an annual meeting
As a shareholder, you have the right to present your views on current shareholder resolutions at the companies' annual meetings. When you receive your proxy statement by mail, you also should receive information detailing the location, date, and time of the company's annual meeting, along with instructions for how to attend. Be sure to ask your broker or adviser for this information if you don't receive your proxy statement at home, or call the company's investor relations department for information if it's not mailed to you.
Before you go, be sure to double-check the rules for your meeting (in your proxy statement or by calling investor relations), because every meeting is different.
Your presence can make a difference. Other shareholders in attendance may change their votes based on the speakers at a meeting, and large turn-outs for resolutions can attract the attention of corporate management, other shareholders, and the media.
4. Loan your shares to others
If you own shares in a company and can't attend its annual meeting, you can let someone else go in your place and speak up on the issues that are important to you. If someone you know would like to attend an annual meeting as an advocate, you can plan with that person directly.
You'll need to send a letter that gives permission for him or her to attend the meeting in your place (two sentences giving your name, the person's name, and the date and place of the meeting is sufficient), plus proof of your share ownership. This is usually a photocopy of a statement from your broker or online stock-trading account showing that you own shares and purchased them within the required time frame. If you work with a financial planner, s/he should be able to fax you the necessary proof of ownership. The person who's attending in your place will need to bring these documents to the meeting, along with a valid photo ID. You can either send your proxy ballot by mail prior to the meeting or give it to him or her to deliver.
If dialogues and shareholder resolutions don’t work to persuade a corporation to adopt a social or environmental policy, shareholder activists may turn to divestment—or selling off their shares—as a means of getting their message across. Divestment demonstrates to a corporation that socially or environmentally irresponsible actions and policies are going to negatively affect the company's bottom line. As an individual investor, you don't have to wait for a shareholder action organization to conduct a divestment campaign if you're uncomfortable with a company or mutual fund in your portfolio. If you haven't seen change for the better, you can choose to divest a company's stock on your own. Be sure to write to management and tell them why you've divested.
In the 1990s, activists convinced companies to divest from business in South Africa to put pressure on that government to abolish apartheid. The campaign was hugely successful and gave rise to modern divestment movements. In recent years, university students in the US and internationally have demanded their schools divest from fossil fuels in a variety of ongoing campaigns, resulting in at least 108 schools committed to divesting all or part of their endowments as of 2017, according to 350.org's Fossil Free Project. Cities and countries have also committed to divesting government funds from fossil fuels companies. Beginning in 2016, divestment was used by protesters of the Dakota Access Pipeline, who asked individuals and cities to remove their investments from the 17 national and international banks giving loans to the building company.
6. Hold mutual funds accountable for their voting practices
Mutual funds are legally required to disclose their voting records. Since the managers of most mutual funds vote in line with corporate management, they seldom support social or environmental resolutions.
You can check the websites of your funds to see their voting records. You can also encourage fund managers to vote for social and environmental resolutions by:
- Keeping track of social resolutions voted on by your mutual fund managers. Let investor relations know how you feel about their votes. If fund managers have voted against a resolution you supported, tell investor relations you're disappointed, and explain why.
- If you know of a social resolution at a company that's about to come up for a vote—and your fund is invested in that company—contact the investor relations department before the vote. Recommend that fund managers support the social resolution, and explain why.
- If your fund is unresponsive to your concerns and continues to vote against social resolutions, consider switching to funds that vote in ways that support your values—and be sure to let the fund's investor relations department know why you're leaving that fund.
7. Encourage your pension funds to get involved
If you have money invested in a public, labor, or private pension fund (you’d know if you have one), encourage your fund managers to get involved with shareholder activism. Write letters or call and ask them to disclose how they are voting their proxies. When you're not pleased with their votes, be sure to let them know.
Gather support of coworkers or others who are invested in the same fund and approach fund managers together, asking them to support social and environmental resolutions.