If you own a stock—even one share—you are a part business owner (or shareholder) of that company. This gives you the opportunity to have your say on how the company is governed through your right to submit a proxy vote. You can vote on issues like board elections, executive compensation, and policy changes. And you can make your voice heard on critical issues like climate change, racial equity, and workplace rights.
Investors without a financial advisor—or who have not granted their advisor the authority to submit proxy votes on their behalf—may find these ballots buried in their e-mail inbox or may be unsure of the best way to vote in order to reflect their values. And it’s for this reason Natural Investments votes most of our clients’ proxies upon being granted that authority, as we are more aware of the issues on the hundreds of ballots each year. And if not, we have the resources to research them in order to cast appropriate votes.
Navigating the complexities of proxy voting and your influence as a shareholder might seem overwhelming, but we break it down for you to make voting your values simple—with or without an advisor.
SIMPLIFYING THE PROCESS FOR CLIENTS & INVESTORS
To simplify the voting process across our 3,800-plus Schwab accounts, Natural Investments centralized proxy voting on the Broadridge ProxyEdge platform a few years ago. The platform imports all accounts from Schwab and aggregates them by proxy so that ballots for each company can be voted on simultaneously across all accounts firmwide that hold the security.
We timed this transition to coincide with Broadridge’s integration of AS YOU VOTE™, the proxy voting suggestions produced by our colleagues at the nonprofit organization As You Sow. Founded in 1992, As You Sow promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies, and has published annual environmental, social, and governance (ESG) proxy voting guidelines that closely align with our positions on many issues. As such, As You Sow has informed our voting decisions for years. In launching AS YOU VOTE™ in 2021, these voting recommendations now appear next to those supported by corporate management at Broadridge. While Natural Investments can go along with the AS YOU VOTE™ recommendations—or change a vote on any issue—it’s very helpful to know where As You Sow stands because it studies the ballots and issues closely.
As You Sow simultaneously launched AS YOU VOTE™ for the general public in partnership with Proxy Impact using the iconik® platform. This proxy voting service is available free of charge to individual investors with or without an advisor. The iconik® platform can auto-vote all shares to match As You Sow’s voting profile, but investors may also change individual votes on a ballot if desired.
AS YOU VOTE™ has developed proxy voting guidelines for management resolutions and shareholder resolutions. Annual proxy statements typically include management resolutions put forth by the company, such as board member elections and executive compensation. Two examples of specific votes cast using the AS YOU VOTE™ guidelines are: (1) opposing the election of a director when the CEO also serves as the board chair; and (2) voting against executive compensation when CEO pay is greater than the 75th percentile of peers. They also withhold votes for directors who have failed to set adequate net-zero targets reducing greenhouse gas emissions in alignment with the Paris Agreement.
AN OVERVIEW OF SHAREHOLDER RESOLUTIONS
In addition to management resolutions, there are several hundred shareholder resolutions filed each year. More than 500 were filed as of March 2024, according to the Proxy Preview 2024 report from As You Sow, Sustainable Investments Institute, and Proxy Impact. About one-third were on environmental topics and about 30 percent on diversity, as well as human and worker’s rights. Some of the new proposals this proxy season asked companies about their use of artificial intelligence (AI). The number of shareholder resolutions is expected to reach more than 600 by the end of the year.
Below are a sample of resolutions supported by the guidelines developed by AS YOU VOTE™, as detailed in their 2024 Proxy Voting Guidelines. They will vote for a resolution that asks a company to:
- Adopt a policy and report on plans to increase the number of women and racially diverse board members
- Adopt and report on guidelines for ethical use of AI in business operations
- Report on goals to reduce scope 3 emissions, which the EPA defines as emissions both upstream (employees commuting, etc.) and downstream (use of products, investments, etc.) of the organization’s activities
- Report on fossil fuel financing and underwriting
- Report on reducing packaging and plastic pollution
- Adopt a policy on paid family leave
- Report on gender and racial pay disparity
- Report on financing of pipelines on Indigenous Peoples’ lands
- Report on nuclear weapons financing
- Report on the effectiveness of diversity, equity, and inclusion programs
- Commission an LGBTQIA independent audit
Natural Investments was able to submit around 1,000 proxy ballots on behalf of clients this proxy season. Here are some examples of the shareholder resolutions we voted for, although they were ultimately rejected by the majority of shareholders:
- Amazon: Report on scope 3 greenhouse gas emissions, plastics pollution, lobbying, warehouse
- working conditions, gender and racial pay disparity, and living wage metrics
- Berkshire Hathaway: Report on greenhouse gas emissions data and progress towards decarbonization
- Ford: Conduct a child labor audit and report on supply chain transparency
- Pfizer: Report on political, lobbying, and electioneering expenditures
- Toyota: Report annually on the alignment with climate-related lobbying activities and the goals of the Paris Agreement
- Walmart: Report on a human rights impact assessment; racial justice impacts and plans; adopt living wage principles; commission worker health and safety audit; and purchase from humane animal facilities
While owners of a stock have the right to submit a proxy vote, investors in mutual funds and ETFs cannot vote the shares of companies within the fund.
The fund manager typically does that because they own the underlying assets. However, the mutual funds included in model portfolios used by Natural Investments are very active in shareholder advocacy. For example, Green Century Funds shared that they won commitments from 26 companies on environmental issues in 2024. Green Century worked with Microsoft to lengthen the lifespan of its computers by extending Windows 10 security updates. This could potentially prevent up to 400 million computers from becoming electronic waste in the coming years. Another example of a win from Green Century is that Costco, the world’s third largest retailer, developed a five-year action plan to reduce plastics packaging by the end of the year.
Most of us think of November as the time to cast our vote in general elections and have our say in what we hope for the world. If you are a stockholder, every spring during proxy season is another chance to make your voice heard and push corporations to do better as we strive for a more sustainable and equitable world.