2020 Shareholder Advocacy Review

Natural Investments plays a proactive role within our industry by facilitating positive economic, social, and environmental change. One of the ways we push for the transformation we want to see is through shareholder engagement with companies, as well as advocacy with elected officials and federal agency commissioners on matters of public policy.

CORPORATE AND POLICY ENGAGEMENTS, RESOLUTIONS, AND LETTERS
In 2020, we participated in numerous environmental, social, and governance (ESG) activities on behalf of our clients on issues ranging from pandemic response and racial equity to shareholder rights and climate change. As the year drew to a close, we also seized upon the opportunity to frame the newly- elected administration’s business and finance agenda. Most of these engagements initiated long term processes that are still ongoing and have not yet achieved outcomes, but investor persistence continues to generate productive dialogue.

SUSTAINABLE FINANCE RECOMMENDATIONS TO THE BIDEN ADMINISTRATION
We contributed to an ESG industry policy paper, “Toward a Just and Sustainable Economy,” presented to the incoming Biden administration by USSIF: The Forum for Sustainable and Responsible Investment on behalf of its 150 member institutions. The proposal calls for the creation of a White House Office of Sustainable Finance and Business, staff at the Securities and Exchange Commission with expertise in sustainable investment (which has already happened!), and specific rules and procedures that protect and enhance shareholder rights, endorse pension plan use of ESG investments, and strengthen community development financial institutions. The transition team and early appointees of the Biden Administration have been receptive to our ideas thus far, although there are more pressing matters demanding their immediate attention.

COVID RESPONSE
At the outset of the pandemic in March 2020, we signed an Investor Statement on Coronavirus Response calling for all corporations to retain and prioritize the health and safety of workers, provide emergency paid leave, maintain supplier and customer relationships, and assure ethical, financial prudence.

We also wrote a letter to the former President and the leaders of Congress expressing concern about the lack of a comprehensive federal response to the pandemic and requested: a national mask mandate;
federal funding for testing, masks, and tracing; extended unemployment benefits; and $1 billion to support communities affected most by the pandemic, particularly communities of color. We were pleased that the $900 billion Congressional relief bill passed in December included $12 billion for community development financial institutions, including $1 billion targeted to minority lending institutions.

We engaged the Securities and Exchange Commission to request that it require companies to disclose workplace COVID-19 prevention and control plans, implement identification, tracing, and isolation policies, comply with quarantine orders, and reveal executive compensation and employee health care provisions.

We appealed to all the major pharmaceutical companies developing COVID-19 vaccinations to advocate for universal, equitable, and rapid global access to the intellectual property necessary to manufacture the vaccine to ensure that the scaling-up, manufacturing and distribution of vaccines is affordable for all. We signed letters to 30 corporations, including Apple, Verizon, General Motors, Citigroup, McDonald’s, Pfizer, and Starbucks, regarding the scope and adequacy of employee health care offerings during the pandemic. The letter called attention to the need for comprehensive reproductive health care for women, given the disruptions and costs associated with the pandemic. We requested that companies examine their insurance and benefits policies, public policy stances, and political spending priorities to further protect women from unnecessary outcomes. These engagements are ongoing, but there have been only a few successful dialogues to date.

RACIAL JUSTICE
We joined dozens of investment firms in signing the “Investor Statement of Solidarity to Address Systemic Racism and Call to Action” to dismantle systemic racism throughout society, address racial equity in our investments and our organizations, support police and prison reform, highlight Black voices in business and finance, and advance anti-racist public policies. We participated in more than a dozen engagements with Kellogg, Conagra, Kraft, Heinz, Amazon, Nestlé, Campbell Soup, Target, and other companies. We implored them to address food inequity, curtail manipulative and unfair marketing practices, and prioritize the health and resiliency of communities and their own workforces. We urged these companies to cease using their undue political influence to promulgate racial inequities that lead to adverse health outcomes and run counter to public health priorities. Many of these companies responded favorably to these requests and made commitments to improve in these realms.

We re-engaged management at FedEx, Nike, Pepsi, and Bank of America regarding their sponsorship of professional football teams with racist names and imagery. Months later, several teams, including the Washington football team and the Cleveland baseball team, citing pressure from these corporate sponsors, agreed to change their team names. Given that this anti-racist campaign has been going on for 30 years, its success was a significant victory for Native Americans and activists involved. Work continues on this issue with the Kansas City football team, the Chicago hockey team, and the Atlanta baseball team, among others.

We signed and sent to Congressional leaders and companies an Investor Statement in Support of Ending the Subminimum Wage, which demands full-wage pay and benefits for workers and an end to poor corporate wages, particularly at businesses where employees rely on tips. Poor corporate wages disproportionately impact people of color and women, keeping such workers perpetually below the poverty line, vulnerable to sexual harassment, and at greater risk of infection during a pandemic.

SHAREHOLDER RIGHTS
We participated in campaigns to prevent the Department of Labor and the SEC from implementing rules that discourage socially responsible investing by pension plans and curtail shareholder rights by making it difficult to file shareholder resolutions and weigh in on matters of critical importance to company risk mitigation.

While these rules were implemented at the 11th hour of the previous administration, a lawsuit is currently being organized against the SEC in an effort to halt implementation of the new rules. We are also engaging Congressional allies to use the Congressional Review Act to strike the rules down. At this time, it is unclear whether they are willing to use this power for this particular purpose, in light of the need to address the blitzkrieg of changes introduced by the previous administration in the eleventh hour, before it left office.

CLIMATE CHANGE
We signed several letters to Congressional leaders in support of their sponsored Green New Deal legislation.

We endorsed the Carbon Disclosure Project’s appeal to dozens of companies to disclose the impacts of company operations on the forests, air, and waters of the world.

We supported a letter to Congressional leaders in support of the Climate Risk Disclosure Act of 2019, which would enable investors to assess the risks to companies unwilling to disclose their climate risk. Our hope is that the new Senate leadership will take up the bill.

We supported a letter to dozens of companies, particularly the largest banks that loan to fossil fuel companies (such as Wells Fargo and JP Morgan Chase), to address the urgent need for comprehensive climate action. The letter also inquired about the inconsistency between the companies’ lobbying activities and the goals of the Paris Climate Agreement––and expressed investor expectations regarding such behavior and the potential corporate risks it creates. We requested that these companies align their own interests and lobbying activities with the industry associations of which they are a member and encourage such associations to adopt positions that acknowledge the materiality of climate risk.

We signed onto As You Sow’s letter to developed nations’ governments, along with 500 institutional investors representing $34 trillion in assets, demanding compliance with the Paris Agreement’s climate-change financial reporting standards and requiring private sector collaboration to reduce atmospheric carbon.

We signed onto a letter to natural gas producers and utility companies requesting that they pressure the EPA to not roll back previously established standards regulating oil and gas methane emissions. Methane capture is critical to address climate change and is a possible secondary revenue stream that must be properly regulated.

As a signatory to the Global Investor Engagement on Meat Sourcing, we signed onto letters orchestrated by Ceres and the FAIRR Initiative to McDonald’s, Chipotle, Yum! Brands, Domino’s, Wendy’s, and RBI (the owner of Burger King, Popeye’s, and Tim Horton’s) urging the companies to better manage water and environmental risk within their meat and dairy production, given their impact on greenhouse gas emissions and climate change.

We signed a letter to Cargill, Archer Daniels Midland, and others urging the companies to mitigate the consequences of their soy supply chain practices in South America, which is causing major land-use changes and massive deforestation in the Amazon.

We signed a letter to dozens of major insurance companies such as AIG, Liberty Mutual, Lloyd’s, and Travelers to not insure companies intending to drill for fossil fuels in the Arctic Refuge and to further publicly declare their intention to not invest in companies engaged in Arctic Refuge development.

FACEBOOK
We were among a dozen activist financial firms formally requesting that Facebook adopt more stringent standards of content moderation and enforcement, particularly regarding political ads and politicians’ posts, as well as human traffickers and groups spreading misinformation and toxic content. This would include proper identification of people opening accounts, special monitoring of closed and secret groups, banning minors from the platform, reforming algorithms used to spread misinformation and hate, and scheduling regular independent external audits of its policies and practices.

Tags: , ,

Michael Kramer

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.