Shareholder Engagement Numbers
Shareholder advocacy continues to be a core focus of our work, despite significant challenges stemming from changes in SEC policy that threaten to weaken shareholder rights. For instance, a November SEC announcement gave companies the ability to unilaterally exclude shareholder proposals from their proxy statements. Additional rulemaking has also limited shareholders’ ability to file memos on the SEC website, as a way to raise awareness and support for shareholder proposals among other investors.
Despite these changes, we expect that for now most companies will continue to include shareholder resolutions on their proxy statements. We also have other avenues for publicizing those resolutions among investors at large. We will therefore continue our efforts to bring broadly held Quaker values to the companies we hold this proxy season, using the tools available to us and, in some cases, seeking creative new points of leverage as well.
Our advocacy focus remains on systemic issues to mitigate risk and support long-term shareholder value in invested companies. This proxy season we have engaged 40 companies, leading to the filing of 16 shareholder resolutions, 8 of which we acted as the lead filer of the proposal.
Human Rights and Worker Rights
We’ve continued our work on health equity, partnering with the Interfaith Center on Corporate Responsibility to engage large pharmaceutical companies on issues including drug pricing, good governance and the human right to health. We’ve also continued engaging companies on supporting a living wage for all workers, specifically in the restaurant industry, where tipped workers are paid significantly less than minimum wage, exacerbating inequality. Research has shown that in states providing minimum wage in tipped industries, businesses do just as well or better than their counterparts in other states who continue to pay below minimum wage.
As in past years, engaging tech companies on the use of their products and/or services in conflict-affected and high-risk areas (CAHRA) remains a priority issue area for Friends Fiduciary. More information on these engagements can be found in our Executive Director’s remarks.
We are similarly engaging companies in response to increasing concerns about possible connections to the US Immigration and Customs Enforcement agency (ICE). We have co-filed a resolution at a home improvement retailer focused on their partnership with a surveillance vendor, whose products allow for the collection of customer data that has been shared with ICE agents. This calls into question the company’s commitment to customer data privacy and concerns around the company being tied to the sharing of private data without due process.
Climate Change and Deforestation
We continue engaging many companies on their efforts to reduce greenhouse gas (GHG) emissions and address the negative impacts of climate change. This year we’re leading engagements with a branded food manufacturer and a supermarket chain on their GHG reduction target-setting and climate transition planning. As producers of their own branded products, both companies face similar concerns around climate impacts on their supply chains and the significant amount of scope 3 indirect GHG emissions from both upstream and downstream activities.
Supermarkets in general tend to have significant scope 3 emissions, with over 90% of their total carbon footprint coming from scope 3. While these companies have scope 1 and 2 targets, we are seeking more information on how they plan to reach those targets and, most importantly, how they will reduce scope 3 emissions. We are also raising concerns around deforestation within these engagements, particularly in light of the intense climate impacts in agricultural supply chains.
Good Governance and Continued Consideration of Climate and Diversity
This proxy season we have re-filed a proposal seeking the separation of the Board Chair and CEO positions at a large asset manager. This governance structure has been widely accepted as a best practice and has maintained significant support from investors at large.
We similarly continue to join fellow investors engaging large asset managers on their proxy voting policies and records. As backlash continues against the consideration of diversity and climate change in corporate risk mitigation, we are urging large asset managers to continue prioritizing these concerns in their stewardship and proxy voting processes.
Despite the disappointing pullback on corporate diversity efforts, we also continue to reach out to those companies whose boards we’ve voted against due to lack of diversity. This proxy season we’ve engaged five companies whose boards did not include any representation of people of color.
The Work Continues
At Friends Fiduciary we know that Quaker values are good business values. As long-term investors we seek to mitigate risk within the companies we hold to support their continued profitability. We know that every company must take into consideration their impacts on people and planet to avoid systemic risk and ensure continued success. We will continue to raise these concerns with the companies we hold and continue to bring Quaker values to corporations, in service of our goal of delivering the strongest possible financial returns to our constituents.