Did you know that when you purchase a stock or an equity, that means you own a share of the company? As part owner of a publicly traded company, you have the right to influence its policies (even if you only own one share!). This is where shareholder advocacy, or shareholder activism, comes in. “Shareholder advocacy leverages the power of stock ownership in publicly-traded companies to promote environmental, social, and governance change from within.”
Here are 3 ways shareholder advocacy works:
Proxy voting
Shareholder resolutions
Company engagement
1. Proxy voting
Shareholders in publicly traded companies are entitled to vote their shares on items that are presented for a vote at a corporation’s annual meeting. If you are an investor in a mutual fund or other investment vehicle that does not allow you to vote your proxies directly, it is a good idea to find out how the fund's proxies will be voted on your behalf. You can also check to see whether your funds are voting according to socially responsible objectives.
2. Shareholder resolutions
A shareholder resolution is a non-binding recommendation to a public company’s board of directors. Anyone holding at least $2,000 worth of stock for at least one year prior to the filing deadline can introduce a resolution to be voted on at the company’s annual meeting through the proxy vote. The goal of a shareholder resolution is to influence company decision making and while the resolutions are only advisory, they are still a powerful way to advocate for change.
3. Company engagement
As owners of large quantities of company stock, fund managers have the opportunity to directly engage with company executives in order to raise issues that are important to their investors. In many instances, fund managers are able to encourage companies to create positive social and environmental change.
You might be wondering what this all means for you. First, make sure you educate yourself on shareholder advocacy and how you can take advantage of your investments to create change. Be sure to check out As You Sow, a non-profit that empowers shareholders to create corporate change. Second, invest with asset managers that represent your values. After all, money is power. Go ahead, let that power get to your head. Let’s use it for good.
