Four Fidelity funds recently backed an environmentalist proxy proposal for the first time on record, Ceres research found.
Even though the votes cast by Fidelity funds at MGM Mirage Fidelity’s usual abstentions on shareholder environmental proposals, it is a start. Reuthers (Fidelity records first ‘green’ proxy votes, 10/9/10) goes on to note:
Ceres found that like Fidelity, Pioneer Investments shifted to favor environmental resolutions for the first time this year, and that companies like T Rowe Price Group increased their support for such proposals. But a few managers including BlackRock Inc reduced support for climate-change resolutions this year, Ceres found.
Further movement by the likes of Fidelity could result in real transformation. Imagine if they begin to take a long term approach that says there’s little point in earning a bit more during the next quarter if doing so would contribute significantly to an inhabitable planet. Combine that with the idea that we will eventually be getting proxy access not only to the corporate proxy but to the mutual fund proxy.
Jennifer Taub of UMass Amherst recently wrote Access to the Mutual Fund Proxy, noting the mutual funds hold 24% of US corporate equity. Although access to mutual fund proxies has also been postponed, pending outcome of the lawsuit, eventually we can expect to get there. When we do, Taub notes:
Adding some competition to the board nomination process may increase board dependency upon fund shareholders. This may create more bargaining power in board negotiations with fund advisers over fees, expenses and other related matters. Given that boards are loathe to use the “nuclear option” and fire the fund adviser, gaining extra leverage to negotiate more strongly on behalf of fund investors is essential.
Mutual funds that are actually beholden to their shareowners. Isn’t that what the whole mutual concept was intended to accomplish?