As voting results in California are tabulated, another type of voting that has caught the eye of investors—proxy voting. Sustainvest Asset Management, an independent investment advisory firm located in Petaluma, CA, received over 44,700,000 votes in favor of a shareholder proposal introduced to $37 Billion-dollar pharmaceutical company Actavis, Inc. (ACT). The shareholder proposal asked the company to release a public Sustainability Report to speak on their initiatives towards becoming a more “green” company.
Actavis currently does not publicly disclose their efforts with CO2 output, energy efficiency initiatives, etc. Dale Wannen, CEO of Sustainvest Asset Management reports the resolution received approximately 43% in favor of, a high number for shareholder activism.
Why should management at Actavis care about the votes from a shareholder in little old Petaluma? The fact that this resolution received over 40% of the shareholders voting in favor should definitely get Actavis’ board of directors and executive management team to start seriously considering their efforts in sustainability. Hopefully, Actavis will act before next proxy season.
This is really about showing shareholders initiatives for anything from reducing greenhouse gas emissions to waste reduction targets to using recycled paper in their offices. Since Actavis doesn’t publicly show any type of report, we, as shareholders, have a right to ask them why not and use the power of the proxy to do so.
In a recent report issued by the Governance & Accountability Institute 53% of the S&P 500 companies are reporting on their environmental, social and governance (ESG) impact through a public Sustainability Report.
Before the annual shareholder meeting, packets of information containing the proxy statement are sent to all shareholders. The proxy statement contains information about the topics to be covered at the annual meeting, including nominations for the board of directors and the pay packages of the top executives. There are also proposals from management as well as shareholder proposals similar to the one presented by Sustainvest.
In most cases, management opposes these proposals and urges shareholders to vote against them. However, management may negotiate with activist investors to make changes in corporate policy to avoid the threat of a shareholder proposal. Actavis held their annual shareholder meeting in Dublin, Ireland. A representative residing in Ireland was able to represent the resolution at the meeting.
Sustainvest Asset Management, LLC is an independent registered investment advisory firm focused on integrating sustainable and responsible investing into investment management.