The Appleseed Fund, a sponsor of the recent #AllinForImpact SRI Conference, leverages its role as a shareholder advocate to encourage boards and management teams to become more transparent and responsible with regard to ESG matters. They believe investors can have significant influence on the companies they own through informal engagement, proxy voting and submitting shareholder resolutions.
Two recent examples:
- Appleseed Fund has twice filed a shareholder resolution with Nabors Industries, an energy service company, asking the company to begin publishing an annual sustainability report and that management provide transparency on the link between executive compensation and its financial and environmental and social performance.
The last resolution was supported by a majority of voters at the June 2015 annual meeting, but ultimately failed due to controversial vote-counting practices by Nabors, whose by-laws call for counting abstentions and broker non-votes as opposition votes in all shareholders proposals. Nabors management has indicated that it intends to provide more transparency regarding ESG reporting. Appleseed is in conversations with Nabors about its plans, but also is planning to refile the resolution.
- Appleseed also co-filed a shareholder resolution with Domini Social Investments to develop a time-bound plan for Avon Products to source sustainable palm oil. Avon committed to a number of steps toward the goal.
Adam Strauss, an Appleseed Fund portfolio co-manager, noted the following:
As socially conscious investors, we always look to invest in companies that are leaders in their respective industries with regard to environmental, social, and governance issues. However, no company is perfect, and every company has opportunities for improvement in these areas.
This is why shareholder engagement is so important to us. It allows us to engage directly with management on these critical issues and provides us with a means to help make good companies even better. We have a responsibility to ensure that our investors’ voices are heard and that their values are reflected in the companies that we own.
Shareholder engagement is one of the most important and most powerful ways that we can fulfill that responsibility.