Portfolios on the Ballot 2024

Portfolios on the Ballot 2024

Portfolios on the Ballot 2024 (POTB 2024), sponsored by The Shareholder Commons (TSC), is designed to guide investors in voting their proxies with a systems-first approach. I fully endorse this initiative. Their report emphasizes the importance of protecting the social and environmental systems that underpin the value of all companies within a diversified investment portfolio. I’m sorry I didn’t bring it to readers’ attention earlier. There is still time to register for the April 17th webinar. See the bottom of this post for registration links. 

By highlighting initiatives that safeguard entire portfolios from the detrimental actions of individual companies, POTB 2024 aims to shift investor focus. Systemic stewardship and collective action by diversified investors will lead to a just and sustainable economy. TSC underscores several vital areas where shareholder engagement and voting can significantly impact corporate behavior and, consequently, the broader economic and environmental landscape. 

Portfolios on the Ballot 2024: My Quick Take

Profit is the driver of business and capitalism. Profits come from solving problems and needs, but they can also be derived from creating problems or externalities. The purpose of business should be to produce solutions, not problems. As long as companies can profit at the expense of others, they will do so, but that contaminates competition. If my business internalizes its costs but my competitor externalizes theirs by polluting the environment or paying wages that need to be supplemented with government assistance, that’s unfair competition. Innovation intensifies and is more beneficial to society when business is channeled into solving problems instead of allowing unjust enrichment by creating costs to society or the environment.

Ideally, governments set guardrails to ensure businesses profits come from solving, not producing, problems. When I was much younger, people used to refer to big government, big business, and big labor as countervailing forces. With the erosion of labor unions and after Citizens United, it is clear that business interests now predominate.

Gallup polls find that most Americans are dissatisfied with the size and power of business. However, they also think there is too much regulation of business and industry. What can we do when business has too much influence, but people are afraid to give the government the power to regulate?

One solution is to elect governments we trust. Hopefully, many people will work on that during this presidential election year. Another tool that shareholders have is to use our admittedly weak corporate governance powers to establish guardrails on a company-by-company or industry-by-industry basis to ensure companies work to create solutions, not problems. The Shareholder Commons helps us with that vital task by taking a systemic approach to issues like climate change and antimicrobial resistance.

Even if we take a profit-maximizing approach, that will lead diversified investors down a different path than individual investors. The duty of a corporate director may be to maximize the profits of their individual corporation. However, by the same logic, the duty of diversified investors is to maximize the value of their portfolio, which comes much closer to maximizing the values of society. A portfolio approach will find more value in reducing externalities from any one company, since the costs to address such externalities may need to be picked up, at least in part, by additional taxes or other expenses made up by other companies.

Guardrails developed by investors using a systems approach might then be adopted by governments if they become widespread and win public support.

Portfolios on the Ballot 2024: Overview

  • Living Wage and Income Inequality: The report discusses how poverty wages and income inequality pose risks to the global economy and diversified investment portfolios. It argues that higher wages can increase productivity and consumption, benefiting the economy and investors. Corporate practices such as tax avoidance and underpaying workers exacerbate income inequality and threaten the economic systems that support diversified portfolios.
  • Corporate Governance: Good corporate governance ensures companies prioritize various issues impacting diversified investors. Effective governance structures provide transparency, accountability, and responsiveness to shareholder interests, enabling shareholders to elect directors and engage in corporate decision-making processes. For example, see my proposal Northern Trust 2024 Ascertain Client Voting Preferences.
  • Human Rights: Human rights can positively affect economic stability and growth. The report points out that human rights abuses in supply chains can lead to disruptions, emphasizing the financial benefits of respecting human rights and civil liberties1.
  • Public Health: A healthy population is vital for economic resilience and growth. The report advocates adequate and equitable public health measures to mitigate healthcare expenditures and foster a productive workforce, driving long-term financial stability.

Portfolios on the Ballot 2024: Call to Action

POTB 2024 calls for investors to adopt a systems-first perspective in their proxy voting, recognizing the interconnectedness of social, environmental, and governance issues and their collective impact on the value of diversified portfolios. Investors can create a more sustainable and equitable global economy by focusing on systemic risks and opportunities. The publication is part of TSC’s broader effort to promote system stewardship among investors, encouraging engagement with companies on systemic issues rather than divestment. TSC provides resources and assistance for investors interested in engaging directly with companies on a system-stewardship basis, including guidance on shareholder resolutions and using guardrails to establish minimum performance expectations for corporate behavior.

Investors can use “Portfolios on the Ballot” (POTB) 2024 to protect their diversified portfolios by adopting a systems-first approach to proxy voting, as advocated by The Shareholder Commons (TSC). This approach emphasizes the importance of considering the broader economic and environmental systems that underpin the value of all companies within an investor’s portfolio.

Portfolios on the Ballot 2024: Opportunities for Collaboration:

  1. Vote for Systemic Stewardship: POTB 2024 flags shareholder initiatives that feature strong systemic arguments, distinguishing system stewardship from strategies focusing solely on the enterprise value of individual companies. By voting for proposals that address systemic risks and opportunities, investors can contribute to the sustainability and resilience of the broader economic and environmental systems, ultimately protecting the long-term value of their diversified portfolios. (UNPRI)
  2. Engage in Shareholder Campaigns: The guide includes nearly 60 shareholder initiatives across various topics, from living wages and public health to corporate governance and environmental sustainability1. Investors can use this information to actively participate in campaigns that aim to mitigate systemic risks posed by corporate practices, such as inadequate wages, environmental degradation, and poor governance.
  3. Attend Educational Webinars: To launch POTB 2024, TSC offers a three-part webinar series, providing investors with further insights into systems-first proxy voting. By attending these webinars, investors can deepen their understanding of systemic stewardship and learn how to apply it in their proxy voting decisions effectively.
  4. Identify Key Issues for Systemic Stewardship: POTB 2024 covers a wide range of critical issues for systemic stewardship, including climate change, economic inequality, human rights, and public health. Investors can prioritize these issues in their engagement with companies, advocating for practices supporting the systems’ sustainability essential to their portfolio’s value.
  5. Support Initiatives with Broad Systemic Effects: The guide presents a table of 2024 proxy season votes that proponents contend will have broad systemic effects. Investors can use this table to identify and support initiatives that improve corporate practices affecting the social and environmental systems critical to diversified portfolios.
  6. Exercise Voting Rights for Systemic Change: By exercising their voting rights through the systems-first approach, investors can encourage companies to adopt practices that benefit their individual enterprise while valuing the health of the broader economic and environmental systems.
  7. Engage Directly with Companies: Beyond proxy voting; investors can use the insights from POTB 2024 to engage directly with companies on systemic issues. This direct engagement can help investors advocate for changes that align corporate practices with the long-term interests of diversified investors.

Under these strategies, investors can leverage “Portfolios on the Ballot” 2024 to protect their diversified portfolios through systemic stewardship, contributing to a more sustainable and resilient global economy.

Portfolios on the Ballot 2024: Webinars

  1. POTB Launch: video and slides.
  2. Guardrail on Antimicrobial Resistance: video and slides.
  3. The guardrail on Poverty Wages: Register for April 17th 10 a.m. ED, 2 p.m. GMT or April 17th 4 pm PDT/April 18t, 9 am AEST. I love that TSC tries to accommodate a global community by holding two webinars on the same day, which is, at times, more convenient for those in Europe and Africa or Australia and East Asia. This third webinar will discuss how low wages and income inequality penalize national and global economies with losses that will burden investment portfolios for years and how investors proposing guardrails asking companies to implement pay practices throughout the value chain that create—rather than extract—value. If you won’t be able to attend the webinar, sign up anyway. You will receive a link to the video and slides. Subscribe to TSC’s weekly digest to stay informed about upcoming proxy actions that include a systemic lens.

   

Portfolios on the Ballot 2024: Related Posts

Proxy Voting as if Systems Matter

Northern Trust 2024 Ascertain Client Voting Preferences

Enhanced Reporting of Proxy Votes: Comments Update

 

 

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