Your investments are a powerful tool for enacting social and environmental change, but many of us aren’t using them to their full potential. As investors, we’re partial owners of companies or funds and with that ownership comes the right to have a say in how they behave. That process of influencing company’s behavior- by introducing or voting on shareholder resolutions- is known as shareholder advocacy.
The investing landscape has shifted drastically, with even large funds saying they care about how their investments impact society and the environment. If you want to get involved yourself, here’s a way to start.
1. Know what companies you own.
The first step in socially responsible investing is bringing your investments into your conscious awareness and being intentional about what your money is funding. This can be hard if your money is sitting in a mutual fund that holds hundreds of companies, or has a non-descriptive name like a “target-date” fund.
There are tools to help surface exactly what companies your money is invested in. Take a look at the tools from asyousow.org to find out just how many “no-no’s” are hiding in your funds. They have websites that show what percentage of each fund is invested in fossil fuels and deforestation, for example. A similar site for weapons & gun holdings is launching soon.
Don’t forget to look at all your investments, including your retirement account.
2. Do you own individual stocks? If so, vote your proxies!
Shareholder resolutions are introduced at each company’s annual meeting. Since attending that meeting in-person isn’t a realistic option for most people, you can still vote on the resolution by voting your proxies.
There are several guides available that show you what social and environmental resolutions are being introduced in the upcoming year. Check out these two: https://www.proxypreview.org/ and http://www.iccr.org/iccrs-2018-proxy-resolutions-voting-guide.
If in doubt, side with other industry groups that have people and planet in mind, such as Ceres, ICCR and As You Sow.
Do you own funds? As an investor in a fund, you don’t vote directly on company resolutions, but you can still influence the fund managers. Call them and tell them how you want them to vote.
3. Move your money into socially-responsible funds.
Socially-responsible, or SRI, funds (sometimes also called ESG for “environmental, social and governance”), most likely already vote for positive societal and environmental impact, which is a strong reason to consider them.
Another benefit to socially-responsible funds is that they screen out, or choose not to invest in certain harmful sectors like tobacco, weapons and fossil fuels.
Don’t take the name at face value, though. Read through the fund description and prospectus to be sure they screen out sectors that you don’t want to be supporting. You can even call the fund’s main office to ask about their approach to socially-responsible investing. If you have an advisor, enlist them for help.
4. Lobby your HR manager to include socially responsible funds in your retirement account.
Go through the process of learning what you own from step #1 with the funds in your retirement account. If you don’t see any good fund options, it’s time to lobby your company to expand. Finding a group at work to do this with is always more effective to show increased demand.
For a step-by-step guide, including a draft letter to send to your internal fund manager, take a look at As You Sow’s toolkit.
5. Share this material.
This work becomes more effective if you have a community joining in with you. Also, shareholder advocacy is a key part of impact investing but something that few individuals know about or understand. So spread the word!
Engaging in shareholder advocacy can seem complex, but the important thing is to get started. Have more questions? Reach out to firstname.lastname@example.org.
Watch our webinar, Stand Against Gun Violence with Your Investments, with special guest Andrew Behar, CEO of As You Sow, author of Shareholder Action Guide: Unleash Your Hidden Powers to Hold Corporations Accountable