Shareowner Advocacy – The Heart of Impact


Certified Financial Planner™
Accredited Investment Fiduciary®
Certified Financial Transitionist (CeFT®)
Owner/Founder of Sustainable Wealth Advisors
Founding Member of Sustainable Advisors Alliance, LLC


The most visible and discussed component of sustainable, responsible, impact investing (SRI) is centered on the process of screening. Based on certain environmental, social or governance (ESG) criteria, various companies are screened out (exclusionary) or screened in (inclusionary). While it’s extremely significant for investors to be able to better align their investments with their values and priorities through this process, it’s not the part of SRI that is most effective as an agent of change. Our decisions as individual investors, or even the decisions of large institutional investors, to exclude or include a particular company are unlikely to affect that company’s policies or corporate behavior. When we own shares in these companies though, we can exercise our rights as shareholders to influence company policies to improve their performance across a range of ESG factors. This strategy, generally referred to as “shareowner advocacy” or “shareowner engagement” is often at the heart of meaningful corporate change.

Our primary goal is to own the shares of companies that are good corporate citizens and are positioned to deliver competitive investment performance over the long term, while impacting people and the planet positively,
creating a more vibrant, healthy world. We must recognize though that there are no perfect companies and think about how we can constructively engage with businesses to become more responsible citizens and stewards, help them have a more positive societal impact and build longterm value for shareowners. While this is clearly a formidable proposition, we have several tools at our disposal.

Proxy Voting. Shareowners who own qualifying shares in a company may vote on resolutions (also known as proposals) that are presented at the annual general
meeting (AGM) or other special meetings that may be called by the company. Although votes can be cast at the meeting, most shareowners vote in advance “by proxy” — via mail, by phone or online. Management proposals typically cover routine tasks like electing directors and approving auditors. Shareholder resolutions though, often cover issues such as climate risk, gender equality, political spending and financial disclosure. While proxy voting historically has been a relatively infrequently used right, it’s become increasingly important.

Dialogue. Shareowner advocacy often begins with a conversation. Many corporations see the strategic benefits of working with their investors to improve policies and practices. Management will often agree to negotiate, particularly if investor concerns are linked to the financial performance
or reputation of the company. Some of these dialogues become ongoing partnerships that involve regular communication on a broad slate of issues.

Shareholder Resolutions. When dialogue fails, it is time to present the issues to all the owners of the company. Proxy resolutions may request additional disclosure or propose changes to company policies or practices. At the annual meeting, a filer has the rare and valuable opportunity to speak directly to the CEO and board of directors.

Divestment. When all else fails, investors may choose to sell their shares in a company to send a message. This technique has been used to help stop companies from doing business with repressive governments, such as in South Africa
in the 1980s. More recently, the “fossil fuel-free” movement is being structured primarily as a divestment campaign.

While there has been a concerted effort recently to weaken shareowner rights, organizations like the US Social Investment Forum (USSIF) have been diligently fighting to protect them. Any comprehensive SRI strategy should seek to include a shareowner advocacy component. Companies like First Affirmative Financial Network, a pioneer and leader in the SRI movement which supports a national group of advisors, have dedicated staff and resources to help individuals navigate this often-complex arena. While some investors become active advocates themselves, many others simply identify issues of concern and then delegate the nuts-and-bolts implementation to SRI specialist firms. Whatever the path, we need to make sure that this important tool isn’t forgotten as SRI becomes increasingly mainstream. Our collective voice as shareowners truly can make a difference.

Essential Resources:

Harry Moran helps socially conscious investors define and achieve their highest goals by aligning their money with their values. He is a 30-plus year veteran of the financial advisory profession. He began working with sustainable investments in 1988 and made the commitment to specialize in this approach in 2001. In 2011, he founded Sustainable Wealth Advisors (SWA) to further this vision. He is a member of First Affirmative Financial Network, a national professional organization dedicated to meeting the needs of the socially conscious investing community. In April 2021, he became a Founding Member of Sustainable Advisors Alliance, LLC. SWA’s affiliation with Sustainable Advisors Alliance, LLC offers the firm the opportunity to collaborate with a dedicated group of financial professionals who also specialize in Impact Investing. Mr. Moran can be reached directly at [email protected] or 518-450-1755.

This content reflects the opinions of the author and is subject to change without notice. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Mention of specific securities, funds, or companies should not be considered an offer or a recommendation to buy or sell the security, fund, or company. Remember, past performance is no guarantee of future results, and no investment strategy can assure success. To determine the suitability of any particular investment, please consult with your investment adviser.

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