Faith-based investors have engaged in shareholder advocacy for decades, stretching back to the Episcopal Church’s 1971 resolution urging General Motors to withdraw from apartheid South Africa and the founding of the investor advocacy coalition Interfaith Center on Corporate Responsibility (ICCR) that same year.
With shareholder engagement strategies, investors often begin by bringing up issues they care about in dialogue with companies, then filing proposals if those initial conversations fail to resolve their concerns. Investors from a wide range of faiths employ this impact strategy to target issues from across the environmental, social, and governance (ESG) spectrum.
A recent Global Impact Investing Network report found that human dignity is a shared value among many faith-based investors; protections for human rights are frequently the subject of resolutions. For example, Azzad Asset Management, an investment advisory firm that incorporates Islamic values into its work, joined with other shareholders to file a resolution with Google condemning the development of a censored search product for deployment in China and asking the company to publish a human rights impact assessment.
Azzad also filed a resolution with Booz Allen Hamilton in response to allegations that the company had aided in training Saudi soldiers who blockaded Yemen. The resolution asked for the adoption of a human rights policy in accordance with the United Nations’ Guiding Principles on Business and Human Rights, and Azzad withdrew the resolution when the company agreed to the request.
Climate and Hunger
Protecting the environment and eliminating hunger are common themes in faith-based investing, so sustainable food systems are sometimes the topic of resolutions. The JLens Investor Network, which aims to promote Jewish values, filed a resolution with Amazon asking the company to report on the effect of food waste in its operations. The resolution notes that food waste results in avoidable greenhouse gas emissions and redistributing the food could reduce food insecurity.
Similarly, Mercy Investment Services, an impact investor promoting Catholic values, led an ICCR resolution with Dine Brands asking the company to study the possible effects of reducing food waste. The resolution cites a study that found that 8% to 10% of greenhouse gas emissions caused by humans stem from food waste and argues that eliminating waste could reduce hunger.
Corporate governance is another focus of faith-based shareholder engagement, perhaps because poor governance decisions may lead to societal impacts that conflict with faith-based values. The Province of St. Joseph of the Capuchin Order, part of the Seventh Generation Interfaith Coalition for Responsible Investment, filed a resolution with Boeing asking it to disclose lobbying activities. The resolution notes that some forms of lobbying could pose a reputational risk. A separate resolution from the ICCR filed with The Walt Disney Company calls for heightened board oversight on workplace equity issues such as racial and gender pay equity and discrimination.
While shareholder engagement has been an effective strategy for bringing faith-based values to the attention of publicly traded corporations, it may become more challenging for investors starting in fiscal year 2022. The Securities and Exchange Commission (SEC) recently raised the minimum value of stock a shareholder must own for one year in order to propose a resolution from $2,500 to $25,000. The SEC has also raised the minimum votes needed to resubmit a resolution. Some faith-based organizations have decried the changes and alleged that the amended rule will hinder their efforts.
Want to learn more about faith-based investing and shareholder engagement? Read:
- How Investors Are Driving Change through Shareholder Engagement in 2020
- On Climate Change, Faith-Based Shareholders Take the Lead
- Shareholder Engagement and Gun Control: Faith-Based Groups Take a Stand
- Groups Seek to Reduce Food Waste through Shareholder Engagement
- The Nathan Cummings Foundation’s Role as Shareholder Activist