ESG Investing

How Investors Are Driving Change through Shareholder Engagement in 2020


The country is reeling from the impact of the coronavirus pandemic just in time for the 2020 proxy season. To make matters more uncertain, a growing number of companies are opting to hold virtual-only shareholder meetings. However, in the midst of this upheaval, faith-based organizations and other investors continue to drive change through shareholder engagement.

That is certainly the assessment of Josh Zinner, CEO of the Interfaith Center on Corporate Responsibility (ICCR). ICCR is a pioneering coalition of 300 organizations, including faith communities, pensions, asset managers, and others. ICCR members deploy corporate engagement strategies as a catalyst for social change.

The organization’s primary shareholder engagement tool is dialogue, a year-round activity entailing hundreds of discussions. Recent dialogues have engaged such companies as Restaurant Brands, regarding nutrition and children’s meals, and Walmart, on deforestation and links to climate change. “Our members are at the table engaging with companies, pushing them to make concrete commitments to improve their environmental, social, and governance performance,” Zinner says.

Generally, it is only when they cannot persuade corporations to change these practices that members file proxy resolutions. This proxy season, members filed around 270 shareholder resolutions on a broad range of topics.

Key Themes and Trends This Proxy Season

According to ICCR’s 2020 Proxy Resolutions and Voting Guide, this year focuses center around 10 areas, ranging from corporate governance and financial practices to environmental health and sustainability. The largest number target human rights, followed by climate change, lobbying and political contributions, and diversity and inclusiveness. Some key trends include:

  • Concern for the environmental impacts of tech giants
  • Risks related to private prisons and immigrant detention
  • Banks’ climate-related lending
  • Proxy voting policies of large asset managers

While many issues have been raised previously, some new topics include the impact of plant closures, adding nonmanagement employees to boards, and offshore drilling.

ICCR and its allies have already started laying the groundwork for corporate dialogue around issues related to COVID-19 in the coming year.

An important linchpin of ICCR’s shareholder engagement work in human rights are the UN Guiding Principles on Business and Human Rights. Endorsed by the UN Human Rights Council in 2011, the principles hold that companies have a responsibility to safeguard human rights in their operations and supply chains. To that end, they should introduce a process for conducting a human rights assessment, engaging closely with stakeholders like workers and the larger community. “Historically, corporations have treated human rights problems as PR problems,” says Zinner. “We’re really pushing companies to incorporate human rights due diligence into the center of their governance process.” Another key human rights focus is eradicating forced labor in supply chains.

ICCR members have filed resolutions focused on these topics with companies in a variety of industry sectors, such as tech, apparel, and food and beverage. For example, one resolution asks that Amazon adopt and publicly disclose a comprehensive human rights policy applicable not just to the company’s suppliers, but also to its operations and subsidiaries. Another seeks to persuade Skechers to institute new policies that commit to a human rights due diligence process, among other steps.

Proxy Season 2020 and the Impact of COVID-19

Along with filing resolutions and voting on the issues above, ICCR has taken a strong stand on the future of virtual-only shareholder meetings. “In-person meetings are probably going to be almost nonexistent this year,” says Zinner. “We want to make sure this isn’t used as a strategy to silence investor voices.”

Working with the Shareholder Rights Group, ICCR released a set of nine best practices in March to ensure that virtual-only meetings do not deprive shareholders of important rights. These best practices include allowing shareholders to present their proposals via methods such as prerecorded audio or video presentations and ensuring that companies hold live Q&A sessions with the board and management at the end of each meeting. In addition, “the virtual-only format should be a one-time emergency measure,” says Zinner.

While the devastating impact of the COVID-19 pandemic came too late to play a part in this year’s resolutions, ICCR and its allies have already started laying the groundwork for corporate dialogue around related issues in the coming year. For example, together with Domini Impact Investments and the New York City Comptroller’s Office, ICCR recently issued a five-point plan for businesses to protect workers. Investors also sent letters to the CEOs of 14 pharmaceutical companies, calling for a collaborative approach to developing critical compounds and vaccines.

“Investors have an important role to play during the COVID-19 crisis to press companies to treat workers, suppliers, and customers fairly,” says Zinner. “The companies that take care of their workers and engage responsibly during the crisis will be building value over the long term.”

Feature image: ICCR CEO Josh Zinner (Photo by ICCR)

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