Between The Lines Issue #6

The peak of the proxy season comes to an end

As the 2022 Proxy Season comes to an end, the Civex Team reflects on the many shareholder environmental, social, and governance wins from corporate ballots. The demonstrated momentum from activist investors will drive corporate action for years to come on issues that many people care about. From Climate Change to Human Rights, expectations that companies will take these matters seriously have never been higher.

Two important takeaways

Amazon’s ballot had an unprecedented 20 resolutions filed and 12 went to a proxy vote.

What is a Proxy Vote? Voting by proxy is when shareholders get a chance to tell the companies in which they are invested which proposals they are for and against. Learn more here.

As shareholder’s voices get louder, the more likely a company’s management team will hear them. It’s extremely rare to have management explicitly supporting a shareholder proposal on a proxy statement, but that’s exactly what happened at Chevron. Chevron’s Board recommended shareholders support a proposal that would require them to disclose more reliable Methane Emission Data.

Trending Proposals

Racial Equity Audits

Requests for Racial Equity Audits (to remove systemic racism) were on nine corporate ballots this year in which two of Civex’s Advocate Partners participated. The SEIU-led shareholder proposal at Home Depot was supported by 62.7% of shareholders, while IASJ gained support while presenting the same topic at Chevron.

Concealment Clauses

Civex Advocate Partner Lift Our Voices and Gretchen Carlson brought the topic of Concealment Clauses front and center during last year’s proxy season. These proposals ask the board to assess the potential risks to the company associated with the use of concealment clauses in employment agreements in the context of harassment, discrimination, and other unlawful acts.
Thus far in 2022, shareholders saw Concealment Clauses on five corporate ballots, including a win for shareholders as 64.7% of IBM shareholders voted in favor for A Public Report on the Use of Concealment Clauses.

New Proposed Legislation – The INDEX Act

Index ETF and mutual funds make up a significant piece of the investment universe. There is a good chance that you own some in your brokerage or retirement accounts.
Proxy votes are a shareholder right that direct shareholders receive. Today, Index ETF and mutual funds shareholders do not have a right to proxy voting as their money managers vote for them.
Three of the largest asset managers – Blackrock, State Street, and Vanguard – have received a lot of scrutiny for holding too much proxy voting power, as they cast 25% of all S&P 500 Index proxy ballots.
Last week, the Senate held a hearing on the proposed INDEX Act which is being reviewed as a potential solution to providing mutual fund and ETF shareholders with a voice on proxy ballots. This is also known as “pass-through” voting.
Regardless as to if this bill passes or not, all signs point to pass-through voting coming to the asset management industry in the near future. If and when this happens, you will be able to share your proxy vote with your money managers.

The 10 (and counting) Advocate Partners of Civex

Civex connects People, Advocates, Asset Managers and Companies to empower change. Visit us to learn more about each and which of our partners you are most aligned with.

The bottom line – Get involved.

It’s not just advocacy organizations submitting proposals. Shareholders are now coming around to this idea. They want to ensure the companies they’re invested in reflect their values. We now see unions, state comptrollers, retirement fund managers, foundations, and even religious organizations using the power of their shares to tell corporations what’s important to them.