Spring is a critical time this year not just for electoral democracy, but for shareholder democracy. Each year, companies allow their shareholders to share their views and ultimately vote on critical issues, from board membership to Environmental, Social and Governance (ESG) concerns. For the many stakeholders that care about social equity, the long-term environmental costs of businesses, or the social impacts of finance, it’s an essential time to open up your snail mail and learn about what’s been proposed.
Proxy voting can be intimidating, given ballots can cover so many issues. To that end, the Interfaith Center for Corporate Responsibility has, for over five decades, developed proxy voting proposals and educated investors on how and why these votes are necessary. ICCR members have filed 344 resolutions that broadly address human rights, environmental justice & climate change, racial justice, AI transparency, and health equity this year.
While ICCR’s 265-page report provides fantastic, in-depth information on the issues at hand, and the text of resolutions filed across 215 companies, here’s a quick cheat sheet on proxy issues to look out for in your mailbox in 2024:
Labor and Human Rights
Since the start of corporations, there’s been a need to safeguard the rights of workers and of people impacted by corporate activity writ large. ICCR members filed 75 resolutions on this focus, more than any other, according to the organization’s 2024 proxy guide. The resolutions run the gamut from living wage policies to avoiding business in conflict regions and conducting Human Rights Assessments. 2023 was uniquely challenging for humanity, setting a grim record for military spending globally, much of which ultimately lands in the hands of corporations.
Chirag Acharya, Senior analyst at Wespath Benefits and Investments, shared information on a recent ICCR webinar regarding a set of resolutions to companies operating in Conflict-Affected and High-Risk Areas (CAHRA). Wespath filed a resolution (page 214 of the ICCR guide) with Mondeléz requesting “an independent third-party report… assessing the effectiveness of the company’s implementation of its Human Rights Policy (HRP) for operations in conflict-affected and high-risk areas (CAHRA), including Russia/Ukraine.”
JPMorgan Chase, Lockheed Martin, Marriott, Raytheon, Texas Instruments and Trip Advisor were also presented with similar resolutions requesting independent, third-party reports on how JPMorgan’s underwriting and lending (page 211) or Lockheed Martin’s lobbying activities (page 232) align with human rights regulations, as well as understanding of risks posed to shareholders by operating in and near conflict regions.
Acharya noted that even setting aside the moral case to avoid business in conflict areas, there’s a strong business case given that warfare naturally carries tremendous risks to people and assets, to say nothing of potential regulator disruptions.
Similarly, Marcela Pinilla, Director of Sustainable Investing at Zevin Asset Management, noted the strong business case for boosting wages—specifically improving employee morale, motivation and productivity, and enhancing a company’s reputation amongst not only job seekers but consumers writ large. Better wages also reduce hiring costs by making jobs more attractive to new candidates and promoting retention of current team members. Resolutions addressing livable wages have been filed with many of America’s largest companies, like Amazon, Target, Walmart, Hershey and Kohl’s.
Climate Change
Climate change and its cacophony of externalities and knock-on effects are already claiming millions of lives and swallowing trillions of dollars. Corporations are often in the awkward position of being significant contributors to climate change while simultaneously having to absorb its economic impacts. This creates a dynamic where shareholders can have a tremendous impact. For example, Pedro Henriques da Silva, Director of Shifting Trillions at Sierra Club Foundation, summarized a resolution filed by SCF with Goldman Sachs for an environmental justice assessment (page 66) as well as more transparency on how the company intends to meet its net zero emissions goals. Several major financial institutions, including JPMorgan, Morgan Stanley, and Wells Fargo, have received similar resolutions, seeking clarity on their paths to net zero.
Diversity & Racial Justice
Many companies made diversity and equity commitments in 2020 following the murder of George Floyd. Still, since then, many have reneged on those commitments amid a broad cultural backlash against diversity in business and throughout the U.S. Founded in 1971 as a means to organize corporate resistance to South Africa’s apartheid government, racial equity and justice are at the heart of the ICCR’s mission and feature prominently as topics in their member’s resolutions. And, despite some progress over the years, a sobering array of statistics from the ICCR report show we still have a long way to go: “Black workers’ hourly median earnings are just 81% of white workers’ wages. The median income for women working full time is 83% that of men. Black women earn 64% of the wages of their white, male counterparts, Native women 51%, and Latina women 54%. At the current rate, Black women will not reach pay equity until 2130, and Latina women until 2224.”
This year, ICCR members have filed resolutions specifically to address gender and racial pay gaps at large firms like Amazon, Apple, Boeing, Marriott and Goldman Sachs, in addition to requesting more explicit ethics policies and transparency from others like Eli Lily and Paramount Global.
Artificial Intelligence
One of the biggest trends in tech of 2023 was the surge in Generative Artificial Intelligence. While the term is perhaps a misnomer for its current applications, “AI” surged as tech companies seemed to hit a critical mass of computing power, enabling the proliferation of technologies that previously only saw the inside of a university computer science lab.
While tremendous potential exists, you don’t have to look far to see the myriad methods in which devices put through the school of machine learning are failing their ultimate exams, from crashing cars to putting innocent people in jail.
Brandon Rees, Deputy Director, Corporations and Capital Markets at AFL-CIO, spoke to resolutions asking for transparency in the use and development of AI at Amazon, Apple, Comcast, Disney, Netflix, and Warner Bros. Many organizations have already made such pledges. Some experts still doubt whether these safeguards are strong enough, such that this sector will require consistent oversight from shareholders.
Health Equity
“Of all the forms of inequality, injustice in health care is the most shocking and inhumane,” Dr. Martin Luther King Jr. said at the Medical Committee for Human Rights in 1966 Chicago. Every human being has a right to health, and it is a broad legal obligation for countries in the United Nations and World Health Organization to develop and implement legislation that guarantees universal access to quality health services and addresses the root causes of disparities. And yet, governments are extremely reliant on corporations to develop, produce and distribute medicines.
Laura Krausa, System Director at CommonSpirit Health, shared information regarding resolutions put forward recognizing the human right to health at Bristol-Myers Squibb, Eli Lily, and Pfizer, noting that the United Nations has established that there is shared responsibility for expanding access to medical resources and supplies.
Exercising our Right to Vote
Americans have fought for our political voting rights for centuries, particularly women and people of color, and guard them dearly. The same applies to our shareholder voting rights: ICCR CEO Josh Zinner gave an example of how one company has been attempting to shut down shareholder engagement as part of a broader movement to limit shareholder rights. In essence, many actors who claim to be against government overreach are trying to force shareholders to ignore their fiduciary duty, controlling which factors investors are even permitted to consider. And, with the looming threat of the Supreme Court overturning the Chevron doctrine, the relationship between US regulators and companies is likely to get even more fraught, making shareholder voices even more critical.
Our voting rights only matter if we exercise them. So don’t let that mail pile up…look out for your proxy ballots, and vote early and often!