Letter from the Publisher

Shareholder engagement has ratcheted up to a new level with enhanced collaborations and strategies, even as some corporate leaders determined to undercut basic shareholder rights have a sympathetic ear in Washington. Concurrently, the Trump administration continues to weaken government regulations that protect citizens from environmental harms and meet basic social needs. More than ever, it is clear that investors who use their voices as shareholders as a powerful force for positive change can make a difference at companies that want to thrive and survive in the future.

New shareholder coalitions are responding to gaps in government action with Investors for Opioid Accountability, Farm Animal Investor Risk and Return, the Investors for Indigenous Peoples Working Group and the Investor Alliance for Human Rights, to name just a few. Shareholders are engaging companies on issues from everyday headlines—guns, cyber security, modern slavery, sexual harassment and climate change—all of which pose material risks for investors.

Last year’s record high votes for shareholder resolutions are the result of major fund families—including BlackRock, Vanguard and State Street—finally losing patience with some companies’ responses to climate risk. This is a good first step and affirms the long-held views of socially responsible investors about the risks energy companies pose to asset owners, the economy and the planet. However, if “success” is moving companies to reduce risk, increase brand value and work transparently with their shareowners, then celebrations are premature. Despite a majority vote at ExxonMobil, for example, its response has been an inadequate report that continues to rationalize business-as-usual and seems likely to ensure both the company’s financial collapse and a 5°C world. One option some investors are considering is to take dissent further and vote against some or all board members at companies that do not respond to material shareholder concerns, especially after a majority vote.

On the legislative front, basic shareholder rights are under attack in Congress; provisions in the Financial CHOICE Act, which passed the House of Representatives in June, would allow only ultra-large shareholders to file resolutions, all but eliminating innovative new ideas coming from the rank and file. This bill faces an uncertain future in the Senate but threatens shareholder voices. In addition, a new Securities and Exchange Commission Staff Legal Bulletin, released in November, seems to open up new ways to limit shareholders’ ability to file some resolutions that have had substantial investor support for years. The full impact of the bulletin remains to be seen, but is also of significant concern.

On the positive side, corporations have made commitments in line with the Paris Climate Accord, even though the White House plans to withdraw from the treaty. Initiatives abound expressing the sentiment that “we are still in,” with action by cities, foundations and universities, among others. Many companies also are adopting the UN Sustainable Development Goals, using its framework and common language that seeks a safe, just and sustainable world by 2030 in line with the aims of member states. The SDGs can be a powerful, unifying platform to solve our deepest problems.

Environmental, social and governance (ESG) investing continues its rise, as well, and now accounts for one out of every five dollars invested. Mainstream investment data providers including Bloomberg, Morningstar, MSCI, and Thomson Reuters offer ESG data for analysts to use when assessing companies. Credit ratings agencies like Moody’s are including ESG metrics in their rankings. Clearly, the investment world believes ESG risks and opportunities are material to corporate fortunes.

Proxy Preview 2018 shows that shareholder proponents remain committed to hard-won gains that ensure transparency between corporations and their shareowners. Whatever the political winds of the moment, the markets are using ESG data to better determine risk and long-term return. The issues that shareholder proponents are raising this year, and the traction they have with investors at large, highlight key business concerns companies must consider. Restricting shareholders ability to alert companies to future risks and bring fresh ideas to the table would be a mistake with long-lasting implications.

Now in our 14th year, Proxy Preview continues to focus on aligning investing with values and to spotlight how corporate policies affect every person and our planet, and how shareholder resolve can lead to positive change. Proxy Preview is proud to continue its central role documenting this journey and bring together a growing coalition of shareowner proponents who work with their companies to solve the most difficult issues of our time.

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Andrew Behar
CEO, As You Sow