Shareholder advocacy is top of mind for investors when evaluating an authentic ESG (Environmental, Social, and Governance) investment strategy. In addition to embedding ESG considerations into the research and investment process, a complete ESG-integrated investment approach calls for thoughtful, effective, and sustained shareholder advocacy. This critical, multi-dimensional set of tasks activates investor capital in pursuit of financial returns as well as intentional impact.
At Boston Common, shareholder advocacy means using our voice as investors and shareholders to drive responsible risk management and positive change in corporate policies, processes, and products. As equity owners in a company, we have unique access to management teams. While the specific ways in which investors can engage with companies varies from country to country based on regulation and market conventions, active engaged investors universally have the opportunity to seek transparency and accountability, while promoting long-term thinking and action.
Such responsible stewardship is the foundation of Boston Common’s long history and leadership in shareholder advocacy. Since our founding in 2003, active ownership has been integral to our investment philosophy and our team has played a leadership role in building the field. We continue to dynamically broaden and deepen our engagement to address emerging and impactful risks and opportunities across the Environmental, Social, and Governance challenges of our time.
Our stewardship efforts can take many forms. Below are some examples of how we generate impact as engaged investors.
What are the different types of shareholder advocacy?
Sustained Dialogue – Transformation rarely happens overnight. It often takes patience and persistence with companies over years to achieve robust integration of ESG aspects into core business models. Sustained company dialogues are founded on a deep understanding of how the governance of sustainability is approached, including board-level oversight and links to performance, goals, and compensation.
Example – In 2022, Lauren Compere, Head of Stewardship & Engagement traveled to Japan and Korea to continue Boston Common’s shareholder engagement work in person.
Proxy Voting– Shareholders have the right to vote on several resolutions included in the company’s proxy ballot and tallied at a company’s annual shareholder meeting. This is a vital way for investors to communicate concerns and influence corporate behaviors. Boston Common has proxy voting guidelines that are designed to promote the best global corporate governance practices and encourage long-term thinking among corporate managements. The guidelines ensure votes support shareholder proposals focusing on respect for human rights, gender, and racial equity, and demonstrate a proactive approach to climate risk and environmental stewardship.
Example – In 2021, Boston Common voted against 70 companies on gender and racial board diversity as detailed in our 2021 Impact Report.
Shareholder Resolutions– Shareholder resolutions are an important part of our toolkit to achieve impact in public equities. Boston Common backs relevant ESG shareholder proposals and files or co-files shareholder resolutions when a company dialogue has stalled, or when a company is not willing to engage. Resolutions may be withdrawn if the company engages and is willing to meet some of our “asks”.
Issue Area Initiatives: A short but intensive engagement that focuses on key performance indicators on a particular issue area.
Example – In 2021, we engaged carbon-intensive companies regarding responsible refrigerant management. Carrier and Daikin committed to adopting Global Warming Potential (GWP) disclosure, while also providing detailed information on the amount of revenue credited to positive products and services.
Example – Boston Common joined 126 financial institutions representing 21 countries and over €18.8 trillion in assets and signed onto the Finance for Biodiversity Pledge, calling on global leaders to commit to protect and restore biodiversity through finance activities and investments.
Public Policy - The pathway to sustainable long-term change is through public and private sector cooperation. Throughout our history, Boston Common has actively engaged to shape public policy around the world. Boston Common believes investors have a duty not just to engage with investees, but to actively engage in policy conversations to drive sustainable corporate growth holistically. Our public policy efforts center on protecting shareholder rights, encouraging standardized sustainability reporting and measures, and supporting a more sustainable financial system. We use collaborative platforms such as the PRI, Ceres, US SIF, the Shareholder Rights Group, International Corporate Governance Network, and the Asian Corporate Governance Association (ACGA).
Example - Boston Common’s Open Letter urging representatives to use their position to ensure that the Corporate Sustainability Due Diligence Directive (CSDDD) captures a gender perspective.