In this post, I will provide some shareholder advocacy updates. Shareholder advocacy involves: direct dialog with companies, filing shareholder resolutions and voting proxies. See our video here.

Impact Investment Returns

I get asked this regularly, so I wanted to briefly address it.  How do sustainable, responsible, impact investment (SRI) returns compare to traditional index investments?

I can point to at some returns comparing indexes to SRI. The table below shows the 1 year and 5 year annualized returns for indexes and SRI funds in the same class. I am not showing that every SRI fund outperforms the index. I am showing that returns from SRI funds are competitive and in line with the index returns.

Fund Ticker Performance
1yr 5yr annizd
*Russell 1000   21.7% 15.7%
Calvert Large Cap Core Index CSXAX 20.1% 15.8%
iShares MSCI KLD 400 Social DSI 20.3% 15.7%
Vanguard FTSE Social Index VFTSX 23.6% 17.4%
Calvert Equity CSIEX 25.1% 14.5%
*S&P MidCap 400   16.2% 15.0%
Parnassus Mid-Cap PARMX 15.2% 14.0%
Calvert MidCap Index CMJAX 18.2%
Walden Midcap WAMFX 18.8% 14.2%
*MSCI EAFE   25.0% 7.9%
Domini Impact International Equity DOMiX 25.3% 10.0%
*MSCI Emerg Mkt   37.3% 4.4%
Calvert Emerging Markets CVMAX 44.3% 9.4%
*Barclay US Agg Bond   3.5% 2.1%
Calvert Bond CSIBX 4.4% 2.2%
*S&P 500   19.4% 13.4%
iShares Global Clean Energy ETF ICLN 21.1% 8.3%
*Russell 1000 Value   13.6% 14.0%
Praxis Value Index MVIAX 16.0% 13.7%

Performance as of 1/1/2018

A report by GIIN shows a comprehensive review of available research to date on the financial performance of impact investments. The report finds that impact investors that target market-rate returns can achieve them. You can get the report here: https://thegiin.org/research/publication/financial-performance

Another point on performance is thinking about where SRI funds vary from indexes – see our blog on the SRI vs traditional index performance. Traditional index funds have more exposure than SRI funds to: global banks, fossil fuel companies, and weapons. SRI funds have more exposure to technology than traditional indexes. When banks, fossil fuels and/or weapons outperform the broader market, traditional indexes will outperform SRI funds.  When they under perform the market or when technology outperforms the market, SRI funds will outperform. However, the difference in performance given the amount of difference in the two approaches will generally lead to small performance differences.

Shareholder Advocacy

RE 100

The RE 100 – a global initiative launched in September 2014 by the CDP and Climate Group – has quickly reached critical mass. RE100 galvanizes corporations to commit to a time-bound goal to power the entirety of their operations with renewable energy, and offers technical and educational assistance to help make the goals reality. Over 100 global companies with a combined $2.5 trillion in revenue, with the help and encouragement of an investor group that includes First Affirmative, have made the commitment.

Domini

2017 shareholder resolutions filed by Domini.

Lead filer:
AT&T Indirect political contributions 30%
Chipotle Mexican Grill Sustainability reporting Agreement Reached
Intercontinental Exchange Stock exchanges and sustainability disclosure 10%
Kraft Heinz Deforestation 13%
Michael Kors Protecting migrant workers in global supply chains Agreement Reached
Motorola Solutions Protecting migrant workers in global supply chains 12%
Nucor Lobbying report (tied to climate change) 38%
Co-filer:
Biogen Pharmaceutical pricing Excluded at SEC
Merck Pharmaceutical pricing Excluded at SEC
PepsiCo Pesticide pollution 9%
UPS Renewable energy goals Agreement Reached

Calvert

ADVOCACY AREA NUMBER OF RESOLUTIONS FILED SIGNIFICANT OUTCOMES
CLIMATE CHANGE AND ENERGY 8 Dillard’s agreed to report to the Carbon Disclosure Project to describe Management of climate risks and impacts, while Amgen agreed to assess its next steps on renewable energy and disclose its current and future renewable energy initiatives. Six proposals went to a vote at annual meetings, including several filed with electric utility companies, which are under pressure as concern about climate change and corresponding regulation threaten to disrupt business as usual.
WATER RISKS AND IMPACTS IN AGRICULTURE 3 Dean Foods and Fresh Del Monte committed to report on water risk and water risk management in their operations and supply chains. The global food sector, which uses 70 percent of the world’s freshwater resources, faces increased financial and operational risk from shrinking water supplies.
BOARD OVERSIGHT OF SUSTAINABILITY AND BOARD DIVERSITY 2 Bed Bath and Beyond will amend its governance documents to reflect the Board of Director’s oversight of environment and social risks. Our proposal at Discovery Communications on board diversity earned 18 percent support; we filed a board diversity proposal for the second year in a row. On October 21 the company announced that it will be adding Susan Swain to the Board of Directors.
HUMAN RIGHTS AND INDIGENOUS PEOPLES’ RIGHTS 3 Calvert continued to affirm its commitment to protect Indigenous rights by filing resolutions regarding offensive and inaccurate portrayals of Native Americans at Netflix and degrading sports teams names at FedEx Corp. Calvert also co-filed a proposal at Kroger on human rights in the company’s supply chain, addressing the area of high risk for food retailing companies. The proposal earn 25% support at its annual meeting.
MARKETING TO CHILDREN 2 Calvert co-filed proposals at Alphabet (Google) and Time Warner about company policy responses to public health concerns, particularly how on-line marketing to children affects children’s nutrition, obesity and health. Both proposals were withdrawn for further dialogue.
SUSTAINABILITY REPORTING 8 HealthSouth and Liberty Media committed to increase their sustainability disclosure on their websites, and OGE Energy committed to prepare a report, which in each case, specifically addresses workplace issues, safety performance, and efforts to improve operational performance and reduce resource waste. In addition, another company pledged to establish an interdepartmental sustainability panel to oversee disclosure of its sustainability information.
MINIMUM WAGE REFORM 2 Calvert co-filed two proposals. Panera Bread will assess employee benefits and compensation and then report out to shareholders.

FIRST AFFIRMATIVE

First affirmative is a network of SRI financial planners. They manage money for advisers.

COMPANY  REQUEST LEAD FILER STATUS
ENVIRONMENT & CLIMATE CHANGE Kinder Morgan (re-file) Report analyzing “carbon asset risk” and company plans to address global concerns regarding fossil fuels and their contribution to climate change First Affirmative 38.2% support
Hess Corporation (re￾file) Report analyzing “carbon asset risk” and company plans to address global concerns regarding fossil fuels and their contribution to climate change As You Sow 30% support
Emerson Electric Issue a sustainability report Walden Withdrawn, report published Walden Withdrawn, report published
Mondelez Report on impacts of company continuing to use non-recyclable packaging As You Sow 27.5% support
Costco Report on company actions to assess, disclose, reduce and optimally manage food waste Trillium Withdrawn, successful dialogue
Whole Foods Report on company actions to assess, disclose, reduce and optimally manage food waste Trillium 30.4% support
Kroger Issue annual reports on its supply chain impacts on deforestation, and progress towards reducing such impacts Green Century 22.9% support
Target Issue annual reports on its supply chain impacts on deforestation, and progress towards reducing such impacts Green Century Withdrawn, successful dialogue
HUMAN RIGHTS Goldman Sachs Report on the application of the companies indigenous peoples policy to the financing of Dakota Access Pipeline As You Sow Withdrawn, successful dialogue
Morgan Stanley Report on the application of the companies indigenous peoples policy to the financing of Dakota Access Pipeline As You Sow Withdrawn, successful dialogue
GOVERNANCE BlackRock Report on incongruities between the company’s proxy voting practices and policy positions regarding climate change First Affirmative (co-lead w/ Walden) Withdrawn, successful dialogue
Bank of New York Mellon Report on incongruities between the company’s proxy voting practices and policy positions regarding climate change Walden 6.52%
JPMorgan Chase Report on incongruities between the company’s proxy voting practices and policy positions regarding climate change Walden Withdrawn, successful dialogue
LOBBYING AND POLITICAL SPENDING Travelers Prepare report summarizing policies governing lobbying and detailing expenditures, including lobbying done on the company’s behalf by trade organizations. First Affirmative 37.4% support
Conoco Philips Prepare report summarizing policies governing lobbying and detailing expenditures, including lobbying done on the company’s behalf by trade organizations. Walden 23.9% support

TRILLIUM

Trillium’s shareholder activism highlights can be seen here: http://www.trilliuminvest.com/wp-content/uploads/2014/08/Q1-Q2-2017-ShareholderAdvocacyHighlights.pdf

GREEN CENTURY

Green Century’s impact investing highlights for 2017 are here:
https://www.greencentury.com/shareholder-advocacy/

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