President-Elect Encouraged to Work in First 100 Days to Reverse Recent SEC Roadblocks to Shareholder Proxy Resolutions Inquiring About Risks
WASHINGTON, D.C. – President-elect Barack Obama can help to avoid future market disruptions and also pave the way for a sustainable economy if he protects and strengthens investors’ rights to use the shareholder resolution process to highlight corporate risk factors and press for needed remedies, according to a joint letter submitted today by over 60 leading institutional investors, investment firms and investor groups.
The letter asks the help of President-Elect Obama to act within the first 100 days of his administration to reverse a five-year “pattern” at the SEC blocking shareholders from using proxy resolutions to request better disclosure of identified financial risks to a company. These risks may include marketplace, social, or environmental concerns.
The letter to Obama was signed by a diverse group that includes, among others, the Office of the Comptroller of the City of New York; noted shareholder advocates Robert A.G. Monks and Amy L. Domini; Calvert Group, Domini Social Investments, Trillium Asset Management Corporation, Boston Common Asset Management, and Catholic Healthcare West.
Leading organizations of investors also endorsed the letter, including: the Investor Network on Climate Risk (INCR), a network of 75 institutional investors and financial institutions with over $5 trillion in assets; the Investor Environmental Health Network (IEHN), whose shareholder members are concerned with financial and health impacts of product toxicity hazards, with $30 billion in assets; and the Interfaith Center on Corporate Responsibility (ICCR), representing nearly 300 faith-based investors with $100 billion in assets.
The joint letter reads, in part: “All investors need better tools to assess corporate risks and more effectively participate in corporate governance and we look to your administration and the Securities and Exchange Commission (SEC) to facilitate such reforms. From the creation of the SEC in 1934, investors have been in a unique position to monitor the companies in their portfolios, and to guard against certain risks to stock price, and to society, by encouraging responsible decision-making by management.”
The letter continues: “In particular, we believe restoring the ability of institutional investors to use the shareholder resolution process to probe companies on certain areas of investment risk is an important initial step. These include the kind of credit risks associated with the mortgage crisis, as well as an array of environmental and social issues which we believe may have large financial implications e.g., climate change and product toxicity . it is our belief that shareholders are in a very good position to help companies evaluate risk.”
However, the letter notes:
Cheryl Smith, co-CEO at Trillium Asset Management Corporation, said:
As the letter explains:
Calvert Senior Vice President for Social Research and Policy Bennett Freeman said:
For the full text of the joint letter and complete list of signatories click here.
For more information please contact Lauren Compere, Boston Common Asset Management, at lcompere(at)bostoncommonasset.com or (617) 720-5557.