Shareholder Engagement and the Proxy Process

Shareholder engagement, also known as active ownership, covers a wide assortment of tactics used by investors to influence the companies they own on questions of corporate social responsibility (CSR). Levels of advocacy can range from proxy voting in favor of shareholder-sponsored resolutions to direct engagement of management in investor dialogues. The intensity of engagement will depend on the priorities and resources of the investor.

What is implicit in this work however, is an acknowledgement of the responsibility that comes with stock ownership to ensure that management is doing what it can to improve its performance both financially and in terms of environmental, social and governance (ESG) measures as this has direct implications for communities where they operate and throughout their global supply chains. 

The core tactics ICCR members use in their engagements include:

  • face-to-face or telephone dialogues with corporate management where one or more issues may be discussed. See more
  • the filing of shareholder resolutions that appear on the proxy statement and are voted on at the annual shareholder meeting. See more
  • multi-stakeholder roundtables convening industry peers to work on a sector-wide issue. See more

Institutional investors not only file shareholder resolutions, they also vote proxy statements themselves. The most engaged institutional investors will even go a step farther, writing a company directly to explain why they voted as they did on the year’s proxy ballot items -- either for, against, or abstain.  They may say, for instance, that “we voted against the director candidates for the compensation committee because of our concerns about the structure of the executive compensation plan.”   Doing so provides an opportunity for dialogue in a way that can be helpful for all parties involved.

There are many other tactics shareowners use as levers including, investor statements endorsed by a broad group of institutional investors; direct outreach to other shareholders; proxy voting services; and other investment advisors to gain support for specific shareholder proposals; and, outreach to consumers and the press as a way to draw public attention to an issue or a company.

Finally, if engagement proves unsuccessful and a company fails to address egregious behavior within a specified period of time, investors may ultimately choose to divest, mainly as a symbolic protest. But whenever possible, ICCR members view remaining engaged with our corporations as the best hope for the positive transformation we seek.



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