Frequently Asked Questions
Environmental sustainability practices, social responsibility commitments and governance policies (ESG) are three factors socially conscious investors use to evaluate and screen investments for sustainability and ethical impact. Growing evidence suggests that companies with strong ESG indicators may perform better in the long term and have superior business models.
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Educating our members and visitors about all aspects of ESG, including the impact of corporate decision-making on the environment and society, is the centerpiece of Advance ESG. Our blog and e-newsletters contain relevant, high-quality content created to inform and inspire. And anyone can feel free to reach out with questions, issues or suggestions.
Because ESG is not an important priority to managements that are more focused on short-term profits and maximizing share value.
According to US law, anyone who owns shares of a corporation has the right to influence its policies. At the annual general corporate meeting, every shareholder is asked to vote on a range of issues including electing the board, approving management’s pay and various governance and policy questions along with an array of environmental and social issues that shareholders have raised. Shareholder advocacy is the practice of using that right to influence a corporation’s behavior by submitting resolutions for a vote or otherwise requesting dialogue with management. In recent years, shareholder advocacy has proved to be an effective technique for improving the environmental, social, and governance policies of major corporations.
A shareholder resolution is a non-binding recommendation to the board of directors of a public corporation regulated by the US Securities and Exchange Commission (SEC). Proposed by shareholders, resolutions are presented and voted upon at the corporation’s annual meeting and through the annual proxy vote. While successful resolutions are only advisory, they are a powerful way to advocate for changes in corporate policies. Some examples can be found here.
No. Current US security regulations only permit shareholders who own a specific amount of a corporation’s voting eligible stock (at least $2,000 worth for three years, $15,000 worth for two years or $25,000 worth for one year) to submit resolutions for a vote at corporate annual meeting.
Not always. Most corporations are very sensitive to public opinion and the vast majority prefer that that these resolutions do not come to a public vote in order to avoid confrontation and potential negativity at the annual shareholder meeting. Shareholder resolutions more often result in a discussion between the advocates and management about the issues raised in the resolution. If an agreement can be achieved that addresses the issues raised in the resolution, the resolution is withdrawn. Or the management can ask SEC regulators to block the resolution from coming to a vote.
Shareholder resolutions are a meaningful way for shareholders to encourage corporate responsibility and discourage company practices that are unsustainable or unethical. Often a shareholder resolution will fail to win a majority of the shares voted, but still succeed in persuading management to adopt some or all of the requested changes because the resolution was favored by a significant number of shareholders. If not, resolutions can be re-submitted if they pass certain hurdles.
Individual shareholders and other investors assign Advance ESG as their shareholder advocacy proxy agent. This allows us to submit resolutions and to negotiate with management on behalf of our entire membership whether they own shares in that company or not.
We selectively target corporations and issues for our advocacy efforts based upon well-known third-party ESG report and ratings providers as well as from input from our membership.
We are actively engaged with many of the major environmental, human rights and other advocacy organizations. In addition, we look for opportunities to add our votes in support of appropriate shareholder resolutions submitted by other entities including investment funds, advisory firms and other shareholders. We work with other organizations to directly engage corporate officers, senior management and other investors regarding prioritizing ESG issues and advocate vigorously against attempts to diminish the ability of investors to participate in corporate governance and strategic planning.
Advance ESG is funded through donations from foundations and other sources. Our members have no financial obligations.