Shareholder Activism Wins Victories

Guest post by Timothy Smith, Senior Vice President, Environment, Social and Governance Group at Walden Asset Management

The investment portfolio at Tides has been managed for decades by Walden Asset Management (formerly U.S. Trust of Boston), a leader in sustainable and responsible investing.  Here are four areas where Walden helps Tides’ investments to support a double bottom line of financial returns and social change:

Screening: Tides’ investment choices utilize environmental, social, and governance screens to ensure investments do not undercut Tides’ purpose and mission.

Public Policy: As a shareholder working in partnership with other investors, Tides has spoken out on key policy issues, such as protecting shareholder rights to file resolutions by petitioning the Securities and Exchange Commission, and by writing Congress.

Community Development Investing: Tides sets aside a designated portion of its portfolio to support community economic development in the United States and globally.  These investments in community banks and loan funds, co-operatives and low income housing provide a modest return in the 3-4% range (actually a very positive return in this post-terrible market), while putting capital to work to empower communities.

One such example is Tides long term investment in Shared Interest, a South Africa guarantee fund based in New York City. Tides’ investment, blended with many others, provides guarantees in South Africa that press banks to make loans to projects in communities they would otherwise avoid.

Shareowner Engagement & Advocacy: As a shareowner, Tides votes its proxies and joins with Walden in writing companies and talking to management.  In addition, in an action that is rare among foundations, Tides actually joins as a public co-sponsor of shareholder resolutions to companies on a wide range of issues, from climate change and the environment, to non-discrimination on sexual orientation and diversity issues, to challenging excessive executive compensation or political spending by companies, to codes of ethics for global vendors of companies.  Our goal here is to be a catalyst for more transparency and changes in company policies and practices.

And often it works. This year Tides and Walden were able to withdraw 12 resolutions in agreements with companies when we came to specific agreements.  This form of advocacy actually contributes in small but important ways to social change and economic justice.  And Tides shares were involved in all these actions.

Specific breakthroughs with companies this year where Tides was a resolution co-sponsor included agreements by General Mills, and Colgate-Palmolive to adopt Say on Pay allowing shareholders to hold an Advisory Vote on executive pay.  Thanks to shareholder activism, more than 50 major companies have approved this policy.

In addition, Tides shares will be active at shareholder meetings to promote resolutions at ConocoPhillips on oil sands, and to urge IBM and Procter & Gamble to adopt Say on Pay.

All of these approaches enable Tides philanthropic capital to go beyond grantmaking to catalyze social change.