Help Clients Have Positive Impact Through Shareholder Engagement

By Paul Feldman

By Christopher Stroup

Shareholder engagement is a fundamental aspect of impact investing. Your clients, as shareholders in public companies, can leverage their ownership to communicate with leadership.

This affords them the opportunity to nudge their portfolio companies towards the positive change they hope to see in the world. Many clients want to better understand how to use their voice (and money) as a catalyst towards positive change. Below are three avenues to help your clients do just that.

Submit Shareholder Resolutions

Clients can submit resolutions to raise awareness about specific topics. These proposals often cover areas like reporting on internal metrics, reporting on environmental metrics, addressing human rights violations, and electing members of the board.

These proposals typically request that the company improve or alter a business practice, which your client can vote on at the company’s annual meeting. It is important to inform your clients that companies are not required to comply with these proposal requests. This remains true even if a majority of shareholders vote in favor of the proposal. That said, it does send a strong message to the company and the rest of the company’s stakeholders.

A minimum ownership level must be satisfied for your client to be able to submit shareholder resolutions. Your client can only submit a proposal if they hold at least $2,000 of a company’s securities for at least three years, $15,000 of a company’s securities for at least two years, or $25,000 of a company’s securities for at least one year.

Vote On Proposals

For you clients who want to have impact but have no interest in attending the annual shareholder meeting, they can still ensure that their voice is heard. This is done through what is known as proxy voting. Proxy voting is another key engagement tool that allows every shareholder, regardless of their ownership amounts, to have a voice.

It is important to understand that how your client owns the company dictates how proxies are voted. If your client owns a single stock position in the company, they can vote their proxies directly or partner with a proxy voting company who can vote the proxies for them.

If your client holds an exchange traded fund (ETF) or mutual fund, the proxies will be voted by the fund manager. Consequently, it is important to work with (or own shares of) funds where managers vote proxies in line with your client’s beliefs.

Join Coalitions For Direct Engagement

Direct engagement is usually reserved for big investors (e.g., fund managers) with significant assets. These shareholders can meet with companies on behalf of their investors. Independent engagement specialists like As You Sow often gather support from different individual and institutional shareholders. By leveraging this cumulative support, they can schedule meetings with companies to elevate a common voice.

Overall, clients can engage in many ways to push their portfolio companies towards positive change. As their advisor, you can help them conduct engagement in a thoughtful and strategic manner to ensure that their money is aligned with what they value most.

Christopher Stroup, MBA, CFP® is an LGBTQ+ financial advisor working for Abacus Wealth Partners in Santa Monica, CA. He focuses his work on LGBTQ+ members of senior leadership across emerging and Fortune 500 companies.

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