Historically, socially responsible investing (SRI) has been about a fundamental decision: whether to hold a “traditional” diversified portfolio, or to screen out companies for various environmental, social, or governance (ESG) criteria in order to meet an SRI mandate. The end result has been an endless debate about whether a portfolio that used ESG screens will subsequently produce returns that are better, worse, or the same as the traditional portfolio.
Yet the reality is that an SRI approach doesn’t have to be a choice between traditional portfolio investing or using ESG screens. An alternative approach is to try to shape the stocks in a traditional portfolio to better adhere to an SRI mandate, by leveraging the proxy voting and shareholder engagement process to steer the company’s management itself in a more SRI-focused direction.
In this guest post, Justina Lai and Ria Boner of Wetherby Asset Management share how they implemented an ESG shareholder engagement initiative within their own advisory firm, leveraging the outside resources of an external non-profit called “As You Sow” that works with institutions (including advisors) to mobilize shareholder resolutions.
The end result of their ESG shareholder engagement initiative was a deeper engagement with clients themselves, for what was ultimately a fairly modest financial and logistical cost for the firm. However, because there are specific requirements that must be met for clients to vote proxies, including owning individual securities directly, affirming their ownership, and delegating proxy voting authority to a third party, advisory firms must be certain to implement a proper process to ensure their shareholder engagement efforts with clients are successful!
source https://www.kitces.com/blog/esg-shareholder-engagement-initiative-proxy-voting-as-you-sow-wetherby/?utm_source=rss&utm_medium=rss&utm_campaign=esg-shareholder-engagement-initiative-proxy-voting-as-you-sow-wetherby
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