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• Webinar Reflections: Harassment, Guns & Data Security this Proxy Season

May 22 2018
May 22 2018
A snowball’s chance in . . .

A year ago, it seemed inconceivable that 69% of investors in a gun company would vote in support of its reporting publicly on ‘reputational and financial risks related to gun violence.’  And yet, on May 9, 2018, 69% of gun manufacturer Sturm Ruger’s shareholders supported this step be taken. Investors in a gun company voted to research producing safer guns.

How did this incredible show of support for a shift in gun manufacturing practices come about?  And what does it mean for other social-change-focused investor requests in 2018?


The basics

Investor engagements can take many forms, but the most often used approaches are dialogues – conversations both ‘behind the scenes’ and in public forums – where constructive talks are held with companies. This may be a multi-year, or even a multi-decade, process.  Should the warm and convivial approach be ineffective, US investors are able to file shareholder resolutions, which allow them to place a 500-word request before the Board of Directors of a company. The support of this request by other investors in that company is tallied through a non-binding vote. However, a high tally acts as a mandate to the company. Investors often also seek out media attention and to educate others on their issues of concern.

These approaches have become increasingly popular and well-supported over time. The US SIF Foundation publishes a report tracking the use of ESG data and shareholder resolutions by investors. Its most recent report, published in 2016, shows that there has been an exponential and significant increase in the use of these tools.



This development reflects an intuitive truth of how the capital markets work. In order to earn alpha – read: make more $ than the other guys – an investor has to have a greater ability than her peers to predict, or direct, the direction of stock prices. Understanding environmental, social and governance issues increases knowledge of individual stocks, as well as macroeconomic conditions.  And, once investors understand that an environmental or social issue may impact their investments, they are incentivized to proactively address the issues.


Implications for rising issues

What happens then, when an issue is new to the proxy ballot?

Three speakers on Confluence’s recent webinar illustrated the changing landscape that rising social and environmental issues are operating within. The topics – gun control, data privacy, and workplace harassment – are currently at the forefront of public concern. They are highly timely in the short-term, but also linked to companies’ long-term value and strategies.

As these issues are unique and nuanced, so were the approaches illustrated by these investors.  However, their work shows that a range of approaches to successfully encouraging corporate change exist within the current investment environment.


Gun control

Josh Zinner, CEO of the Interfaith Center on Corporate Responsibility (ICCR), highlighted resolutions and investor coordination efforts by ICCR members this year which focused on gun control. Among these were the resolution filed by Mercy Investment Services at Dick’s Sporting Goods which succeeded in moving the company to report on the Sandy Hook Principles, stopping the selling of assault-style weapons AND destroying those that were on its shelves.

This significant change in corporate policy at Dick’s was paralleled by the unprecedented showing of investor support for a gun control resolution at Sturm Ruger. Catholic Health Initiatives and Adrian Dominican Sisters had filed a joint resolution at the gun manufacturer, asking that the company report on its activities related to gun safety. The company has committed to honor the request. This high-support vote garnered significant media attention as well as the wrath of the NRA. The angry calls being fielded by his organization, Mr. Zinner says, are “a sign we must be doing something right.”


Data privacy

Cambria Allen, Director of Corporate Governance at the United Auto Workers Retiree Medical Benefits Trust, spoke to the resolution at Equifax. Following Equifax’s massive data breach in July of 2017, UAW Retiree Medical Benefits Trust partnered with a coalition of investors to file a resolution that would require Equifax to report on governance measures taken since the attack. This focus on reporting was meant to address Equifax’s failure to respond to their data breach appropriately. “Transparency is a huge problem in the market. If we don’t have the information, we can’t make changes,” stated Ms. Allen.

Likely due to significant pressure from consumers and public interest groups, Equifax chose to comply with the vast majority of the proposal’s recommendations, ultimately reporting on a number of governance changes, including an independent investigation into the company’s actions, changes to the board, and short- and long-term executive compensation and clawback policies.


Workplace harassment

Brianna Murphy, Vice President of Shareholder Advocacy at Trillium Asset Management, outlined efforts focused on workplace diversity. This included a resolution at PNC Financial Services Group, which requested that PNC prepare a diversity report that identifies employees according to gender and race in defined job categories, as well as a description of policies/programs focused on increasing gender and racial diversity in the workplace.

Trillium believes that workforce diversity is an effective tool to mitigate workplace harassment and took a more direct approach in addressing sexual harassment with their recent resolution at Nike, which asked the company to consider integrating culture or diversity metrics into the performance measures of senior executives. The resolution was in response to news that multiple veteran executives abruptly left the company after an internal survey uncovered a toxic harassment culture. In the end, this resolution was withdrawn and Nike agreed to evaluate the request and meet quarterly to discuss the results.



While investor support for ESG issues is increasing, it is, by no means, guaranteed. The successes of these initiatives are reflective of a few important qualities of the efforts, essential when raising new topics:

  • The issues are topical and highly pertinent to the companies where the concerns were raised.

  • The filers or the resolution have clearly elucidated their concerns and the actions which would address them.

Is there more to be done on these issues, and more needed to strengthen these companies’ responses? Absolutely. However, the successes of these three efforts shows that, in 2018, both investors and companies are receptive to thoughtfully constructed rationales for change.



Meredith-Benton (2)


Meredith Benton leads Whistle Stop Capital, LLC.  Whistle Stop aids investment managers and asset owners in developing active strategies to address human rights and environmental concerns across asset classes. It also assists in assessing and communicating how sustainability issues may impact portfolio construction.


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