In mid March we hosted an event featuring two industry leaders who specialize in Shareholder Advocacy – an essential part of social investing. Joining us was Holly Testa, Director of Shareowner Engagement at First Affirmative Financial Network and Julie Gorte, SVP, Sustainable Investing & Portfolio Manager with Impax Asset Management.

Julie Gorte & Holly Testa

Holly described advocacy work as a mosquito trying to affect an elephant – the company. One mosquito alone is annoying, but easily swatted away. With multiple advocates banding together, the elephant can no longer ignore the swarm! Generally, advocacy is done through three channels:

  1. Proxy Voting
  2. Shareholding Resolutions
  3. Dialoguing behind the scenes

Julie updated us on the Financial Choice Act, and how the SEC is making advocacy within a company more challenging. Currently, Rule 14a-8 allows any owner of $2,000 worth of company stock for over a year to file a resolution. Sadly, this is being considered to change to 1% of ownership. With a giant company like Apple one would need to own $9 Billion worth of stock to file a resolution! This proposed change hasn’t been enacted yet, and we’re actively opposing its adoption!

On a more positive note, we are seeing some great industry shifts toward impact. The sustainable stock exchange initiative is in full swing at the UN with 20+ exchanges publishing or committed to publishing guidance on Environmental, Social, and Governance (ESG) criterion. For us here in the U.S.A, Nasdaq is our most notable commitment. Even ratings companies such as Moody’s and S&P have began including climate change as part of their rating criteria. This makes sense as parts of our country become more vulnerable to how climate is changing- Houston, Santa Barbara, and Puerto Rico are a few that readily come to mind. It only makes sense that bonds for infrastructure projects in these communities consider environmental risks.

With today’s climate on gun control, the topic naturally came up. Not surprisingly, neither First Affirmative nor Impax own any gun manufacturer stock. However, one way we can influence this industry is by working with banks. For example, if you were to go out and buy a gun, would your bank finance that transaction? Our industry is working on making banks more aware of how their lending ultimately affects things like gun proliferation. This was similar to action we took with the Dakota Access Pipeline and engaging with banks giving loans to the companies who financed the pipeline.

Our teammate, Renee Morgan, had the opportunity to update us on some advocacy work she and others are doing regarding racial justice. On Renee’s end, she has been working within our industry to talk with the firms we work with about the racial composition of their firms. More to come on that in the next few weeks. She also highlighted how one of our partners, Self Help Federal Credit Union is providing grants to DACA participants to file their $500+ paperwork.

Thank you to those who joined us and please reach out to us if you are curious about learning more about our advocacy efforts. Till next time!

Mention of specific securities is not a recommendation to buy or sell that security. For suitability information on any investment please see your investment advisor.

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Ken Jacobs CFP®, AIF®, CLU and Renee Morgan are investment advisor representatives of First Affirmative Financial Network (“First Affirmative”). Ken and Renee own an entity called Sustainable World Financial Advisors (SWFA) which is not affiliated with First Affirmative nor is it a registered entity. SWFA does not offer investment services, those services are offered by First Affirmative which is a Registered Investment Advisor (SEC File #801-56587). SWFA is a “doing business as” (DBA) name for use in its operations and should not be considered a registered entity offering investment services. The credentials CFP® & AIF® listed above bear trademarks. FAFN-Logo-(1)
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