Embracing Shareholder Advocacy

I previously wrote about my unconventional path to the boardroom here. Today I am pleased to write about the important topic of shareholder advocacy as it relates to board service.

Shareholder advocacy means influencing a corporation’s behavior by exercising rights as partial owners, or shareholders, of that company. In other words, leveraging the power of stock ownership in publicly traded companies to prompt environmental, social and governance change from within.

We can be shareholder advocates as individual investors. I’ve also had the opportunity to learn about shareholder advocacy as a board member and am pleased to share with you what I’ve learned.

Divesting is one form of shareholder action, which entails selling your shares.?A recent example is Trinity Health’s statement that actions of violence and aggression do not align with its Mission or commitment to socially responsible investing.?As such, Trinity Health is in the process of divesting all Russian holdings within its investment portfolio.

Divesting is important. Making a public statement encourages others to do so and sends a message to a company or, in this case, a nation. Other times, divesting may not be the only answer. In some cases, working within the company as active shareholders may be more influential.

If you have children and live in the United States, you might have heard of the retail chain Five Below. Five Below is a specialty discount retailer that targets a younger demographic. In 2021, Trinity Health filed a shareholder resolution asking the company for a report of its “processes to assess and manage risks and/or hazards associated with chemicals in products.”?Productive dialogue with the company led to withdrawal of the resolution when Five Below agreed to conduct such an assessment of its private label products and to disclose how it manages chemical risks. As a result, kids given products from Five Below are less likely to play with toys with known toxins in them, thanks to Trinity’s shareholder advocacy.

In 2021, Trinity Health joined Europe and UK-based investors in filing a resolution calling on Unilever to disclose the total annual food and drink annual sales by both volume and revenue made up by healthier products (as defined by a government-endorsed Nutrient Profile Model, such as from the UK, France, Australia or New Zealand), and to adopt targets to increase the share of healthy foods it sells. After several shareholder dialogues, Unilever agreed to publicly report the performance of its product portfolio against at least six different government-endorsed Nutrient Profile Models as well as the company’s own Highest Nutritional Standards (HNS) for 16 of its biggest markets. Unilever will become the first global food company to complete such a report. Later this year, the company will also adopt new targets for plant-based sales, reduction of salt, sugar and calories, and will increase the sales of healthier “positive nutrition” products.??Shareholders agreed to withdraw the resolution and will meet with the company during the year as Unilever sets its new nutrition targets.

Years before my time on the board, in 2015, Trinity Health reached out to Best Buy via letters and subsequent meetings, asking it to expand its efforts to eliminate potentially harmful chemicals from its private label electronic products.?The focus was on toxic flame-retardants used in the plastic casings of televisions.?These chemicals can leach out of products and scientific studies have linked exposure to these flame retardants to negative health impacts. In 2022, Best Buy announced a new commitment that all newly designed models of Best Buy’s Insignia brand television will no longer contain toxic organohalogen flame retardants. It is also working with its suppliers to evaluate safer alternatives to these toxic chemicals.

?I also learned that Trinity filed a shareholder resolution at PDC Energy, the 30th?largest oil & gas company in the US, asking the company to set goals to reduce routine flaring and venting of methane from operating and non-operating wells and to commit to the World Bank’s “Zero Routine Flaring by 2030” initiative.?Reducing methane emissions will have an immediate impact on addressing climate change. The resolution led?PDC Energy?to commit to end all routine methane flaring by 2025 and reduce its greenhouse gas and methane emissions intensity by 60% and 50% respectively, also by 2025.?

In 2013, Trinity Health joined with other shareholders to dialogue with CVS, calling on the company to stop selling tobacco.?The following year, the company announced it would end tobacco sales.

?In 2012, the U.S. Surgeon General reported that there is sufficient evidence to conclude that there is a causal relationship between depictions of smoking in the movies and the initiation of smoking among young people.?Shareholder engagement over nearly twenty years has led to all the major movie studios adopting tobacco policies that aim to eliminate tobacco in youth-rated movies. Trinity Health leads the advocacy efforts with WarnerMedia and continues to meet with the company to monitor enforcement of the policy.?Shareholders have pressed that tobacco policies be expanded to streaming content, and as a result of shareholder dialogues, WarnerMedia and Disney committed to protecting kids from tobacco depictions in their streaming content.?WarnerMedia’s HBO Max original entertainment shows rated TV-Y, TV-Y7 and TV-PG will not have tobacco or vaping depictions unless they are portrayed negatively or depict a literary or historical figure who smoked.?Disney+ service identifies content with negative stereotypes and tobacco depictions and labels that content for consumer awareness. In 2015, it committed to all youth-rated movies made under the company’s studio banners will be smoke-free. Good for WarnerMedia for insisting that its tobacco policy be enforced -?no smoking in the new “The Batman” movie.

When I joined the Stewardship Committee (i.e., Finance Committee) and Socially Responsible Investment Sub-Committee at Trinity Health, I knew I’d get to review lots of numbers. I was pleased to also embrace these board committees as meaningful opportunities to make a difference in the public health of our country, including but not limited to Trinity Health patients. For me, the experience of shareholder advocacy has given renewed meaning to the phrase, “Put your money where your mouth is.” Thank you to all of the organizations that look out for people, planet and profit. We need all three priorities to work in concert to positively impact the health of the world and society, one investment at a time.

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