Our first initiative is about changing minds—communicating our ideas through this newsletter, through publishing and through presentations and public speaking. We have articles in the current issues of the Oxford Review of Economic Policy and the Journal of Applied Corporate Finance. I also had a chance to be interviewed by Amelia Miazad, Founder of the Business in Society Institute at Berkeley, and one of the scholars out there who really gets it. We also helped teach a short ALI-ABA Continuing Legal Education program on ESG and Board Fiduciary Duties. Please take a look at these and pass them on to anyone who might be interested.
We are also working hard to update our materials for broader consumption. We are delighted that Sam Andrus is helping us translate our theory of change into slides and visuals that are easier to consume. We would love to test drive these new materials, so please let us know if your organization would like to watch a presentation over Zoom—don’t be shy or think you are the “wrong” audience: we want to bring this message to everyone, and getting some early and honest reactions will be critical.
Our next two initiatives are about changing the rules by clarifying that the laws governing investing do not actually require fiduciaries to prioritize financial success at individual companies over the health of people and planet, as they are currently interpreted. Instead, those rules should allow for other people’s money to be managed in a manner that protects all of the common interests that shareholders have, including their interest in a healthy economy, society and environment.
One of our rule-changing initiatives is litigation oriented: we would like the courts to clarify that the fiduciary duties of directors and trustees allow them to protect the broad common interests of their shareholders and investors. (More starkly, I want the courts to say that the directors of the companies I invest in through index funds should not create economy-destroying carbon and inequality in order to boost returns, because that behavior really doesn’t help me in the long run.)
In June, we will hold our first workshop with practicing lawyers, institutional investors and law professors to discuss potential lawsuits that might establish this principle, as well as opportunities for participating in other litigation where the voice of the average index fund investor is not being heard. If you would like to participate in this effort as the beneficiary of a pension plan or mutual fund, a shareholder of a corporation, as a lawyer or otherwise, please let us know. This is a great opportunity to get in on the ground floor of an exciting new effort.
The other rule-changing initiative is about actually rewriting the laws, as we discussed in this post about our efforts to draft a White Paper. The most important part of this effort is going to be clarifying the laws that govern institutional investors like pension funds, endowments, and foundations. If you have an interest in working behind the scenes or directly with state officials and legislators in order to make it easier for these investors to engage with companies on issues of great importance to our collective interests, let us know.
Our final initiative is aimed at changing the actual behavior of investors and companies. We want to spark a movement among asset owners and managers to use guardrails—minimum parameters for corporate behavior—as a tool for increasing the level of sustainable performance at corporations. We are initiating a process to develop a core group of early adopters from the asset owner/manager community. If this would be of interest to your organization, please let us know—we think we can effect lasting change to the way business is done and you can be a part of it. To participate, we ask that institutions (1) commit to the proposition that certain substantive levels of conduct are non-negotiable, regardless of financial materiality from an individual company perspective and are instead “tickets to the game” and (2) be ready to engage with companies on such guardrails in advance of the 2021 proxy season.
We hope this has given you a better idea of what we are doing on the ground and we hope to hear from you if you would be interested in getting involved. Please reach out to us and we would be happy to talk further about how you can engage with our work.
From The Shareholder Common’s May 2020 Newsletter. Sign up for our newsletter here to get more updates from TSC on our work, research, and opportunities for action.