Introducing TSC’s Proxy Voting Guide

Portfolios on the Ballot


Proxy season allows shareholders to tell companies how they want their capital applied in the real economy. Among other matters, shareholders can press for an end to extractive practices that threaten diversified investors’ financial interests in preserving a resilient economy. Portfolios on the Ballot highlights upcoming 2023 proxy votes that address diversified investors’ common interests in a just and sustainable economy. In particular, POTB identifies:

  • Proposals and “vote no” campaigns designed to accelerate reductions in greenhouse gas emissions at companies that appear to be prioritizing their own cash flows over the risk that the climate crisis poses to the entire economy (and consequently to diversified portfolios). Matters include both proposals and votes against directors. Companies targeted include ExxonMobil, Chevron, BP, and Shell.
  • Proposals at Amazon, Meta Platforms, and Alphabet to protect digital and human rights. These companies have created huge enterprise values for themselves but are creating ever-greater risks to the social institutions that sustain a resilient economy. This prioritization of profits over people may increase these companies’ cash flows, but it’s a terrible trade for their diversified shareholders, whose portfolios depend on a thriving economy.
  • A proposal at McDonald’s addressing the abuse of antimicrobials in its supply chain. While this practice may improve its margins and thus its share price, it contributes to antimicrobial resistance, a $100 trillion threat to the global economy, and a corresponding risk for the diversified portfolios that rely upon a high-functioning health care system.
  • A proposal at State Street, one of the world’s largest asset managers, seeking a report on whether it could serve its clients better by stewarding companies away from practices that threaten the systems that undergird its clients’ diversified portfolios, even when those practices might be financially beneficial to the individual companies.
  • A proposal at BlackRock, asking the world’s largest asset manager to report on whether and how it could improve its pension fund clients’ investment returns by stewarding its holdings to “engineer decarbonization in the real economy,” thereby improving financial returns to BlackRock shareholders.
  • Proposals at major banks including JPMorgan Chase, Royal Bank of Canada, Goldman Sachs, and Citigroup asking them to end fossil-fuel financing that exacerbates systemic risk to diversified portfolios from climate change.
  • Proposals asking companies to disclose how paying their workers less than a living wage (Kroger and Dollar Tree) and selling tobacco products (Kroger) externalizes costs onto their shareholders’ diversified portfolios.
  • A proposal at Verizon asking it to discontinue political expenditures that may increase its own financial returns at the expense of diversified portfolios.




Modern investing requires diversification. Optimizing the financial risk and return of a portfolio requires broad diversification. This allows savers to earn the high returns available from risky assets (such as common stock), while diversifying away the idiosyncratic risk that would accompany concentration on one company or sector.

Diversification prioritizes overall market returns. This diversification means that the most important factor determining investment returns over the long term will be the return of the market itself, rather than whether any particular company in a portfolio does better or worse than the market.

Diversified investors considering sustainability questions should prioritize overall market returns to protect their portfolios. When considering an ESG or sustainability-linked vote, investors should ask, “How will my vote affect my overall return from the market?” because overall returns are what allow investors to meet their financial goals and liabilities.

Often, the answer to this broad question is the same as the answer to the narrow question, “What vote will optimize returns at the company in question?” For example, the question whether to support a resolution favoring shareholder rights may be “yes,” because those rights will create greater accountability, so that the company is more likely to protect shareholders’ financial interests, improving both company returns and total market returns.

For some sustainability questions, however, the interests of individual companies are not aligned with their diversified shareholders’ interests in optimizing overall market returns. It is not always the case that the vote that is best for company returns is best for portfolio returns. As the votes discussed in this publication illustrate, the strategy that maximizes cash flows for a company may involve the creation of social and environmental costs that threaten the systems that support the economy upon which diversified portfolios depend.

Shareholders can and should vote in their own interests (or the interests of their beneficiaries), even when those interests conflict with isolated company interests. Shareholder stewardship is not constrained, by law or commercial reality, to advocacy designed to preserve or enhance a company’s long-term value: if a portfolio company creates social or environmental costs that threaten their overall portfolio returns, investors can (and should) use their stewardship tools to oppose such behavior, even if doing so could reduce enterprise value at an individual company. (A memo explaining this concept is available here.)