Proxy Season 2023: Teeing Up Guardrails

We’ve filed shareholder proposals at Hormel Foods (annual meeting date January 31), Tyson Foods (February 9), and McDonald’s (TBD) asking those companies to comply with World Health Organization (“WHO”) Guidelines on Use of Medically Important Antimicrobials in Food-Producing Animals (“WHO Guidelines”) throughout their supply chains.

Co-filers on the first two were Amundi, Europe’s largest asset manager by assets under management (US$1.9 trillion), and HESTA, an Australian superannuation fund with almost AU$70 billion in assets. Antibiotics overuse exacerbates antimicrobial resistance (AMR), which the WHO describes as “one of the top 10 global public health threats facing humanity.” AMR poses a systemic threat to public health and the economy. When the efficacy and availability of life-saving drugs are compromised, the entire economy suffers. And when the economy suffers, investors lose. By 2050, AMR could cause US$100 trillion in lost global production, thus lowering the economy’s intrinsic value.

A January 23 Responsible Investor article covered the Tyson proposal:

Speaking about the proposal Akaash Sachdeva, responsible investment manager at HESTA, said that co-filling “is recognition that consistent industry change is needed in the use of antibiotics to raise livestock and this cannot be achieved in isolation at any one company alone.”


He added: “We’re pleased that our programme of filling shareholder resolutions at key companies, in collaboration with The Shareholder Commons, is gaining traction with investors.”

We couldn’t have said it better ourselves. Akaash’s reasoning is precisely why these three proposals are a prelude to what will become an AMR guardrail campaign in 2024. Regular readers may remember that guardrails are minimum parameters for companies to protect vital social, environmental, and economic systems. These standards proscribe company practices that damage diversified portfolio value. Guardrails must be developed outside of companies, so that they’re set with a view toward maximizing the overall value of the economy and diversified portfolios, not the value of individual companies or industries involved in the negotiation.

This strategy avoids the trap of business case engagement. Companies are internally focused, and not structured to address the broad systemic concerns that matter most to diversified investors. Guardrails address this natural conflict of interest.

Once a guardrail is established, investors announce the guardrail and take steps to ensure companies stay within it. These steps include:

  • Voting against directors at public companies that don’t follow guardrails;
  • Voting against going-private transactions that don’t include guarantees to adhere to guardrails; and
  • Ensuring that companies entering the market through IPOs are committed to guardrails.

Investors also use their influence as limited partners to ensure that private equity, venture capital, and hedge fund sponsors bring portfolio companies within guardrails. Even companies not adequately subject to such governance tactics can be affected through their participation in supply chains.

For case studies demonstrating how investors can apply guardrails to reduce or eliminate damage to diversified portfolio value from antimicrobial resistance and climate change, click here.

Given the clear case for system stewardship as a means to optimize diversified portfolio value, we’ve also filed a proposal at State Street (May meeting date TBD) asking its board to report on the conflict of interest between its corporate executives and its clients, whose investments could benefit from reductions in the social and environmental costs corporations profitably externalize.

Finally, we’ve filed a proposal at Meta Platforms (May meeting date TBD)—the corporate behemoth that owns Facebook, Instagram, and WhatsApp—asking its board to report on the feasibility of aligning its remuneration practices with the interests of its shareholders in reducing the costs it externalizes when diversified portfolios absorb those costs.

We’ll share more about the McDonald’s, State Street, and Meta proposals as their annual meeting dates draw closer.