Advocacy
Change Finance seeks to leverage the power of capital markets to promote a more just and sustainable world. A rigorous investment methodology that relies on environmental, social, and governance (ESG) data is one tool for achieving this goal, but more is needed. Change Finance is also committed to active ownership. Through the thoughtful and collaborative work of our Shareholder Advocacy Team, we can make a more specific and immediate positive impact.
Our Advocacy Toolbox
Proxy Voting
Proxy voting is the most direct method for shareholders to influence corporate practices. Supporting shareholder resolutions that are in the best interest of people, the planet, and ethical profits is the foundation of shareholder advocacy at Change Finance. We diligently vote our proxies following ESG principles and with the guidance of Glass Lewis.
Corporate Engagement
Shareholders of publicly traded companies own a portion of the business, and therefore, can influence the decisions of corporate management. Change Finance works to identify areas where companies can improve ESG performance and then collaborates with other investors to promote corporate policies that enhance the sustainability, responsibility, and profitability of the business.
Divestment
Change Finance divests from those industries that are fundamentally unsustainable and where engagement efforts are unlikely to be successful. Examples of those industries in which we divest include fossil fuels, tobacco, and weapons. Divestment meets the moral and ethical demands of our clients, while simultaneously insulating them from the risks associated with irresponsible corporate practices.
Shareholder Resolutions
In some situations, Change Finance will seek to file formal shareholder resolutions, a critical tool for active shareholders to have an immediate impact on corporate policy and practices. Resolutions may also bring otherwise reluctant corporate managers to the negotiating table.
Public Policy
A strong public policy framework is critical for incentivizing responsible and sustainable corporate behavior. Change Finance’s memberships and affiliations with organizations, such as USSIF and the FAIRR Initiative, allow us to collaborate with other investors to promote policies supportive of shareholder rights, equality, and democracy.
Justice and Equity
Through our Justice and Equity advocacy, Change Finance seeks to address the structural and systemic issues which lead to unequal and inhumane outcomes, particularly for minoritized groups. We continue to lead campaigns to address systemic racial and gender pay inequity and to work with others on issues ranging from reproductive rights to diversity in the board room. Addressing social inequity is better for business, better for society, and better for investors.
Featured Engagement
Reproductive Rights
Public policies restricting reproductive health care are bad for business. They impair the ability to build diverse and inclusive workforce pipelines, recruit top talent across states, and protect the well-being of all the people who keep businesses thriving. For example, after the Texas law banning abortions after six weeks of pregnancy went into effect in 2021, a poll found that “roughly 75% of women and 58% of men said the new law would discourage them from working in Texas and that 73% of women and 53% of men said they wouldn't even apply for a job in a state that passed a similar ban.” 1
Given that healthcare is directly tied to employment, employers are now in the spotlight regarding how they care for and support employees in their reproductive health journeys. Businesses need to evaluate how benefits contribute to, or detract from, their ability to build an equitable workforce. Change Finance is currently engaged in dialogue with companies we invest in with the goal of supporting womens’ equity in the workforce by ensuring that companies in our portfolio have policies and benefits that support reproductive health, regardless of the employee’s location.
Our engagement letters regarding reproductive rights policies in collaboration with Rhia Ventures have garnered signatures from institutional investors, asset owners, and asset managers who are long-term investors in the public markets, with combined assets under management of $19.9 billion.
1Survey: Two Thirds of College-Educated Workers May Avoid Texas Because Of Abortion Ban https://www.forbes.com/sites/maggiemcgrath/2021/09/02/survey-two-thirds-of-college-educated-workers--may-avoid-texas-because-of--abortion-ban/?sh=710de506e4c0
Other Engagements & Collaborations
Sponsor:
Don't Ban Equality
Description:
Restricting access to comprehensive reproductive care, including abortion, threatens our workers' and customers' health, independence, and economic stability.
Sponsor:
Share
Description:
Mondelez has yet to take action to address the significant racial equity issues raised in this year's racial equity audit (REA) shareholder proposal, even though the proposal won a near-majority vote.
Sponsor:
Adasina and OthersDescription:
Investor letter to the S&P 100 companies in advance of proxy season, to communicate our expectations on board diversity and racial justice.
Sponsor:
OpenMic
Description:
Investor letter to the Federal Communications Commission urging it to adopt a rule to require all regulatees—including broadcasters, cable operators, satellite companies, telephone, and cellular companies—to submit their EEO-1 data to the FCC.
Sponsor:
Trillium
Description:
Letter to Starbucks to ask them to maintain neutrality related to worker unionization efforts.
Sponsor:
Responsible Business Initiative
Description:
A coalition of businesses and organizations working to expand access for people to work, support themselves, and live healthy lives. “Clean Slate” is a term for legislation that streamlines the process by which eligible conviction and non-conviction records are sealed.
Sponsor:
Investor Circle Toward Decarceration
Description:
Investor led coalition to signify dissociation from any “opportunity” to underwrite or finance the prison industry.
Sponsor:
US Impact Investing Alliance
Description:
Letter to Federal Reserve asking for significant changes to the Community Reinvestment act.
Change Finance Proxy Votes
Engagement Highlights
TJ Maxx
In a conference call with TJ Maxx it reaffirmed its commitment to reproductive health care access. It has always been important to TJX. They cover a full spectrum of reproductive services and reviewed their plans after the Dobbs decision to ensure that employees could utilize the travel benefit to access services that were no longer available to them locally.
Climate and Environment
Through our Climate and Environment work, Change Finance seeks to preserve and enhance the natural systems that are critical to people and to the planet. A Deloitte analysis concludes that the climate crisis could cost the US economy $14.5 trillion dollars in the next 50 years.2 Fundamentally, climate change is an existential threat to life as we know it. The global economy must decarbonize rapidly if we hope to limit warming to a level to which humanity can adapt.
Featured Engagement
Letters to AT&T, Becton Dickinson, and Intuitive Surgical
For too long, businesses have treated carbon emissions as a cost free externality which means the costs of those emissions have been born systemically through their impacts on society. It is getting harder for corporations to hide their contributions to the climate crisis and with the SEC’s proposed rule governing corporate climate disclosures expected to take effect in early 2023 it will get even harder. We believe those increased disclosure requirements cannot come soon enough. As we discovered when we ramped up our carbon neutrality program, even companies with commitments to transparency can do better. As we worked with our carbon foot printing partner, Verity, we found that reporting can be inconsistent across a company’s web properties, ESG reports, and their reports to the Carbon Data Project (CDP) which collects and consolidates carbon footprint data from many companies. As more companies make net zero commitments and more investors begin to track progress toward those commitments, clear, accurate, reliable reporting is essential. This year we engaged with three companies in our portfolio, chosen from among the largest emitters in the portfolio, who either didn’t have clear reporting or who had inconsistencies in the data reported.
At AT&T we asked for clarification of the discrepancies between their ESG reports and the data reported the CDP as well as for additional information about their exposure to climate risk and mitigation strategies.
At Becton Dickinson we requested clarification on the discrepancy between their TFCD and CDP reporting, an update on their plans for Scope 3 reporting, and more information on accountability mechanisms for achieving emission reduction targets.
We asked Intuitive Surgical to include actual emissions data, not just percentage reduction in their sustainability reporting and to report that data to CDP.
Other Engagements & Collaborations
Sponsor:
Ceres
Description:
Letter to EPA on proposed standards for oil and regulations.
Sponsor:
IIPWG
Description:
The Investors & Indigenous Peoples Working Group has put forward an investor statement to financiers which highlights risks posed to the rights of Indigenous Peoples, to the cultural survival of Indigenous practices, to the long-term health of local water systems, and to the climate.
Sponsor:
Business for Climate Action
Description:
Comment letter urging the president and congress to take bold legislative action on climate change.
Sponsor:
The Investor Agenda
Description:
2022 Global Investor Statement to Governments on the Climate Crisis showcased at COP27.
Sponsor:
Ceres
Description:
Statement of Essential Principles for SEC Climate Change Disclosure Rulemaking
Sponsor:
Interfaith Center on Corporate Responsibility
Description:
Letter to the Chamber’s leadership, including members of its Board of Directors, to advocate for the relevant public policies needed to significantly reduce GHG emissions, stabilize our climate, and re-envision our energy economy.
Sponsor:
PvFF
Description:
Sign on to two comment letters directed to the Securities and Exchange Commission (SEC), responding to its Request for Comment on its proposed rules on Environmental, Social, and Governance (ESG) investing and disclosures.
Sponsor:
American Sustainable Business Network & Interfaith Center for Corporate Responsibility
Description:
Letter in Support of PACTPA which would significantly strengthen current regulations, create incentives to transition away from toxic pesticide use, protect the health of communities, and reduce public health care costs.
Change Finance Proxy Votes
Governance and Policy
Through our Corporate Governance and Public Policy advocacy, Change Finance seeks to create incentive structures for corporate managers that benefit all stakeholders. We also continue to advocate for public policy that addresses social and racial inequalities, preserves nature’s biome and our natural world, and strengthens the foundations of our economic system, democracy. We continue to believe that these goals transcend political ideologies and should be supported by all who pursue investment returns from capital markets.
Featured Engagement
SEC Comment Letters
2022 was a banner-year for ESG-related public policy. The Securities and Exchange Commission (SEC), which is responsible for overseeing investment-related activities, proposed three important rules related to ESG...
The Corporate Climate Disclosure Rule, which is expected to be released early in 2023 will require corporations to disclose their greenhouse gas (GHG) emissions, the environmental risks they face, and the steps they’re taking to mitigate those risks.
The Names Rule, which originally took effect approximately 20 years ago, will be modernized to ensure that funds which include ESG in their name do, in fact, follow defined ESG practices.
The Fund ESG Disclosures Rule, which is expected to be finalized in October of 2023, is a first attempt to bring some standardization to the ESG investing space. It will require ESG funds to provide certain consistent types of disclosures to investors with the goal of making it easier to make sense of the ESG claims made by different fund managers.
While Change Finance, along with many in the ESG investing industry, believes that regulation is needed to help address pervasive greenwashing that can make it very difficult for investors to determine which investments have adopted terms like ESG or sustainability simply because they are trendy while doing little or nothing to invest with a true sustainability focus, we are concerned that the initial versions of some of these rules would not effectively serve the purpose for which they were intended. That is why we participated in our industry trade association, the US Sustainable Investment Forum (USSIF) task force to formulate an industry response to the proposed Names Rule and the proposed Fund ESG Disclosures Rule. Together with other task force members, we analyzed the proposed rule, identified areas for improvement, and drafted a detailed comment letter for USSIF members to use as a template in their own responses during the SEC’s open comment period.
Political Accountability
Just as public policy directly affects corporate governance, sometimes corporate governance directly affects public policy - particularly when corporations decide how to deploy resources to influence politics, whether through direct or indirect political contributions or through lobbying. We have been working for several years on corporate political accountability and this year our work became even more powerful as we partnered with the Center for Political Accountability (CPA) to work with them to move companies toward implementing policies that align with the new CPA-Zicklin Model Code for Political Accountability. As the preamble to the Code begins:
“The heightened risk posed by engaging in political activity makes it paramount that companies adopt a code of conduct to govern their political participation. Whether a company is directly contributing to or spending in elections or indirectly participating through payments to political or advocacy organizations, a code commits senior management and directors to responsible participation in our nation’s politics. The code is a public commitment to employees, shareholders, and the public to transparency and accountability. It not only mitigates risk but also demonstrates the company’s understanding that its participation in politics must reflect its core values, its respect for the law, and its responsibilities as a member of the body politic.”
The Model Code has 12 basic precepts. Many of them are simple and seem like the basics of nominal corporate ethics, although, of course, there are stories of companies failing each of these. For example:
- Political spending should represent a company’s interests, not those of its officers or executives.
- Contributions will not be given for official acts or that otherwise have
the appearance of bribery. - The company won’t coerce employees to make personal political
contributions.
Other of the code’s precepts seem clear to us to be good governance, although they may not be as obviously basic ethics:
- All political expenditures must obtain prior written authorization from
the appropriate corporate officer. - The company will publicly disclose all direct political contributions.
- The Board of Directors will supervise the company’s political
contributions and assess its risks and impacts.
The two final precepts in the Model Code, which we believe are relatively novel and critically important address ESG specifically:
- The company shall consider how the positions of candidates and organizations
to which it contributes align with its values and the Board must review this. - Separately, the Board must consider the broader societal and economic harm
and risks posed by the company’s political spending.
Perhaps, however, the most challenging precept for companies to address, and the one we’ve focused on in our 2022 engagement is precept 9: “The board shall require a report from trade associations or other third-party groups receiving company money on how it is being used and the candidates whom the spending promotes.” This particular item is uniquely challenging because it requires the company to seek non-public information from third parties which those third parties may be reluctant to share, and to make continued participation with those third party groups contingent on receipt of the information. Generally speaking, a company chooses to join a trade association because it gets value from its membership - access to essential information, lobbying, and more. It may be a difficult strategic decision to make continued membership contingent on access to information that the association is unwilling to share. We are seeking the brave first-movers willing to take a stand and help lead a coalition of their peers who, acting in concert, can drive change.
To that end, we filed shareholder resolutions at Eli Lilly and PayPal in each case seeking public disclosure of the political expenditures of trade associations, social welfare organizations and other political organizations to which those companies belong or contribute. The Eli Lilly resolution and supporting statement are available here. Over the past two years, PayPal has shown rapid and marked improvement in its political accountability as measured by the CPA-Zicklin index. We anticipate that by the time you read this report, we will have reached a negotiated withdraw agreement.
Other Engagements & Collaborations
Sponsor:
OpenMic
Description:
Investor letter to the Federal Communications Commission urging it to adopt a rule to require all regulatees—including broadcasters, cable operators, satellite companies, telephone, and cellular companies—to submit their EEO-1 data to the FCC.
Sponsor:
US Impact Investing Alliance
Description:
Letter to Federal Reserve asking for significant changes to the Community Reinvestment act.
Change Finance Proxy Votes
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