Shareholder Advocacy: Background


Promoting corporate environmental responsibility through active dialogue with companies is one of the primary missions of Green Century Capital Management (Green Century).

As investors, we are in a unique position to engage in dialogues with companies. Executives are often more comfortable discussing their environmental practices with their own shareholders than with others. Shareholders also bring unique strengths to these dialogues, deriving from the fact that, ultimately, they own the company.

Since the first shareholder resolution was filed in 1971 protesting General Motors' stance on apartheid in South Africa, investors have used their influence to encourage companies to become better corporate citizens and improve their social and environmental behavior. From increasing recycling to fighting global warming, active shareholders have demonstrated that they can help achieve positive changes in corporate environmental policies.

Indeed, the success of environmental shareholder resolutions has been increasing. From 2001 to 2003, the average percentage of votes in favor of environmental resolutions rose from 7.2% to 11.3% ("2003 Report on Socially Responsible Investing Trends in the United States," Social Investment Forum, updated 12/2003, p. 18). Shareholder advocacy can have an impact even if a resolution fails to pass. In many cases, a social or environmental resolution is withdrawn because the company's management decides to work with the proposing shareholders.

As shareholder advocacy moves into the 21st century, Green Century builds upon its tradition to advocate for greater corporate environmental responsibility. We engage companies on the merits of improving their environmental performance, and make the case that such action may help them succeed financially as well. There are numerous examples of this principle; some are quite obvious - for example, that saving energy may also save a company money. Other examples may be less obvious - for example, that adopting new technology to reduce emissions can be a better long-term bet than fighting environmental regulations. Green Century's approach has enabled it to accomplish a number of important environmental achievements over the past decade. But the impact of our work is found not only in our victories -- it is also found at the companies whose cultures reflect an increased awareness of the role that they can play in achieving a clean, healthy environment.