Social and environmental activists have a long history of proposing shareholder resolutions at company meetings. Increasingly, investors are identifying issues toward which they want to take an "activist stance" in their proxy voting.

Recently, major mutual fund managers have spoken publicly of the responsibility of companies and investors, and in many cases implied a new era in their approaches to voting proxies. Larry Fink, CEO at BlackRock, wrote in late 2017: "Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate. Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders."¹

While some may be skeptical of the commitment shown in such a letter, the fact that Fink felt compelled to speak publicly on these issues, and used phrases often found among the true believers in the responsible/sustainable investment community ("license to operate"), is evidence of the marketplace’s higher level of interest in these concepts.

Certainly, many people have seen the Fearless Girl statue facing down Wall Street’s bull statue. What most observers may have missed was the announcement State Street made at the time it unveiled the statue—that it was changing its proxy voting policy: specifically, if necessary, it would withhold its proxy votes from the chair of nominating or governance committees where no women serve on the board of directors.²

Whether these changes by big firms are statements of the converted or attempts to greenwash, they indicate a sea change. The new emphasis on the importance of proxy voting provides a significant prompt to any firm not taking its voting rights seriously. When big firms like Vanguard and BlackRock vote in favor of climate change disclosure resolutions at ExxonMobil, it becomes more difficult for small firms to defer to management.

It also becomes more difficult for the same large firms to generally oppose other social and environmental resolutions. Critics have pointed out the inconsistent manner of proxy voting on climate change issues by firms like BlackRock—supporting a resolution at ExxonMobil while still opposing resolutions at other larger fossil fuel companies. One headline summarized the rate of change: "BlackRock and Vanguard’s climate change efforts are glacial."

But remember, glaciers change landscapes.

This article was recently published in Proxy Preview 2018.

Send questions or comments to blog@aperiogroup.com.

¹ www.blackrock.com/corporate/en-no/investor-relations/larry-fink-ceo-letter

² www.ssga.com/investment-topics/environmental-social-governance/2017/guidance-on-enhancing-gender-diversity-on-boards.pdf