The Shareholder Commons Supports 2023 Proposals that Prioritize Portfolio Returns, Curtail Company Strategies Threatening Diversified Investors
“Most investors own a broad range of securities, but individual companies sometimes pursue profits at the expense of their diversified shareholders,” said TSC Chief Strategy Officer Sara E. Murphy.
In advance of the 2023 proxy season, The Shareholder Commons (TSC), a non-profit advocate for diversified investors, has worked with shareholders filing proposals at McDonald’s, State Street, Meta Platforms, and other major corporations to end extractive practices that threaten the financial interests of shareholders in preserving a resilient economy.
“Most investors own a broad range of securities, but individual companies sometimes pursue profits at the expense of their diversified shareholders,” said TSC Chief Strategy Officer Sara E. Murphy. “These proposals are designed to preserve the systems that support both the economy and their portfolios, but which are threatened by the social or environmental costs of certain corporate behavior.”
Global financial institutions Amundi, HESTA, and LGIM America—together representing more than $3.5 trillion in client assets—have co-filed the McDonald’s proposal, which addresses the risk that antimicrobial overuse poses to diversified portfolios that rely on an effective health care system. As companies such as McDonald’s overuse antibiotics and exacerbate antimicrobial resistance (AMR), the efficacy of these life-saving drugs is compromised, putting the whole economy at risk. Antimicrobial overuse in the McDonald’s supply chain may improve its margins and share price, but it also undermines the high-functioning health care systems that diversified portfolios rely on for long-term performance. The proposal calls on McDonald’s to follow World Health Organization guidelines for safe antimicrobial use.
“The antibiotics in the supply chains of McDonald’s and other food companies represent a material risk,” said Maria Ortino, Senior Global ESG Manager at LGIM. “AMR kills more than a million people each year and could cause $100 trillion in economic damage by 2050. Failure to adequately respond to AMR could lead to far greater risks—for our clients, society, and the global economy—than any individual company costs McDonald’s would incur by addressing this issue. Without coordinated action now, AMR could lead to the next global health crisis.”
The State Street proposal, filed by long-time shareholder advocate Jim McRitchie, seeks a report on whether the asset manager could better serve its clients by stewarding companies away from practices that threaten the systems undergirding diversified client portfolios, even when those practices might be financially beneficial to the individual companies.
“State Street manages trillions of dollars for ordinary workers saving for retirement and other life needs through diversified stock and bond funds,” said McRitchie. “It cannot effectively do its job to protect those savers unless it stops portfolio companies from engaging in practices that drain the social and environmental resources that support the portfolios of most savers.”
The proposal at Meta Platforms asks for a report on whether executive compensation could be calibrated to address the costs externalized by its operations, including costs imposed on the global economy and the environment. By prioritizing web traffic and user engagement to maximize profits, Meta often puts users, workers, political stability, and public health at risk. The proposal encourages compensation adjustments to offset any incentive to create costs that will be absorbed by the economy and, ultimately, Meta’s own diversified shareholders.
In an increasingly interdependent global economy, diversified shareholders must analyze the financial effect of companies’ social and environmental impacts on their entire portfolio. The Shareholder Commons’ forthcoming report, “Portfolios on the Ballot,” will highlight other 2023 shareholder initiatives that implicate the portfolio impact of individual companies’ policies.
Read more about system stewardship here.
About The Shareholder Commons
The Shareholder Commons (TSC) is a non-profit organization that addresses social and environmental issues from the perspective of shareholders who diversify their investments to optimize risk and return. TSC’s advocacy focuses on the divergence that often emerges between a company’s interest in maximizing its cash flows over the long term and its shareholders’ interests in optimizing overall market returns.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230322005195/en/