Should Foundations Embrace Shareholder Engagement and Activism?

Historically, responsible investing in public markets has been considered concessionary: screening out businesses such as tobacco makers or oil companies was seen as likely to reduce returns. But lately, many investors see the possibilities of impact investing yielding market-rate returns—while also positively influencing corporate behavior.

 

For example, while BlackRock Inc. CEO Laurence Fink's letter to CEOs recommended better ESG evaluation, it also outlined the importance of deeper engagement with the companies they invested in. Fink's annual letter preceded a big announcement in April to exclude gunmakers and sellers from some funds. This announcement followed on the heels of engagement with gunmakers in efforts to support safe and responsible use of weapons.

 

In this article on shareholder activism and engagement, the authors discuss the state of shareholder activism today, from nonprofits and pension funds— including the California Public Employees’ Retirement System and the Sisters of St. Francis— to fund managers such as Zevin Asset Management, Arjuna Capital, and Trillium Asset Management. Their key questions: should private wealth, including family offices and foundations, leverage their role as shareholders to influence the companies they invest in? What strategies are they using right now to create better business? And why are so few philanthropists doing so today?