July 9, 2018
A group of investors known as the “Shareholder Rights Group” who are largely focused on forcing companies to disclose information and change policies regarding their environmental impact made news last week when they criticized moves by the Securities and Exchange Commission (SEC) to prevent shareholders from “micromanaging” the companies they own.
The misleadingly named “Shareholder Rights Group” gives readers the impression that these are retail investors primarily interested in helping the companies they are invested in to grow their returns. However, a quick review of the members of the Shareholders Rights Group tells a different story. Nearly all the members are professional investing firms who are “impact” investors focused on making investments in companies that live up to certain environmental criteria, while often eschewing investments in fossil fuel companies. The members also control a significant amount of capital with “at least $25 billion of assets under management.” The group’s membership calls into question any claim they are focused on improving the financial returns of the companies they target. Instead, the membership list suggests that the group represents investors whose environmental views are normally reserved for political advocacy.
Trillium Asset Management, a member of the Shareholder Rights Group, was mentioned in the article for its failed attempted to introduce a resolution at EOG Resources, Inc. that would have forced the company to set targets for reducing methane emissions. The SEC thought the resolution was “micromanagement of the company”. A review of Trillium’s website makes clear that “engaging companies” on climate change is a key strategy of the firm, while also offering investment products which are completely free of fossil fuels. This strong focus on climate change engagements, as well as the offering of investment vehicles that exclude hydrocarbons, should at least raise skepticism of Trillium’s interest in introducing shareholder resolutions meant to improve the financial performance of companies over their activist interests.
As You Sow, another member of the Shareholders Rights Group, considers itself the “nation’s non-profit leader in shareholder advocacy.” As You Sow describes themselves as advocates that push corporations to change, “As shareholder advocates, we directly engage corporate CEOs, senior management, and institutional investors to change corporations from the inside out.” This focus certainly differs from the traditional shareholder interest in growing the company.
Nine of the fifteen members of the Shareholders Rights Group are also “network members” of the non-profit organization Ceres. Ceres is yet another large advocacy organization that “…tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and human rights abuses.” The report regarding the SEC’s recent initiatives even lists Rob Berridge who is the Ceres Director of Shareholder Engagement, as one of the “reviewers” of the report .
Further, Sanford Lewis, who serves as the Executive Director of Shareholder Rights Group, has a long history of anti-corporate activism. The biography on his business website lists him as a member of the Network for Sustainable Financial Markets, and a former Board member of Ceres and Communities Concerned About Corporations. He was also the founder and director of the Good Neighbor Project for Sustainable Industries, a project of the Tides Center, which is a large foundation that issues grants to left leaning organizations.
Although their name indicates otherwise, it appears that the Shareholder Rights Group primarily represents the interests of activist investors. It is critical the public understands the intent and focus of groups who claim to stand up for the rights of all shareholders. The Shareholder Rights Group seems to be only interested in representing the rights of environmental political activists instead of the retail investors whose voices continue to be silenced