SHARE POWER Campaign –
Investment Company Connection
Making the investment company connection...
Who is connected to investment companies?
Investment companies include banks, mutual fund companies, brokerages and insurance/annuity companies. You are connected to an investment company if you own (or are considering investing in) a mutual fund, variable annuity, variable life insurance, IRA, 401k or pension.
You are also connected if you are an employee of an investment company. SHARE POWER is NOT about demonizing investors for holding stock in companies with human rights concerns, nor is it about demonizing those companies. There is no such thing as a perfect company. Likewise, there is no such thing as a company that is doing everything wrong. SHARE POWER is about using the power vested in our connections to encourage companies to IMPROVE. As an employee, you have special leverage with the investment company you work for, but you may also bear certain risks by confronting your employer with concerns you have about their investments and policies. In such a case, it is up to you to make the judgment about whether or how to raise those concerns.
How is your investment company linked to powerful companies?
Investment products sold by investment companies, including mutual funds, 401k, pensions, IRA accounts, variable annuities and variable life insurance, often include stock in large companies as part of their overall investment strategies. These types of investments are run by professionals (or groups of professionals), usually called portfolio managers, who make decisions about what stocks (and bonds and other securities) to buy and sell in order to make a positive "return" on the investment. Thus, as an investor in these types of products, you don't own these stocks directly. However you do have the right to know how your money is invested. And you always have the right to choose the investment company that best serves your needs.
Portfolio managers often have relationships with the companies their products are invested in. Frequently, the research they use to make their investment decisions comes directly from the companies themselves, though they also receive research from independent investment firms. Of course the relationship between the portfolio manager and the company can go both ways – when a portfolio manager has a concern about the short or long-term value of a company based on how a company is operating, they can raise that issue with the company, as part of their due diligence on that investment. For the most part, portfolio managers do not take human rights concerns into consideration when they are assessing investments, unless there is a clear link demonstrating that the concerns could result in increased financial burden, or liability, for that company. Unfortunately this type of information is not mainstream, since it is not readily available on a balance sheet or in an annual report.
When portfolio managers invest in companies that are facing social and environmental challenges, they can use shareholder activism to harness their substantial weight as an investor to support important causes and to defend human rights. How? In addition to raising issues directly with the companies they are invested in, all shareholders have a responsibility to vote on a variety of proposals each year, some of them focused on social and environmental issues. These proposals are usually raised by other concerned shareholders, including religious investors and NGOs. However, owning stock in a company also creates opportunities for them to initiate or file proposals on issues they are concerned about, either alone or in coalition with other investors. This is a common practice among socially responsible investment companies such as Walden Asset Management, Trillium Asset Management and Boston Common Asset Management, all of whom Amnesty has worked with in the past on shareholder proposals.
Yet the vast majority of investment companies do not use their substantial power as shareholders in this way. Or worse, they (unwittingly or not) use their power in ways that tacitly support the status quo, allowing companies to deny their human rights responsibilities. The good news is that a new regulation by the Securities and Exchange Commission (SEC) requires mututal funds to disclose publicly how they vote on proposals, so they have an obligation to tell you.
What could your investment company do?
There are many ways that your investment company can use their shareholder power in a positive way. They should:
- Publicize the way their funds/portfolios are invested, and how they have voted on socially and environmentally conscious shareholder proposals.
- Vote favorably on, and publicly support existing socially and environmentally conscious shareholder proposals.
- File or co-file socially or environmentally conscious proposals with companies they own.
- Make public their proxy voting guidelines, especially on social, environmental, labor and human rights proposals. Most investors have established such a set of guidelines to direct their voting on shareholder proposals. Sometimes these guidelines explicitly call for voting AGAINST any proposal with a social or environmental agenda! (An excellent example of proxy voting guidelines is provided by the AFL-CIO.)
- Establish socially responsible investment guidelines. Note that establishing socially conscious investment guidelines is a proactive strategy, and not a reactive, divestment-oriented initiative. We are not asking shareholders to divest from–that is, sell–these companies but to use their ownership to push for change. Establishing socially responsible investment guidelines is one way for shareholders to pressure companies, since it encourages companies to take positive steps that will allow them to be considered appropriate investments.
- Learn more about Amnesty's work on shareholder activism
- Read about our past shareholder activism campaigns:
Chevron | Dow Chemical | Internet companies - Review our glossary of useful investment terms
If you want to ensure that the investment company you're connected to is doing all it can to promote corporate accountability for human rights, follow our step-by-step guidelines to plan a SHARE POWER Campaign.
