Additionally, State Street said it would vote against the chair of a board’s nominating and/or governance committee if the company was unreceptive to engagement regarding increasing the number of women on the board. Later in the year, State Street announced that it followed through with this action at 400 companies.
More investors are becoming climate change activists
Certainly, 2017 was a year of policy changes, but climate change continues to be a flashpoint moving into 2018. In particular, although the fossil divestment movement has gained considerable attention, many large investors, given their fiduciary duties, prefer to continue to own these companies and work to change behavior via voting or engagement.
In fact, amidst all the public attention, the City of Seattle took the unusual step of releasing a memo from their legal team explaining this decision. This makes New York City Pensions’ recently announced plans to completely divest from fossil fuels over the next five years (as well as sue 5 major oil companies akin to the fight against tobacco) all the more notable. Will the entire state follow?
Given the noteworthy actions taken during 2017, we expect climate change to be a hot topic during 2018.
Ending modern slavery
Finally, this is a topic we have delved into before and started to help address: human trafficking or modern slavery. While there were no big policy changes in the United States, Australia is stepping to the forefront in the fight against modern slavery. In August 2017, Australian lawmakers proposed a law, and they hope to implement draft legislation in 2018 that is aimed at curtailing this crime. Related legislation is already in place in the United Kingdom, France, and California.
We certainly hope that the efforts made in 2017 will gain momentum in 2018, which will translate to more action by countries around the world against this heinous activity.
Shareholder engagement is on the rise. Investors clearly demonstrated in 2017 that they have an increasing interest in investing responsibly, and that they are willing to actively engage and challenge companies that fail to demonstrate good-faith efforts to be upstanding corporate citizens.
During 2018, we expect to see escalating interest as investors with portfolios of all sizes seek opportunities that meet their return needs, while also capturing their desire to make the world a better place.
This article was republished with permission from Parametric.