In the Industry: Q2 2022 Impact Digest

As proxy season ramps up, shareholder advocacy is poised to continue to prove a valuable tool to move the needle on issues such as racial and gender equity, climate change and gun violence – particularly in light of the recent and tragic mass shootings. Alongside regulatory changes, shareholder voices are another influential way to shape business practices and advocate beyond what government alone can accomplish. Shareholder advocacy is a key driver for greater transparency and accountability within impact investing and the broader business community.

In the News

Barron’s

BlackRock CEO Stands Firm on ESG Investing

BlackRock CEO Larry Fink reiterated his commitment to ESG investing in light of challenges in first quarter performance. Fink noted that the energy transition will require a 30- to 50-year time frame and pointed to inflows of $19B into sustainable investments, showing that investor interest remains. He also highlighted a potential future opportunity driven by the need for significant infrastructure investments to support the energy transition in the coming years.

Morningstar

It’s Been a Rough Start to 2022 for Sustainable Investing Stock Strategies

A combination of surging traditional energy stocks and significant losses in large-cap tech stocks has left many sustainable funds trailing benchmarks for the first quarter of 2022. That said, longer-term results still show sustainable stock strategies outperforming the market at large. Over the past five years, more than 70% of Morningstar’s Sustainability indexes have outperformed their traditional market equivalents.

Bloomberg

Mastercard to Tie All Employee Bonuses to Meeting ESG Goals

After tying bonuses for at the executive vice president level and above to the company’s ESG goals, Mastercard announced that they will expand the policy to all employees. The company will focus specifically on its efforts to reduce carbon emissions, improve financial inclusion and achieve gender parity in employee pay. These factors will be included in the company-wide metrics used to set bonus levels, which also consider account revenue and earnings.

Bloomberg

California Push to Seat More Women on Boards Ruled Unlawful

California’s 2018 law requiring corporations based in the state to have a minimum number of women on their boards was struck down by a state court in May. The move, combined with the invalidation of a similar state law aimed at increasing diversity from underrepresented communities, shows that some diversity and equity mandates may face ongoing legal challenges. Despite these challenges, many companies have already increased the gender diversity of their boards and have hopefully seen the benefits. 1,100 women were added to boards last year, and the share of women on boards has doubled since the law’s passage.

Bloomberg

SEC to Crack Down on Misleading ESG Claims With Fund Rules

The SEC proposed new restrictions to ensure ESG funds accurately describe their investment policies, in some cases including disclosing the greenhouse gas emissions of the companies in which they’re invested. The proposal is one in a series of efforts to combat greenwashing and increase accuracy in labeling and disclosures of ESG funds, including earlier calls for standardized disclosures about funds’ investment strategies.

Bloomberg

Guns, Abortion and Race Heat Up Company Annual Meetings

A record number of proposals addressing racial justice, gender equality and gun violence have been presented to shareholders this year with some receiving significant support. A majority of shareholders of firearms maker Sturm Ruger & Co. have called for the company to investigate the human rights impact of its weapons. At least half a dozen major corporations, including McDonald’s and Apple, have been asked to respond to potential racial disparities in their workforce and how they interact with communities in which they do business. Average support for racial equity disclosures has run at approximately 46%. Research shows that about two-thirds of resolutions that receive between 30% and 50% support lead to at least some change from the companies.

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