Systems secured historic wins at Starbucks and Wells Fargo amid a challenging year for shareholder proposals and ongoing attempts to misinform about ESG
New York City Comptroller Brad Lander and the boards of the New York City retirement systems (NYCRS) released the annual Shareowner Initiatives Postseason Report for the 2023 proxy voting season. The report highlights the field-leading work of the Bureau of Asset Management’s Corporate Governance and Responsible Investment team to confront systemic, sectoral, and company-level risks through engagement with the funds’ portfolio companies.
As investment adviser to NYCRS, the Comptroller’s Office is responsible for voting the pension funds’ proxies and implementing shareholder initiatives. New York City’s pension funds have a long history of active ownership and “systemic stewardship,” from opposing apartheid in South Africa to winning “proxy access” to give shareholders the right to nominate directors at U.S. companies.
“New York City’s pension funds are longtime leaders in meaningfully engaging with some of the largest companies to achieve real progress. By pushing companies like Starbucks to respect workers freedom of association, Wells Fargo to prevent harassment and discrimination, and Fox to stop defaming people, we are helping to raise corporate governance standards and ensure a more inclusively-thriving economy. That’s good for our retirees, and good for the economy as a whole. I am grateful to our Corporate Governance and Responsible Investment team for their work to drive sustainable change throughout our investment portfolio,” said New York City Comptroller Brad Lander.
Proposals for more fair and equitable workplaces received the most support. Starbucks investors expressed their growing concern regarding the company’s labor relations and strongly supported the Systems’ proposal to request a board-commissioned assessment of the company’s adherence to its commitments to workers’ rights, including freedom of association and collective bargaining. The proposal received 52% support. Starbucks released the assessment earlier this month, showing that its actions deviated from its policies.
The Systems also secured majority support (55%) for a proposal requesting that the Wells Fargo Board of Directors prepare an annual public report describing and quantifying the effectiveness and outcomes of the company’s efforts to prevent harassment and discrimination against its protected classes of employees received a majority vote.
In addition to extensive corporate engagement, the Comptroller’s Office continued its work on myriad investor coalitions on human capital and workers’ rights and as founding members of the Climate Action 100+.
On behalf of the Systems, Comptroller Lander also penned letters to portfolio companies requesting increased disclosure and transparency on workplace concerns including 11 public companies named in a New York Times investigation as allegedly profiting from the use of U.S. suppliers that illegally employ underage migrant children.
During 2023, the Systems also sued the Fox Corporation for neglecting its duty to shareholders by opening itself up to defamation lawsuits from the persistent broadcasting of falsehoods about the 2020 presidential election.
This season, the Systems submitted shareholder proposals to 32 portfolio companies to address a broad range of risks to our portfolio companies and withdrew approximately 47% of their shareholder proposals, down from 85% in 2022. Of the proposals that went to a vote, voting support averaged 27%, down from 35% in 2022.
Overall, shareholder proposals experienced a steep decline in support across the board driven largely by the conservative backlash to environmental, social and governance (ESG) investing.
The Systems’ proposal on climate change received the least support from investors, averaging only 13% support. This included resolutions calling on JP Morgan Chase, Goldman Sachs, Morgan Stanely, and Royal Bank of Canada to set and report on absolute emissions targets for their energy and utilities sectors, something other major banks have done.
“While we were disappointed by investors’ lack of support for common-sense climate resolutions that were entirely consistent with company performance and shareholder interests, we can’t back away from work to confront the systemic financial risks of climate change,” said Comptroller Lander. “We will be considering new options for corporate engagement and shareholder action in 2024 to insist that banks and other portfolio companies act to implement their net-zero commitments. We need to see action, backed by transparent reporting, not just words.”
In response to the backlash against ESG, Comptroller Lander joined with hundreds of private and public sector leaders to call on policymakers to protect the freedom to invest responsibly. This array of leaders reminded policymakers that building profitable businesses and investment portfolios demands an analysis of all material financial factors. In a joint statement, the leaders argued that they should be free to consider material factors relevant to the sustainability of business: “Our consideration of material environmental, social, and governance (ESG) factors is not political or ideological. Incorporating these issues into financial decision-making represents good corporate governance, prudent risk management, and smart investment practice consistent with fiduciary duty.”
The Systems voted on 16,552 shareholder meetings in 70 markets globally. This includes 3,126 annual and special meetings for U.S. companies. In addition, the Systems voted against the election of 34.7% of directors in the U.S. market.
The annual postseason report covers proxy voting and shareholder proposal outcomes for the 12 months ending June 30, 2023. It includes detail on each shareholder proposal.
Proxy voting decisions for each of the Systems can be viewed here, and are available within 24 to 48 hours of electronic votes being submitted.
In addition to Comptroller Lander, the trustees of the aforementioned systems are as follows:
Teachers’ Retirement System (TRS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; Chancellor’s Representative, Dr. Angela Green, New York City Department of Education Panel for Educational Policy; and Thomas Brown (Chair), Victoria Lee, and David Kazansky, all of the United Federation of Teachers.
New York City Employees’ Retirement System (NYCERS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Public Advocate Jumaane Williams; Borough Presidents: Mark Levine (Manhattan), Antonio Reynoso (Brooklyn), Donovan Richards Jr. (Queens), Vito Fossella (Staten Island), and Vanessa L. Gibson (Bronx); Henry Garrido, Executive Director, District Council 37, AFSCME; Richard Davis, President Transport Workers Union Local 100; and Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.
New York City Police Pension Fund (Police): Mayor Eric Adams’ Representative Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Fire Commissioner Laura Kavanagh (Chair); New York City Finance Commissioner Preston Niblack; Andrew Ansbro, President, Robert Eustace, Vice President, Chris Viola, Treasurer, and Eric Bischoff, Staten Island Representative and Chair, Uniformed Firefighters Association of Greater New York; Sean Michael, Chiefs’ Rep., Joe Camastro, Lieutenants’ Rep. and Liam Guilfoyle, (Chair), Uniformed Fire Officers Association; and Peter Devita, Marine Engineers Association.
New York City Fire Pension Fund (Fire): Mayor Eric Adams’ Representative Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Finance Commissioner Preston Niblack; New York City Police Commissioner Edward Caban (Chair); Chris Monahan, Captains Endowment Association; Louis Turco, Lieutenants Benevolent Association; Vincent Vallelong, Sergeants Benevolent Association; Paul DiGiacomo, Detectives Endowment Association; and Patrick Hendry, Daniel Terrelli, Albert Alcierno and Arthur Egner all of the NYC Police Benevolent Association.
Board of Education Retirement System (BERS): Schools Chancellor David C. Banks, Represented by Karine Apollon; Mayoral appointees Lilly Chan, Marjorie Dienstag, Gregory Faulkner, Anita Garcia, Anthony Giordano, Dr. Angela Green, Alan Ong, Phoebe Sade-Arnold, Maisha Sapp, Venus Sze-Tsang, Gladys Ward; CEC appointees Naveed Hasan, Jessamyn Lee, Thomas Sheppard, and Ephraim Zakry; Borough President Appointees Geneal Chacon (Bronx); Tazin Azad (Brooklyn); Kaliris Salas-Ramirez (Manhattan); Sheree Gibson (Queens); Aaron Bogad (Staten Island); and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.
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