Investors have a right and a responsibility to engage with companies on environment, social, and governance (ESG)-related issues where shareholder value is at stake and improved performance is within reach. Calvert uses strategic engagement and shareholder advocacy to encourage positive change in companies in virtually every industry, both to establish certain commitments and to encourage concrete progress.
We use different approaches for different funds.
Tools and resources
Our sustainability research analysts regularly engage in shareholder advocacy work directed at both companies Calvert holds and those whose investment prospects we believe can benefit from attention to particular ESG challenges. We use a wide range of tools, which are described below. Also see:
Proxy voting. As company shareholders, Calvert votes on issues of corporate governance and social responsibility at annual meetings. We take our responsibility seriously and vote each proxy in a manner consistent with the financial and social objectives of our Funds, in support of most sustainable and responsible shareholder resolutions. Calvert's Global Proxy Voting Guidelines integrate corporate governance and corporate social responsibility into what Calvert calls a "sustainable governance" model that it shares with other mutual fund companies. The guidelines are available here. Our proxy votes are disclosed here.
Shareholder resolutions. A shareholder with $2,000 of company stock, held for one year, can file a resolution calling on a company to take a particular action, such as changing a company policy or producing a report on a particular issue of concern. If not settled favorably and withdrawn beforehand, these resolutions may come to a vote in front of all shareholders at the company's annual meeting. In 1986, Calvert Social Investment Fund (CSIF) became the first mutual fund to file a shareholder resolution - with the Angelica Corporation on labor/management issues. Calvert routinely files or co-files up to three dozen resolutions each year with a wide range of companies on our priority objectives.
Working in coalitions. Often we partner with other investors and NGOs to advance common objectives. We believe there is power in numbers and in more company shares when we bring voices and interests to the table with different perspectives yet common objectives. We have greater leverage to work for ESG-related improvements when we work through coalitions, whether by co-filing shareholder resolutions, engaging in company-specific or broader industry-wide multi-stakeholder dialogue, joint research or public policy platforms.
Dialogue with company executives. We regularly initiate conversations with management both as part of our social research process and corporate engagement program. After becoming a shareholder, we continue our dialogue with management through periodic calls, letters, and meetings. Through our interactions, we gain a sharper sense of the company's commitments, performance and challenges, and press for improvement in specific areas of concern. While our first responsibility on behalf of our shareholders is to engage with companies that we own, we have stepped up our dialogue with companies that do not currently pass all of Calvert's ESG criteria as many have begun to address corporate responsibility and sustainability issues more seriously over the last several years.
Multi-stakeholder dialogues. Calvert participates in issue or industry specific standard-setting exercises, working with other investors, corporations and members of civil society to formulate best practices or principles for new and challenging corporate responsibility issues. Such exercises present efficient and effective ways to raise standards in an entire industry. For example, Calvert participated in the two-year dialogue with Yahoo!, Google and Microsoft together with other SRIs, human rights NGOs and academic experts that produced the Global Network Initiative-the new standard launched in late 2008 that addresses the corporate responsibility of internet service providers to respect freedom of expression and the right to privacy in their operations around the world.
Public policy initiatives. Calvert engages in public policy issues that are directly relevant to corporate responsibility and sustainability, and in turn to the economic interests of shareholders. We send comment letters to the SEC that attempt to reinforce certain shareholder rights, meet with policy-makers to encourage action on energy and climate change, and testify before congressional committees on areas of focus. For example, we testified on behalf of Sudan divestment to the U.S, Senate Banking Committee, and the Texas House of Representatives in 2007.
Publishing research reports. Calvert produces industry and issue reports to contribute to the debate regarding best practices. We also use these reports, which benchmark company performance on key ESG issues, in our engagement with individual companies. For example, we worked with the environmental and investor group CERES to produce the first-ever analysis of the carbon disclosure of S&P 500 companies in early 2007, and produced on our own, major reports in 2008 focusing on the green building practices of the U.S. homebuilding industry and the diversity policies and practices of the 600+ companies in the Calvert Social Index. We then use these research reports as advocacy platforms from which we file or co-file shareholder resolutions, initiative dialogue with company management and publicize our findings.
In addition to deploying this combination of tools, we also reinforce our shareholder advocacy through public statements on the Calvert website and through the media to focus public attention on a particular company or issue.
Different approaches for different funds
For the Signature Strategies® portfolios, Calvert's advocacy focuses on select companies with four strategic advocacy priorities guiding our company-specific and cross-sectoral activities:
- Environment and climate change,
- Human rights, labor rights and Indigenous Peoples' rights,
- Diversity and women,
- Governance and disclosure.
For Solution Strategies® portfolios, which selectively invest in companies that produce products and services geared toward solving some of today's most pressing environmental and sustainability challenges, Calvert's advocacy focuses on issues specific to the sector or company:
- Advocacy related to the Calvert Global Alternative Energy Fund focuses on governance and environmental issues.
- Advocacy related to the Calvert Global Water Fund focuses on access to water and human rights issues, as well as transparency, disclosure and community relations.
- Advocacy related to the Calvert Emerging Markets Equity Fund focuses on corporate actions to address global sustainability challenges.
For SAGE Strategies™ portfolios, Calvert's advocacy involves enhanced engagement with key companies that do not meet all of our Signature Strategies portfolios' ESG criteria, focused on the most salient risks and opportunities for those companies in their industry contexts. For these companies, we use the full combination of our engagement and shareholder advocacy tools, emphasizing direct company and multi-stakeholder dialogues and also including proxy voting and shareholder resolutions.