Impact Blog
Proxy-voting trends and investor impact

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Shirley Peoples, AVP & Shareholder Engagement Assistant Manager, Calvert Research and Management

      Washington - Investors are paying more attention to how companies are being managed than ever before. Proxy-voting trends are one indication of this, with implications that could influence company behavior in a positive direction for those interested in Responsible Investing.

      One big change we've noticed in recent years is that investors don't automatically vote in line with management, assuming that a company's values matches their own. Rather, they look for clarity, transparency and insight about how companies are managing their workforce and supply chains and whether firms adhere to high standards of environmental stewardship, product integrity and overall ethics.

      Corporations, in turn, have a greater understanding of investor demands and the importance of sustainability. This has had an impact on Calvert's engagement. Years ago, we had to provide an extended explanation of Calvert and Responsible Investing when we contacted a company's investor relations department. That isn't the case now.

      Another trend we've noticed is that companies are much more receptive to engaging in productive dialogue than in the past, so we are having to file fewer shareholder resolutions than in prior years.

      The importance of transparency

      The Security and Exchange Commission (SEC) mandates that proxy votes be disclosed, but this was Calvert's position long before the regulatory mandate. In fact, Calvert has disclosed our votes since 2002, and they are always available on our website. This allows everyone to see how we voted each ballot item on the proxy, outlines our voting rationale and provides guidance to other investors. Practically speaking, it also allows investors to see which companies vote in conjunction with their rhetoric, and which fail to do so.

      Influencing management

      When investors believe a company isn't moving fast enough in the right direction, or needs to increase its commitment in certain areas to improve the business, proxy votes are an important way for investors to send a message.

      For example, when voting on directors of corporate boards, Calvert looks closely at a board's gender, ethnic and racial diversity. We define a diverse board as having at least one female board member, one minority board member and 30% diversity overall. Research has shown that companies with more diverse boards benefit from a broader range of viewpoints and tend to be more financially successful.

      In recent years, we have refined our voting guidelines on board diversity. We now vote against the Nominating Committee rather than the entire slate of board members, as we believe they ultimately are accountable for a board's composition.

      Looking ahead

      In terms of future trends, we believe board diversity will become an even more central focus for investors and companies. We think board qualifications should be disclosed in proxy statements and that this will be increasingly important as corporations become more complex. To date, few companies provide this type of transparency.

      In our view, the focus on board diversity is having a global effect, as many markets are now adding gender as a qualification to be listed on an exchange. Although there is still a long way to go worldwide, we have seen great progress in this area. Japan is a case in point. Historically, Japanese companies did not embrace gender diversity but we now see their boards becoming more diverse.

      Through our targeted engagement strategies and proxy voting, Calvert hopes to encourage companies to build responsible boards that are representative of - and responsive to -- their workforce, communities and shareholders.

      Bottom line: Proxy voting has evolved over time as ESG issues and sustainability have become more mainstream and material to corporate decision-making. As a leader in Responsible Investing, Calvert has been at the forefront of urging companies to change through shareholder resolutions and proxy voting.