Calvert is an active shareholder of companies in which we invest. We talk with management to learn about their business practices and challenges. We encourage positive social change within companies because we believe that today's social and environmental issues will become tomorrow's financial problems.
Active Socially Responsible Shareholders
When we talk with a company, one of our objectives is to learn about management's approach to social responsibility. This includes learning about the company's programs and policies, management's track record, and vision for the future. Calvert often evaluates the company's programs and advocates for best practices. In most cases, this dialogue is open, frank, and constructive. Calvert can act as a catalyst for expanding existing programs or encouraging new initiatives, and we encourage management to publicly discuss its commitment to social responsibility.
When our dialogue with management is not successful, we may elect to file a shareholder resolution independently or with other concerned investors. The resolutions, included in the annual proxy ballot, are voted on by shareholders at the company's annual meeting. These resolutions often request that companies report to shareholders on a particular issue, such as providing employee diversity data or delineating goals for environmental programs.
When Calvert files a shareholder resolution, we seek to work with management, even as we advocate for improvement. Many of the resolutions we file with companies are ultimately withdrawn, due to a negotiated settlement. We will only withdraw a resolution if we can obtain a strong commitment from management for positive change in the area of concern. If we are unable to reach an agreement, the resolution may remain on the proxy ballot and go to a shareholder vote.
The Shareholder Resolution Process
When a shareholder resolution is put on the company's proxy statement, all shareholders are able to vote for or against the resolution. Company management usually recommends voting against these resolutions. Investors may also make a brief presentation and discuss the issue publicly with management at the shareholder meeting.
Three outcomes typically follow a shareholder resolution filing:
- The filer and company management finally reach a mutually acceptable plan of action and the resolution is withdrawn.
- Management submits a request to the Securities and Exchange Commission (SEC) to exclude the resolution, without the risk of enforcement action. The SEC may or may not grant this request.
- The full resolution is placed on the proxy ballot and is voted by all eligible shareholders at the company's annual shareholder meeting. All shareholders are invited to vote in person or by proxy.
Calvert may stay invested in companies that have social shareholder resolutions, depending upon how company management responds to our stated primary concerns.
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