The Other Kind of Voting

In my personal life, I make a major effort to live in an environmentally sustainable way. That means heating my house with a heat pump, changing my diet, paying for renewable energy, and all the other things that we’ve written about on this blog. When it comes to investing, sustainability is a little more complicated. The most well publicized stance of climate activists are campaigns to get institutional investors to divest from fossil fuel projects. That’s something I support as well, but as an investment professional I recognize that most companies are both part of the problem and part of the solution. Fighting climate change is going to require us to get them to invest more in the solutions and commit to reducing their contribution to the problem.

Want some examples? EPC companies (Engineering, Procurement, and Construction) like Quanta and Fluor build solar, wind, and nuclear power plants, but in many cases these same companies work on pipelines and oil refineries. Mining firms like Rio Tinto mine both lithium and coal. Alcoa, an aluminum producer, is a significant emitter but it’s developed a zero emissions smelting process for aluminum. Microsoft is a major consumer of electricity but they’ve committed to buying their entire consumption from renewable sources by 2025. 

All of this brings me to the point of this post: If you have a retirement account, then you are an investor, and you can use your influence to make our economy more sustainable. You’ve probably got some money invested with the big passive funds like those from Vanguard or Blackrock. This might be in your 401(k) or IRA or your own personal trading account. You can use your power as an investor to influence what companies do with regard to climate change – and it only takes a minute. See the links below.

Vanguard is offering a proxy voting choice pilot. One of the options for its voting policies is the Glass-Lewis ESG Policy, which supports director nominees that provide board level oversight of environmental risks, provide sustainability disclosures, and specifically votes in favor of candidates that will commit to net zero targets and climate related financial disclosures. 

Blackrock / Ishares offers voting choice as well for its products.

Both offer ESG oriented proxy voting choices.When it comes to your other, individually held stocks, you of course will need to study the options and make educated choices. Take the time to do it – voting your proxies are important just like voting in local and federal elections. If you want help, you can turn to Institutional Shareholder Services or Glass Lewis for recommendations.

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