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SU Treasurer’s Office changes proxy voting protocol to better promote sustainability through responsible investment practices
SU Treasurer’s Office changes proxy voting protocol to better promote sustainability through responsible investment practicesSeptember 26, 2007Sara Millersemortim@syr.edu
Syracuse University’s Treasurer’s Office has adopted a new protocol that will better ensure that investment decisions align with the University’s values and priorities while still achieving its goals. This protocol increases the attention given to reviewing and voting proxies for shareholder proposals related to environmental, social or governance (ESG) issues, making certain that strategic investments are consistent with the University’s commitment to sustainability and social responsibility.
SU’s endowment portfolio includes investments in publicly traded companies. As an investor in these companies, SU is entitled to vote on corporate decisions. ESG issues of concern are commonly proposed by shareholders and included on the proxy voting ballot via the shareholder resolution process. These proposals are then voted on at the company’s annual shareholder meeting. For example, investors may ask for a company to set greenhouse gas reduction goals and to report on how the company plans to reduce greenhouse gases in recognition of the risks associated with climate change. This issue would be included on the particular company’s proxy voting ballot.
SU has taken a more active role governing its voting of proxies of portfolio companies to ensure that a particular company’s policies and practices are consistent with the University’s values or to attempt to influence a company’s policies. As part of this new process, the SU Treasurer’s Office has begun taking the following steps to identify upcoming shareholder proposals for publicly traded companies held by the University that relate to ESG issues; to make informed voting decisions and direct the University’s investment managers to vote the proxies accordingly; and to report the University’s voting record to the Campus Sustainability Committee on an annual basis:
- 1) subscribe to Social Issues Service, an organization that provides proxy voting and corporate governance solutions to the institutional marketplace; Social Issues Service is available through Institutional Shareholder Services;
- 2) using the Social Issues Service, identify all shareholder proposals relating to ESG issues (for publicly traded companies held by the University), which will be presented during the upcoming proxy season, typically from April?June;
- 3) review issues relating to each shareholder resolution, including the pros and cons provided by the Social Issues Service, and formulate proxy voting recommendations to discuss with and gain concurrence from SU’s executive vice president and chief financial officer;
- 4) communicate proxy voting decisions for specific shareholder resolutions to investment managers by e-mail; and
- 5) communicate the University’s voting record on ESG issues to the Campus Sustainability Committee each year.
SU first revisited its proxy voting protocol after Eric Ripley, a graduate student at the SUNY College of Environmental Science and Forestry and M.B.A. student in the Whitman School of Management, asked SU to review its proxy voting protocol to look at what level the University participated in voting, how University investment managers selected investments, and whether consideration was given to how institutional investments aligned with SU’s broader sustainability initiatives. Ripley met with Chancellor and President Nancy Cantor in November regarding the need for SU to take a more active role in terms of shareholder engagement as a large institutional investor and the mechanisms that other institutions have undertaken to accomplish a more active role. Cantor asked Ripley to gather information on similar institutions that have outside investment managers and that are active shareowners, and to work with SU Executive Vice President and Chief Financial Officer Louis G. Marcoccia and the Campus Sustainability Committee to accomplish the necessary changes.
Ripley then wrote a paper on responsible investment and the integration of ESG issues into investment decision-making, and met with Marcoccia in early January. In his paper, Ripley recommended some specific actions that the University could take to become a more engaged and responsible investment owner, including enacting a change in the existing proxy voting protocol. After Ripley presented to the Campus Sustainability Committee, a proposal was prepared to change the University’s current proxy voting protocol.
“SU has joined an elite list of universities and institutional investors across the country who realize that they have a powerful voice through proactive shareholder engagement practices,” Ripley says. “Proactive institutional investors around the country and the world are winning battles related to climate change, environmental issues, human rights issues, diversity issues and a host of other problems. SU has added its name to that list.”
This change in protocol further advances the environmental, economic and social goals of the University, and supports SU’s commitment to promote sustainable activity. “The energy and commitment Eric showed to help the University affect this change is the definition of Scholarship in Action, and I thank him for bringing attention to this need,” Marcoccia says. “SU is improving its efforts to promote sustainable practices and policies, and this change in proxy voting protocol shows that the University is fully embracing all components of this commitment.”