Earth Day: A time to reflect on progress - and the challenges that remain
How shareholder advocacy can make a difference
Earth Day occurs April 22, as it has since its founding in 1970. Some credit Earth Day’s establishment as the beginning of the modern environmental movement. As a child, I remember attending school assemblies commemorating Earth Day. Speakers stressed the key environmental themes of the era such as “reduce, reuse, and recycle." There was an emphasis on activities like picking up litter and planting trees, which we sometimes participated in during school.
My family also had our own environmental practices, such as recycling and planting thousands of trees on my grandparents’ property, which was barren from strip mining done decades before. Our church had a Creation Care Sunday that coincided with Earth Day and highlighted larger-scale problems and emphasized our role as stewards of the natural world.
These experiences contributed to my increasing understanding of the fragility of the Earth and the enormity of our environmental challenges. My interest in finance and public policy blossomed as I began to see systemic change as the best way to mitigate damage and encourage a more sustainable trajectory.
I joined Praxis Mutual Funds® nearly 15 years ago, at a time when “make every day Earth Day” had become the mantra. I’ve been privileged to work on environmental issues through shareholder advocacy, using the rights of stock ownership to promote corporate change. The future of our planet is top of mind in my work, whether the subject is the climate crisis, environmental justice, or toxic chemicals. However, moving from one seemingly intractable problem to another can become exhausting.
This Earth Day, I’m taking a step back to reflect on some of the achievements and positive developments in corporate environmental policy since I began my career, through the lens of shareholder advocacy. Here are a few examples of the progress I’ve witnessed:
It’s hard to believe that a short time ago, it was an uphill battle to convince many companies and investors that environmental, social, and governance factors were material and worthy of consideration. Now, nearly all large-cap companies produce significant sustainability or corporate responsibility reports and routinely integrate ESG issues such as climate change and human rights risks into their core business operations.
When I began at Praxis, the goal of filing a shareholder proposal on environmental or social issues was to achieve a meeting with the company, or at least to get a mid-single-digit percentage of the vote satisfy resubmission thresholds for the following year. Not only do proposals now generally receive a much larger share of the tally – and even an occasional majority vote – they often spur companies to make substantial policy changes. And proposals can make a difference even if they don’t end up on the ballot; about half of the resolutions Praxis has filed in the past five years were withdrawn by the shareholders because of negotiated agreements with the company.
Climate consciousness has spiked in the past decade. Where it was once a struggle to get corporate recognition of the existence of climate change, companies now are going far beyond acknowledging the climate crisis and setting ambitious targets for emissions reductions, even in lieu of public policy mandates. For example, most of the electric utilities Praxis has engaged have made net zero carbon emissions commitments by 2050 or earlier, and all have set major emissions reduction targets. Shareholder dialogues are now largely focused on the practical, incremental steps needed to achieve these climate goals as quickly as possible. This is true progress.
Perhaps the most important development in corporate engagement has been the willingness of companies to invest real time and effort in speaking with shareholders on environmental and social issues. When I started in this field, we felt lucky to gain an audience with the general counsel and head of investor relations, let alone anyone relevant to the issue at hand. As companies have become more accustomed to speaking with shareholders – and shareholder concerns have regularly proven to be prescient – they increasingly see dialogue and relationship-building as valuable and mutually beneficial. This bodes well for shareholders and stakeholders who seek sustainable corporate change.
Despite the fundamental progress that companies have made, there’s no question that the quest for sustainability has so far fallen short, as witnessed in publications such as the latest Intergovernmental Panel on Climate Change reports. If the Earth becomes uninhabitable, frankly, nothing else matters. At the same time, however, it’s fair (and healthy) to take stock of what has been achieved in the recent past. For me, this progress offers a basis for hope on this Earth Day. Perhaps it can provide hope and encouragement for you too.