Positive Change at Four Companies
In addition to using social, environmental and governance standards to select our investments, each year the Domini Social Equity Fund submits shareholder proposals to corporations in its portfolio, addressing a broad range of social and environmental issues. They send a strong message to corporate management, and can often encourage the company to speak to us about reaching an agreement. Since 1994, the Fund has submitted more than 250 proposals to more than 95 major corporations.
We were pleased to reach agreements to withdraw four proposals during the first quarter. In response to our request to adopt a set of principles for minimum wage reform, Best Buy informed us that its board of directors was overseeing a process already underway to further develop the company’s position on wage levels within the company to ensure its employees have sustainable careers and that Best Buy continues to attract the best talent. We chose to withdraw our proposal in exchange for the company’s agreement to include additional factors in that process, including the effect of minimum wage reform on the company. Domini is also helping to coordinate investor education on this issue.
We were pleased to withdraw our proposal with First Solar after dialogue in the fourth quarter about the company’s political activities. At our request, First Solar’s board adopted a resolution to begin full disclosure of its political contributions, and also adopted a policy to restrict its trade associations from using its dues payments for electoral purposes.
Working with other investors, we withdrew our shareholder proposal to Whole Foods seeking information about the company’s efforts to mitigate the impact of its palm oil purchases on deforestation and human rights. The company agreed to enhancements to its Palm Oil Pledge, and to continuing dialogue to discuss implementation.
Our proposal to 3M addressing share buybacks caught the attention of Gretchen Morgenson, the Pulitzer Prize-winning Market Watch columnist for the Sunday edition of the New York Times: “We’re not against buybacks,” said Adam M. Kanzer, a managing director at Domini. “The question is at what point do buybacks become excessive and when do they undermine the long-term value of the company?” We pointed out that 3M spent $21 billion to purchase its own shares over the past five years, but only $22 billion on research and development and strategic acquisitions. When such a substantial portion of a company’s capital expenditures is directed to buybacks, we believe it makes sense to ask whether there’s a more constructive way to invest that capital, such as research and development, employee compensation and training, and climate mitigation. The proposal prompted constructive conversations with 3M and Target. At Target, we were able to withdraw our proposal in exchange for a commitment to enhanced disclosures.
In addition to the above-mentioned engagements, we also spoke with Chipotle regarding its food safety and sustainability reporting policies, with Facebook, Google, LinkedIn, Microsoft and Yahoo on matters relating to the Global Network Initiative and human rights, with Home Depot on its phasing out of pollinator-harming pesticides, and with Staples on minimum wage reform.