Domini Funds
2023 Annual
Engagement Report
2023 in Review
At Domini, we use our role as a shareholder to encourage stronger policies and practices to advance the twin goals of our Impact Investment Standards: Universal Human Dignity and Ecological Sustainability. Our 2023 engagements focused on climate change and the systemic importance of forests; human rights and workers rights; and access and equity.
Through constructive interaction—via letters, dialogues, shareholder proposals, and proxy votes—we communicate our expectations to companies, both on our own and in collaboration with other investors, and encourage best practices and innovation. In this report, we provide an overview of our 2023 engagement activity across Our Funds, markets, issues, and tools. Through these efforts, we seek to advance the positive impact of our shareholders’ investments on people and planet.
Engagements by Topic
Topic Highlights
Below we provide additional insights on priority Topics represented above.
Engagements by Country
United States (354), Japan (120), Switzerland (27), United Kingdom (22), Germany (17), France (12), Australia (11), The Netherlands (11), Brazil (10), Sweden (7), Denmark (5), Belgium (4), Canada (4), Ireland (4), Norway (3), Taiwan (3), China (2), Israel (2), Jersey (2), Luxembourg (2), Spain (2), Cayman Islands (1), Hong Kong (1), Hungary (1), Italy (1), Mexico (1), Singapore (1), Thailand (1)
Engagements by Sector
We meet with companies across sectors, focusing on the unique impacts of their business models on communities, the environment, and other stakeholders. For example, many companies in the Industrials sector will play a critical role in the low-carbon transition, which is a focus of many engagements there.
Percentage of Companies Engaged by Domini in Each Fund
We engage with portfolio companies in each of our Funds to advance the priorities of our Impact Investment Standards. These charts reflect, by Fund, the percentage of Domini’s engagement with companies that were held in each of our Fund’s portfolios at any point during 2023.
Engagements in Fixed Income
In 2023, we held 23 engagements with fixed-income issuers held in the Domini Impact Bond Fund, and these generally focused on issues of access and equity. Our goal is to understand the issuer’s activities and potential environmental and social risks associated with those activities, and to communicate our expectations. We encourage issuers to improve disclosure to enable us to better evaluate their environmental and social performance and the impact of their financing activities in closing financing gaps, expanding access to capital, and supporting equitable investment in public goods.
We wrote to and held dialogues with four non-profit hospital systems around racial equity and quality of care, linked to how revenues are used from a discounted drug pricing program. In other engagements, we met with a water and sanitation financier around the human right to water and how they help ensure access, affordability, and equity in water and sanitation services. We also engaged with one of the largest U.S. housing financiers on housing affordability, climate resilience, and racial equity. We engaged with two banks on their policies and due diligence around deforestation, to encouraging increased disclosure on the effectiveness of their efforts to engage with clients and reduce the risk of their financing contributing to deforestation in Brazil.
Shareholder Proposals
Since 1994, we have filed over 320 proposals as part of our strategy to address priority engagement topics. Companies will often engage with us and are open to reaching an agreement, which results in a withdrawal of our proposal. If we cannot reach agreement, an eligible proposal is included in the corporate proxy statement for a vote by all company shareholders. A company may also seek to omit a proposal from its proxy statement with the Securities and Exchange Commission, which makes a determination after review.
Below is a list of the proposals that we filed or co-filed alongside other investors in 2023, and the results of those engagements.
| Company | Status | Topic |
|---|---|---|
| Bank of America Corporation* | 7% vote | Transition out of fossil fuel financing |
| BorgWarner Inc. | 32% vote | Just transition strategy for workers and communities |
| The Chubb Corporation | 17% vote | Arctic refuge, Indigenous rights, and biodiversity assessment in underwriting |
| Dollar General Corporation | 68% vote | Workers health and safety audit |
| Huntington Bancshares Incorporated | Withdrawn for commitment | End lending and underwriting for coal |
| Deere & Company* | Withdrawn for commitment | Publish a climate transition plan |
| The Kroger Co. | Omitted** | Pilot the Fair Food Program, worker-driven social responsibility |
| Tesla, Inc. | Omitted** | Adopt a policy on freedom of association |
| The Hartford Financial Services Group, Inc. | Withdrawn for commitment | Arctic refuge, Indigenous rights, and biodiversity assessment in underwriting |
| Wabtec Corporation | Withdrawn for commitment | Just transition strategy for workers and communities |
* Co-filer
** The Securities and Exchange Commission (SEC) allowed the company to omit our proposal from their proxy statement after the company submitted a No-Action request.
A few examples of company progress:
- Dollar General conducted and published a worker health and safety audit after a majority of shareholders supported our proposal.
- Wabtec committed to disclose a just transition report on engaging communities and workers as it electrifies freight.
- Huntington Bancshares strengthened its climate risk policy on high-risk clients.
- The Hartford increased its disclosure and internal capacity around Indigenous rights.
Proxy Voting
When you own stock in a corporation, you have the right to vote on proposals at the company’s shareholder meetings. This is the primary forum where management seeks affirmation of what it is doing and where shareholders can weigh in on important issues. Proxy votes are cast using an electronic ballot. Proxy ballots vary but generally include voting on corporate governance issues, including the director elections and appointments, approving auditors, executive compensation packages, mergers, and share buybacks, as well as voting on proposals submitted by other shareholders.
Domini casts all votes based on our Proxy Voting Guidelines, which align with our Impact Investment Standards. Below is a summary of our 2023 votes by Fund.
| Fund | Domini Impact Equity FundSM | Domini International Opportunities FundSM | Domini Sustainable Solutions FundSM | Domini Impact International Equity FundSM |
|---|---|---|---|---|
| Total Meetings Voted | 308 | 293 | 43 | 194 |
| Number of Proposals | 4293 | 4932 | 540 | 3033 |
| Percentage of Management Proposals Supported | 47% | 35% | 35% | 35% |
| Percentage of Executive Compensation Proposals Supported | 12% | 47% | 36% | 50% |
| Percentage of Directors Opposed for Lacking Adequate Racial and Gender Diversity | 48% | 57% | 53% | 57% |
| Percentage of Environmental and Shareholder Proposals Supported | 82% | 89% | 100% | 90% |
There are signs of positive change. Companies are consulting more frequently with rightsholders and experts. Their willingness to meet with groups who have concerns—and learn directly from them about what kind of change is warranted—shows an openness and humility that can lead to stronger business practices.
– Mary Beth Gallagher, Director of Engagement
Glossary
Engagement Commitment | Domini’s engagement tools include shareholder proposals, proxy voting, and public statements, including, discussions about, or the issuance or endorsement of, statements or letters on a variety of environmental, social, or governance issues. These tools help us create far-reaching impact in support of our engagement themes: universal human dignity (people) and ecological sustainability (planet). We believe that dialogue and collaboration can inform our engagement efforts. While Domini periodically works with other investors or organizations with common interests in support of our engagement themes, we independently determine which issuers to engage with, the scope of our participation in engagements with others, and whether to support shareholder proposals filed by another investor, in accordance with our Proxy Voting Guidelines. |
Engagements Statistics | Engagement tracking and monitoring is done on a best-efforts basis. Engagement statistics count each substantive individual meeting, call, and response from a company or policy maker. Some of these individual engagements are part of multi-year initiatives or collaborative engagements, while some are more isolated engagements with a company on a specific topic. |
Companies Engaged | Nearly all of the engagements reported includes companies held in the Domini Funds. We sometimes will engage in dialogue with companies that are not held by the Funds or are ineligible for investment, either because they do not meet our standards or are not currently part of our investment universe. |
Dialogue | A meeting, in person or by phone or video conference, between shareholders and corporate executives to discuss areas of interest, generally focused on environmental and social performance, impacts, or disclosure. |
Proxy Statement | A document filed by a publicly traded company to provide shareholders with information regarding matters to be voted on at the annual shareholders’ meeting, including board member elections and executive compensation. |
Proxy Voting Guidelines | Institutional investors’ predefined criteria and principles for voting on proxy proposals, outlining their stance on various governance issues such as executive compensation and sustainability initiatives. Read Domini’s Proxy Voting Guidelines at domini.com/proxyvoting. |
Shareholder Resolution | Proposals submitted by shareholders under SEC Rule 14-a-8 are advisory proposals for consideration and voting at a company’s annual general meeting, addressing various issues such as climate change, just transition, or workers’ rights. |
Shareholder Engagement | The process by which companies interact with their shareholders to communicate corporate strategies, address concerns, and solicit feedback. |
Written Engagement | Domini communicates with companies and policy makers through emails and letters, to ask questions about policies, practices, or impacts. When a company sends a substantive reply to address our question or concern, this is also included in the written engagement tracking. |
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