As reported in this week's Society Alert, among the several noteworthy excerpts from Proxy Insight's interview with Boston Partners Director of Sustainability & Engagement William Butterly (page 6) is this one concerning the Business Roundtable's statement on corporate purpose, which has been the focus of a number of shareholder proposals (see, e.g., Goldman Sachs: Item 5 / Citigroup: Proposal 6 / Bank of America: Proposal 7):
Several shareholder proposals this season relate to the Business Roundtable’s (BRT’s) statement on corporate purpose. Do you have any thoughts on this topic?
The concept of stakeholders is a little troubling for me because the shareholders own the company and the employees are an integral part of that, so you have two important elements there. I think there is a little too much emphasis sometimes on the other so-called stakeholders which would include things like non-government organizations. I do not think it is an item that is material or important and I think that you can still have consideration of other groups that have input into the effective running of the company without necessarily giving them some sort of quasi-ownership rights by calling them stakeholders. I do not think the business roundtable position necessarily advances the cause.
Illustrating how different investors may have divergent views, perceptions and priorities, this article from Pensions & Investments earlier this week relays a conversation with As You Sow's CEO about the expected impacts of COVID-19 on next year's proxy season proposals: "Shareholder activists also will be watching closely at next year's meetings to see how BlackRock Inc. and other large asset managers implement the Business Roundtable's new approach to defining a corporation's purpose, shifting from a sole focus on shareholders to one that considers all stakeholders, including employees, customers, suppliers and communities, he said."
Also notable are Butterly's remarks indicating that the SEC's outstanding proxy advisor rule proposal is useless based on what appears to be a mistaken belief that issuers are currently always given the opportunity to review and comment on ISS's and Glass Lewis's research reports sufficiently in advance to correct errors before a vote (which is not accurate):
What are your thoughts on the SEC’s announcement that it will no longer propose that proxy advisers submit their recommendations to companies?
I am not sure it is going to make a difference. In everything that we have seen from ISS there has not been one case where the issuer was not given the opportunity to review the research and comment on it. At least that is what ISS says in their reports; I have no reason to disbelieve them.
In the engagement activities that we have had with issuers where ISS has taken a negative position or contrary to management’s position, it has been very clear that there has been a dialogue between management and ISS prior to that position becoming public. Whether all issuers have taken advantage of that or not I do not know but most have it seems. I think that regulation would have been useless at least when it comes to ISS, I am sure Glass Lewis does it as well, so there is time to correct factual errors that ISS or one of the proxy advisors have made.