Recommendations for Investors
Climate, Inequality, Unaccountable Technology
Institutional investors have a responsibility to mitigate systemic risks to their portfolios, including from inequality, climate change, and unaccountable technology. Although the following recommendations focus mainly on stewardship—primarily proxy voting—the same principles also apply to investors’ allocation practices and public policy advocacy.
Within a given investment firm, fund managers should work with stewardship teams to ensure the system-level risks to their specific portfolios are being adequately addressed.
1. Acknowledge the materiality of inequality, climate change, and unaccountable technology.
Ensure that relevant documents and communications explicitly acknowledge that:
Inequality, climate change, and unaccountable development and use of technology pose idiosyncratic and systematic investment risks that are material to shareholder value.
The risks associated with inequality, climate change, and unaccountable technology should be mitigated through stewardship, consistent with fiduciary duty.
2. Set issuer expectations related to inequality, climate change, and unaccountable technology.
Ensure that relevant documents and communications explicitly set expectations for issuers to mitigate their contributions to inequality, climate change, and unaccountable technology. This should include:
Mitigating inequality by:
Comprehensively disclosing political spending and lobbying activities.
Respecting workers’ rights to freedom of association, a safe and healthy workplace, and a living wage.
Mitigating intra-firm inequalities, including by addressing exorbitant CEO pay and investing in human capital development.
Eliminating workplace racial and gender discrimination.
Mitigating climate change by:
Committing to achieve net-zero greenhouse gas emissions by 2050 at the latest
Setting medium-term targets consistent with cutting emissions in half by 2030
Aligning capital expenditures with net zero by 2050 and halving emissions by 2030
Ensuring policy influence positions and activities consistent with net zero by 2050 and halving emissions by 2030.
Mitigating unaccountable technology by ensuring the development and use of data centers, artificial intelligence, and other technology does not contribute to externalities, including:
Climate change and environmental impact
Workplace inequality
Democratic backsliding
3. Engage issuers.
Conduct sustained engagement with issuers that communicate the above expectations and consequences for not meeting those expectations.
4. Ensure proxy voting policies adequately address inequality, climate change, and unaccountable technology.
Proxy voting policies should:
Acknowledge the financial and investment risks related to inequality, climate change, and unaccountable technology.
Explicitly link proxy voting to performance expectations for issuers.
Commit to vote for resolutions that guide issuers to better meet those performance expectations.
Commit to vote against responsible directors at issuers that are significantly misaligned with those performance expectations, or do not implement resolutions with substantial shareholder support.
Facilitate amplification of key proxy votes related to inequality, climate change, and unaccountable technology, including through pre-declaration, exempt solicitations, press engagement, and vote rationales.
In general, given the increasing severity of systemic risks facing portfolios, proxy voting policies should strengthen or at least maintain preexisting proxy voting commitments related to inequality, climate change, and unaccountable technology on a year-on-year basis.
5. Cast proxy votes that align with the above policies.
Vote for resolutions that guide issuers to better meet those performance expectations related to inequality (including say-on-pay proposals), climate change, and unaccountable technology. Vote against responsible directors at issuers that are significantly misaligned with those performance expectations, or do not respond to resolutions that received substantial shareholder support.
6. Amplify key proxy votes related to inequality, climate change, and unaccountable technology.
Amplify key votes by pre-declaring votes in advance of companies’ annual general meetings, filing exempt solicitations, publishing opinion editorials, publishing voting intentions online, and publishing voting rationales and communicating rationales to the boards of directors at issuers.
7. Adopt and utilize an escalation pathway.
Adopt and utilize an escalation pathway with key issuers that serially fail to meet expectations related to inequality, climate change, and unaccountable technology.