• Marcy Murninghan

Charters & Good Governance

The Watertown Home Rule Charter is but one example of a "charter." There are others, affecting businesses, churches, nonprofit institutions, and so on.

Key here is the meaning of "good governance," and what level of accountability exists to assure that checks and balances exist (the "instrument", involving roles and responsibilities) to assure that the public interest (the "aspirations", involving values and vision) is served.

In the U.S., charters governing the conduct of the publicly-traded business corporation is modeled after our public system of governance. That is, in theory, shareholders are akin to voters — they have rights and privileges, a "voice", to assure their concerns are heard. And since "stock ownership" now is largely institutionalized, that voice — in one's insurance policy or bank account or mutual fund or retirement fund — may or may not be heard.

Meanwhile, corporate boards of directors function as the "elected branch," expected to represent the interests of the voters — e.g., the body politic. As for "shareholder primacy" — well, we're so interconnected, it's hard to disentangle "shareholder primacy" from what's good for both people and planet, even though our financialized and bifurcated economy has done so over the past 60 years. That's beginning to change, even as we've a long way to go.

As in public life, the "executive branch" is the CEO and other C-suite executives. In contrast to what a lot of people think, nowadays they're not as impervious to social and environmental concerns as they used to be.

As for the "judiciary" — well, in part, that "umpire" responsibility part lies with the SEC, as well as state courts wherein chartering authority resides.

Whatever the charter or "corporation" — be it a municipality or publicly-traded company — what's key here is to integrate life enhancing values into its governance and operation. Watertown Forward seeks to do that with respect to our municipal governance and "body politic."

We can extend this, rightfully so, into our political economy, too.

That's not an impossible task.

A good place to start: Proxy voting.

See the chart showing the types of shareholder resolutions filed this year — 435 in all, up from 429 in 2020. As of February 11, roughly 313 will go to a vote, after excluding those omitted by the SEC due to company challenges, or withdrawn by the proponents.

According to analysis conducted by Si2, substantively, these resolutions include those involving corporate political activity (18%); workplace diversity (16%); climate change (15%); human rights (11%); board diversity / oversight (9%); sustainability (9%); decent work (6%); environmental management (6%); health (4%); and "other" (1%). Five percent of the resolutions filed were by politically conservative groups, led by the National Center for Public Policy Research (NCPPR), generally (as Heidi Welsh writes) "to push for ideological diversity on board and (new this year) to question the BRT [Business Roundtable] statement of [corporate] purpose."

While not an investment adviser (have been an ESG / responsible investment "field builder" since 1983) I'm proud to be a longtime Proxy Preview sponsor, alongside Domini, Calvert, the Nathan Cummings Foundation, Harrington Investments, Arjuna Capital, ClearBridge Investments, Parnassus Investments, NorthStar Asset Management, Rose Foundation, The Sustainability Group, Fiduciary Trust International, Responsible Investor-dot-com, Boston Trust Walden, Global Proxy Watch, First Affirmative, Green America, Nia Impact Capital, Singing Field Foundation, Miller/Howard Investments, Carillon Tower Advisers, and Veris Wealth Partners.

Here's what I think: As we contemplate continued malignment and destruction of voting rights in the public sphere, we needn't lose sight of what that means with respect to the publicly-traded corporation. While they by no means are not perfect, checks and balances exist there, too. Owners, like voters, have some measure of voice and agency. The question is: Do they use that voice and agency that's legally been endowed?

In part, the answer is "Yes." At a time when "good governance" is being challenged in our domestic politics, on the corporate front, shareholder activists like James McRitchie, Nell Minow, Bob Monks and numerous other longtime friends and colleagues have been active for decades, seeking to promote greater participation, accountability, and responsiveness involving a host of material matters affecting the business corporation's impact on our collective human and ecological well being.


Because they recognize that "ownership" is "trusteeship," and carries with it rights and responsibilities that affect people and planet over the long term, across generations. They also know that "value creation" involves more than money alone — that the way companies address environmental, social, and governance questions have meaning beyond a given quarter, and beyond coins and paper.

A sea change is taking place on the corporate and investor accountability fronts, even as there remains a long way to go. My colleagues Bill Baue​ and Ralph Thurm over at r3.0 are on the cutting edge of sustainable finance, breaking new ground on how we measure, manage, and monitor TRUE sustainable impact — beyond ESGreenwashing — that takes "context" into consideration.

More immediately, though, all of us have voice and agency far more than we might think. Even if we don't own stock, we're tied of institutions that do — such as local tax-exempt institutions that are underwritten, in part, by our taxes. Their holdings likely include the "public equities" asset class, within which are companies with shareholder resolutions on public policy / good governance topics.

These aren't "nuisance" resolutions. If they've made it through the SEC gauntlet, which is loaded with obstacles, their appearance on the corporate ballot for voting at the annual general meeting (AGM) is cause for celebration. Like them or not, they warrant our attention. Collective action, as in public life, makes a difference. So does voting. It's time to ask our local university, hospital, museum, public pension fund, community foundation or other grantmaking entity, fraternal society, cemetery association (!!!), house of worship, and insurance company if they're fully and prudently leveraging their financial assets in service to the public interest. After all, that's why they don't pay taxes!

Watertown has several of these. Down the road, we can raise the question of responsible investment within the context of the values that animate our Charter, and the vision of the "beloved community" we'd like to see and build.

In part, that means this: Does Watertown's government — and local NGOs (aka "civic fiduciaries") wealthy enough to have investment portfolios — behaving as responsible owners, as good stewards, who diligently carry out their fiduciary duty to vote on the shareholder resolutions before them? Do they have a proxy voting policy that aligns with the public interest values that lie at the core of their mission? If not, why not? And how might they craft one?

That's why we need a new kind of voter education + registration project, one that, as Stacey Abrams showed us in Georgia with respect to public life, holds the promise of assuring that certain corporate practices adhere to ethical principles and the public interest.

One pathway to understanding the specifics: the annual release of Proxy Preview 2021. So take a look, and get educated. Seize the power, and count yourself among those who believe that capitalism can bend to the public interest, not the other way around.

Here's more, from the PP team:

Get ready for Proxy Preview 2021 — the 17th edition of the insider's guide to environmental, social, and sustainable governance shareholder resolutions is coming to you March 18, 2021.

Proxy Preview is the #1 resource for shareholders seeking to understand key social and environmental issues being raised by investors.

This free publication provides the most comprehensive data on hundreds of shareholder resolutions — including on corporate political spending and lobbying, climate change, human rights, diversity, fair pay and working conditions, sustainable governance, and much more. New proposals in 2021 address racial justice, COVID and worker safety. Over 20 guest authors provide analysis and expert insight to help you navigate the issues and successfully vote your shares.

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