Stringer says initiative promotes fiscal – and social – responsibility at private firms

While elected officials and advocates are quick to call for divesting public pensions from companies like gun manufacturers as a means of promoting social responsibility, New York City Comptroller Scott Stringer said the law limits his office to solely focusing on finances.

The comptroller has, however, launched an initiative that seizes on social issues that could pose a financial risk – like diversity, executive pay and climate change – at firms where the city’s pensions are invested. His Boardroom Accountability Project endeavors to ensure executives have a responsible approach to such concerns by compelling companies to adopt a policy of allowing shareholders to nominate director candidates.

“It is essential that we have the right directors in the room – directors who, collectively, have the diverse skills and experience needed to understand and respond to long-term business risks,” Stringer said in a statement. “With proxy access, we have the ability to say, if a board isn’t nominating diverse, qualified directors, we will do it ourselves. …  We’ve seen corporations put management’s interests before investors’ with sky-high executive compensation. And, as long-term investors, we are concerned about the impact of climate change across our portfolio.”

In November 2014, Stringer’s team approached 75 companies about adopting a resolution to allow shareholders who have at least a 3 percent ownership stake for a minimum of three years to nominate director candidates. So far, 66 companies voted on the resolution, and 43 adopted it. Another seven companies voluntarily adopted a similar policy, and two proposals became moot due to corporate transactions.

The comptroller’s office said the resolution is advisory and not enforceable. Most firms are still phasing in the proxy access provisions, so Stringer’s office said it would be premature to name any shareholder-nominated candidates. His staff aniticapites that companies will begin to cultivate a more responsive approach to shareholders, thereby curbing the need for proxy-nominated candidates. His office pointed out that companies beyond the 75 targeted firms – more than 100 – have started embracing proxy access policies.

Meanwhile, researchers at the U.S. Securities and Exchange Commission found that returns grew 0.5 percent at companies that adopted proxy-access measures, underscoring Stringer’s fiscal argument.

“My mission is to protect the retirement security of over 715,000 dedicated city workers and retirees, some of whom will still be drawing a pension 50 years from now,” Stringer said in a statement. “The goals of the Boardroom Accountability Project, therefore, are to limit risk to our long-term investment by ensuring that the boards of companies in which we are invested are thinking about the impact of their business practices decades into the future.”