Cornell professor Christopher Marquis writes this week’s “Five Myths” column in The Washington Post. We don’t agree with all of his points; most important, we believe that there is no trade-off of profitability in managing risk by incorporating sustainability concerns, and we note that most American workers are “small shareholders” via retirement plans, 401(k)s, or mutual funds. But we do agree with his point that providing alternatives like B-corporate structures is good for the market and that small shareholders play a vital role in pushing for change.

Yet some shareholders use their ownership as a platform to agitate for change in corporate behavior, especially along environmental, social and governance lines. They are able to do so because all shareholders with holdings greater than $2,000 have the right to submit proposals for consideration at the annual shareholders meeting. Many times, nonprofits or religious orders invest in companies aiming to change their behavior. For example, an anti-plastics activist group, As You Sow, introduced a proposal at Starbucks’s 2019 meeting that the coffee chain make its cups more recyclable, which garnered 44 percent of the vote; an earlier As You Sow proposal led Starbucks to introduce plans to abandon plastic straws. Some of this work is also done collectively. Trillium Asset Management organizes shareholders with minority positions to press companies for socially responsible practices. Chipotle Mexican Grill responded to a Trillium proposal by setting emissions reduction targets for its carbon footprint and reaffirming existing eco-friendly initiatives it will impose on its agricultural suppliers. 

Five myths about shareholders – The Washington Post