Responsible Investment Requires a Proxy Voting System Responsive to - PowerPoint PPT Presentation

Responsible Investment Requires a Proxy Voting System Responsive to Retail Investors* Presentation by Ian Robertson CFA Department of Continuing Education Smith School of Enterprise and the Environment *Forthcoming in Designing a Sustainable Financial System: Development Goals and Socio-Ecological Responsibility , Palgrave McMillan, 2017

Ian Robertson 1 2 3 4 5 Investor Rights ESG Valuation Values Economic rights Screening Corporation ESG Proxy Ownership rights Voting ESG Proxy Ownership rights Voting ESG Engagement ESG Engagement

Ian Robertson 1 2 3 4 5 Figure 3. Proxies Voted by Retail Investors Extrapolated between 1976 and 2008. Sources: SEC (1976); Broadridge (2015) 100% Rise of ESG & Responsible Investment Street name 80% Diversification 60% Media/Electronics 40% Notice & Access 20% 0% FY75 FY80 FY85 FY90 FY95 FY00 FY05 FY '10 FY '15 Always + Sometimes Always Actual

Ian Robertson 1 2 3 4 5 Will My Proxy Be Voted? Discount Brokerage Full Service Brokerage Portfolio Manager (RIA) No No Maybe Stock Maybe Maybe Maybe Mutual Fund Exchange Traded Fund Probably Not Probably Not Probably Not (ETF)

Ian Robertson 1 2 3 4 5 Recommendations Discount Brokerage Full Service Brokerage Portfolio Manager (RIA) Fiduciary Fiduciary Stock No No Maybe Client Objectives form Client Objectives form Mutual Fund Exchange Traded Fund Integration of Ownership & Economic Reporting (ETF)

Ian Robertson 1 2 3 4 5 Figure 1. Stages of Capitalism Figure 7. Stages of Capitalism: The Retail Ownership Gap Figure 1. Stages of Capitalism Adapted from R.C. Clark (1981); G.L Clark & T. Hebb (2004 ) Adapted from R.C. Clark (1981); G.L Clark & T. Hebb (2004) Adapted from R.C. Clark (1981); G.L Clark & T. Hebb (2004 ) Property Rights Property Rights Property Rights Eras of Capitalism Structures & Concepts Property Rights Trust Robber Barons / Corporation (Democratic) 1. 1. Owner / Operators 1. Owner / Operators Gilded Age Progressive Era Corporation (Plutocratic) Roaring Twenties Agency Issue Direct Interaction 2. Business Managers 2. Business Managers 2. 2. 2. Major Owners 2. Major Owners Golden Age Disintermediation ? 3.3 Discount Responsible 4. 4. ESG Proxy Voting 4. ESG Proxy Voting Brokers Investment (Institutions) ? Neoliberalism 3.2 Retail Brokers Responsible 3.1 Portfolio Managers 3. Portfolio Managers 3. 3. Minor Owners 3. Minor Owners 3. ??? Investment (Retail) (Retail) (Retail)