Socially responsible mutual funds are considerably stronger proponents of corporate governance shareholder resolutions than conventional mutual funds, according to a study by the Social Investment Forum Foundation (SIFF).
The SIFF report analyzed the U.S. mutual fund voting patterns that are now discernible as a result of the first 12 months of mandatory proxy disclosure, a requirement that was strenuously opposed by most of the mutual fund industry.
The new study entitled “Mutual Funds, Proxy Voting, and Fiduciary Responsibility: How Do Funds Rate on Voting Their Proxies and Disclosure Practices?” states, “Socially responsible investing (SRI) funds as a category support more shareholder-proposed corporate governance resolutions and ‘vote no’ campaigns than their conventional peers by a 2-to-1 margin. They also tend to support more controversial governance resolutions, like separating the CEO and chair positions, or limiting non audit services by auditors. SRI funds are also more consistent in their support of popular ‘plain vanilla’ governance issues we examined (poison pills, expensing stock options, golden parachutes, and declassifying the board) — totaling 90% support for these four issues, opposed to 72 percent support by ‘conventional’ funds.”