INVESTMENT & ECONOMIC ANALYSIS: March 2003
SOCIAL TOPICS (Archive): INVESTMENT &
Triumph at the SEC
Published, March 2003
Timothy Smith is
president and chair of the Social Investment Forum, as well as Director of
Socially Responsive investing here at Walden. The following is excerpted from
his January 23 statement pertaining to new SEC rules on proxy voting.
Both socially and environmentally responsible
investors hail today’s important decision by the Securities and Exchange
Commission (SEC) to protect the rights of all investors by requiring meaningful
disclosure of proxy voting by mutual funds and investment advisors. In taking
this action, the SEC has empowered investors with the right to information that
can be used to evaluate the commitment of mutual funds and investment advisors
to good corporate governance and long-term shareholder value.
For years now, Social Investment Forum members have
called for disclosure of proxy votes and voting guidelines. Forum members were
the first firms in the nation to voluntarily make such disclosures. In fact, all
of the U.S. mutual fund companies that currently disclose both their guidelines
and voting decisions publicly are members of the Forum. Our members have done so
voluntarily because they understand that mutual funds have a fiduciary duty to
vote proxies in a manner that is consistent with the best interests of their
shareholders and clients.
It is important to remember that corporate scandals
like Enron, Tyco, and WorldCom were not caused by executive greed alone. Mutual
funds were among those that approved Enron’s board of directors, supported CEO
compensation packages, and voted against numerous corporate governance measures
that may well have prevented some of the abuses we’ve recently witnessed. The
SEC’s action today tears away the cloak of secrecy that up until now has
shielded mutual fund proxy voting from much-needed public scrutiny.
The SEC action is good for investors and it is a good
thing for the mutual fund industry, including those companies that do not yet
appreciate that fact. There is mounting evidence that attention to shareholder
rights, including social and corporate governance issues, is linked to long-term
corporate performance. When all mutual funds reveal how they use proxy votes,
enabling shareholders to know what is being done in their name, we expect to see
a contribution to long-term shareholder value.
More and more investors today understand the
importance of good governance, ethics and corporate citizenship in the companies
in which they invest through mutual funds. They want to see if mutual funds “get
it” and are voting thoughtfully and conscientiously on their behalf. Today’s
action by the SEC finally makes that possible.
The information contained herein has been prepared from sources and data we believe to be reliable, but we make no guarantee as to its adequacy, accuracy, timeliness or completeness. We cannot and do not guarantee the suitability or profitability of any particular investment. No information herein is intended as an offer or solicitation of an offer to sell or buy, or as a sponsorship of any company, security, or fund. Neither Walden nor any of its contributors make any representations about the suitability of the information contained herein. Opinions expressed herein are subject to change without notice. The writings of authors do not necessarily represent the views of Walden Asset Management, its parent, or affiliated entities. There are certain risks involved with investing, including various risks depending on the type of investment vehicle being used.
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