It sure sounds like a new era has dawned! The World Economic Forum recently issued a new manifesto and the Business Roundtable (BRT) released a new statement on the “Purpose of a Corporation.” Both declare that a new business model has been adopted and it is Stakeholder Capitalism, where “a company serves not only its shareholders, but all its stakeholders—employees, customers, suppliers, local communities and society at large” including sustainable environmental, social and governance (ESG) principles. However, are we really in a new era? Do the titans of business finally understand and agree to the essence of what shareholder advocates have been asking for since the first social policy resolutions were filed 50 years ago? Or are these just empty words?

The 2020 proxy season may provide the answer to this question. If we see major asset managers—which between them control major stakes in most public companies—side with the shareholder advocacy community by voting for ESG resolutions, that will tell one story. If we see fund managers continue their long-standing practice of voting with management against nearly every ESG resolutions, it will tell another. BlackRock publicly stated, “Climate risk is investment risk,” but every year has voted against the vast majority of climate proposals; if this changes, we will know a shift may truly be underway. In addition, the continued attacks on shareholder rights by signatories of the new purpose reveal a contradiction with their newfound business model.

Likewise, we will see how corporate management responds to this year’s resolutions. Leading companies have an opportunity to define a path to a clean, just and sustainable future, leaving behind a dying and destructive economic paradigm. This year can be the inflection point when the battle for the future of our planet intensifies and a new trajectory is revealed. Corporate boards that have not exerted their power for oversight must be held accountable, and they must act to create change. If they do not, shareholders will intensify their use of resolutions and legal options to replace these recalcitrant boards.

The interconnection of all the issues described in Proxy Preview 2020 is clear. Climate change has already triggered social injustice, with 100+ million refugees fleeing drought, fire and starvation around the world. The coronavirus pandemic is causing border closings and promises to affect supply chains, which may lead to even more economic upheaval—especially for the most vulnerable communities. Toxins in water, pesticides in food, single-use plastics piling up on beaches and disrupting marine life, hate speech proliferating through social media and political spending that shifts power away from the majority of people are all intertwined and may trigger each other. As the World Economic Forum and Business Roundtable now acknowledge, environmental and social impacts have clear material financial implications for corporations and investors.

The 2020 shareholder resolutions demand urgent attention from all stakeholders to ensure we find leaders who make the right decisions to transition to a new economic era. It is a time of great risk but also one of great hope. Shareholder proponents strive to work with corporate management to find solutions that create a just and livable world that will allow both businesses and future generations to thrive. We hope the new corporate pledges for stakeholder capitalism mean a new era has arrived.

Andrew Behar
CEO, As You Sow