Strategies Shareholder engagement

The ownership of the common shares of a corporation gives the holder the opportunity to exercise various shareholder rights such as proxy voting, negotiations with management, and the sponsorship of shareholder resolutions. This section explains how responsible investors use the shareholder engagement strategy and gives clear examples of shareholder engagement activities.

Responsible investors, who practise shareholder engagement through a mix of letters, conference calls, face-to-face meetings and joint dialogue with other investors, build productive relationships with company management and board members by addressing how things could be done better. Constructive dialogue indeed often leads to positive change. However, when dialogue results in an impasse, fund managers may elect to file a shareholder proposal for consideration and voting on by shareholders at the company’s next annual general meeting. Sometimes, the filing of a proposal suffices to convince a company to take action, have the proposal removed from the meeting agenda, and avoid negative publicity. Divestment – selling of shares – is generally a last resort when dialogue and shareholder proposals fail, and companies refuse to budge on improving environmental, social and governance performance. No one fund is likely to engage in dialogue with all the companies in its portfolio in a given year, hence the existence of what is referred to as the proxy vote, another influential investor tool and/or responsibility.

Not all responsible investors employ the full spectrum of engagement strategies. Shareholder engagement can be broken down into three types of action: (1) dialogue with companies; (2) submission of shareholder resolutions; (3) application and maintenance of a proxy voting policy that outlines voting positions on environmental, social and governance issues. The following section presents examples of each of these three engagement subtypes.

Examples – Dialogue with companies


The following details engagements by NEI’s Ethical Funds with Encana Corporation on an extensive variety of issues including climate change, risks relating to oil sands operations, hydraulic fracturing, water-related risks and challenges, human rights, community relations, First Nations rights, and reasonable compensation linked to environmental, social and governance (ESG) performance. Content provided by NEI (2014) and modified for better flow.

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Suncor and Petro-Canada

(Content provided by NEI Ethical Funds (2014) and modified for flow)

The following details the engagement by Ethical Funds with Suncor (and Petro-Canada) between 2002 and 2013 on a variety of issues including climate change, risks of oils sands operations, alternatives to fossil fuels, renewable energy development, human rights, biodiversity protection, linking compensation to ESG performance as well as Free, prior and informed consent of First Nations peoples.

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Tim Horton’s

Ocean Rock lobbied Tim Horton’s for years to provide fair trade coffee in commercial outlets. The company, already involved in a partnership program to assist small-scale famers (although not through the purchase of coffee beans from those farmers), eventually launched its Partnership Blend coffee in the spring of 2013. Sales of that coffee are helping to develop sustainable coffee farming communities in key regions of the world.
(Source: Shareholder engagement: influencing positive, measurable change.  OceanRock, investment inc.)


Loblaw Companies Limited

OceanRock has engaged Loblaw on a range of issues since 2006, including sustainability reporting disclosure, ‘say on pay’ and supply chain matters. As a result, the company has published corporate sustainability reports each year since 2007, and has participated in the Carbon Disclosure Project since 2009. Last year, Loblaw signed the Accord on Building and Fire Safety in Bangladesh, as well as the Company Pledge against Forced Child and Adult Labour in Uzbek Cotton.
(Source: Shareholder engagement: influencing positive, measurable change.  OceanRock, investment inc.)


HP, Dell and Best Buy

US-based As You Sow Foundation has filed resolutions, engaged with these three companies and established industry-wide take-back and recycling programs which each year prevent some 500 000 tonnes or more of e-waste being disposed of in landfills. (Source:


Shell, BP, Walmart, Novartis, Lockheed Martin, Chevron and others

A UK-based organization by the name of ShareAction details a number of engagement successes with multinationals on ShareAction, the movement for Responsible Investment.


Examples – Shareholder resolutions


This shareholder proposal was submitted to Google in 2014 challenging the company on its tax practices. Another proposal was submitted to Google in 2015 on Google’s political spending practices.


Canadian Imperial Bank of Commerce (CIBC)

This shareholder proposal presented to CIBC in 2014 was ultimately withdrawn after the submitting fund met with bank officials and received assurances that their request would be addressed in future reporting.


ExxonMobil Corporation

Shareholders requested that ExxonMobil prepare a report by September 2014, omitting proprietary information, produced at reasonable cost and outlining the company’s strategy for addressing the risk of stranded assets as a result of global climate change. ExxonMobil was also to include an analysis of long and short term financial and operating risks faced by the company.
The proposal
The ExxonMobil commitment


ExxonMobil Corporation

Shareholders requested that the board of directors report annually on the results of company policies and practices deemed above and beyond regulatory requirements, the object being to minimize adverse environmental and community impact generated by the company’s hydraulic fracturing operations.
The proposal
The withdrawal agreement and planned action



Kraft Foods

This resolution was submitted to Kraft Foods in 2015 requesting that the Board prepare a public report, at reasonable cost and omitting proprietary information, describing how Kraft is assessing the company’s supply chain impact on deforestation and associated human rights issues, and its plans to mitigate these risks.


For more examples of US-based resolutions, go to As You Sow


Examples – Proxy voting

To view a proxy voting guideline policy, click on the following link:
Proxy Voting Guidelines – 2015

Understanding Shareholder Votes

In Canada, any shareholder can make a proposal, a brief statement of which must be included with notices of meetings, but it can be refused if it “does not relate in a significant way to the business or affairs of the corporation,” or “the rights conferred by this section are being abused to secure publicity” and under s. 137(8)of the Canadian Business Corporations Act (CBCA) the only way to challenge this is by application to a court.

Most proxy votes are dominated by company management and a few dozen large financial institutions, which often automatically vote with management and hold the majority of a company’s shares. Consequently,  it is difficult and extremely rare to see a majority vote on a shareholder-initiated proposal, but even relatively modest shareholder votes can serve as the impetus for significant corporate policy changes. In most cases, an investor with 3 percent ownership in a company would be one of the top shareholders, and thus even single digit votes may gain considerable attention from company management. A company would be unwise to ignore any social or environmental proposal that obtained above 10 percent of the vote, which means that often, issues that obtain this level of vote will result in some action by the company to address the shareholder’s concerns.

In the US as in Canada, there are requirements for a proposal to receive enough votes to be re-filed the following year. For the first year, a proposal must receive 3 percent of the vote for concerned shareholders to be able to refile that specific proposal. If a proposal is filed 2 years in a row, it must obtain 6 percent support the second year, and 10 percent the third year and each subsequent year.

Voting Your Shares


Examples – Divestment

(when engagement fails to produce results)


The VanCity Investment Management (VCIM) mutual fund sub-advisory team actively engaged Enbridge for over five years on a number of ESG risks regarding the Northern Gateway pipeline project. Issues addressed included oil tanker safety, human rights impact, adequacy of consultation, disclosure of financial risks and potential environmental damage. Action culminated in 2012 when VCIM joined two other institutional shareholders in filing a resolution which garnered the support of about 29% of shareholders and called on the company to assess the risks associated with First Nations’ opposition to the project. When combined with a 2010 pipeline spill on the Kalamazoo River in Michigan, an incident with respect to which Enbridge sustained serious criticism, and cancellation of a carbon capture proposal designed to reduce greenhouse gas emissions from a coal-fired power plant, VCIM ultimately concluded that Enbridge no longer fulfilled ESG criteria and consequently withdrew Enbridge securities, shares and bonds from funds (notably the IA Clarington Inhance SRI funds) and managed portfolios. (Source: VCIM, 2013 Shareholder Report, p.13)


Strengths and weaknesses


  • Directly impacts the behaviour of large companies.
  • Results in long term, measurable, positive change at some of the leading companies in Canada and elsewhere in the world.
  • Forges collaboration between non-governmental organizations and responsible institutional investors.
  • Investors tend to secure a greater number of services for fees charged when they invest in funds which practise engagement.
  • Large public pension funds in Canada employ engagement strategies on behalf of their beneficiaries, namely the Canadian people. As a result, substantial sums of money go to supporting engagement, meaning that individual Canadians actually enjoy exposure to and the benefits of these strategies through their pension fund contributions.


  • Little known or understood by individual investors
  • Considerable activity takes place behind the scenes, lending the impression that not much progress is being made.
  • Engagement is a demanding process, rendering the strategy difficult or inaccessible to do-it-yourself investors.
  • Even when support for shareholder proposals is relatively high, the company has no legal obligation to comply with investor requests.