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Shareholder engagement is not just a buzzword; it’s a critical tool for driving corporate accountability and meaningful change. Given VegTech™ Invest’s dedication to advancing sustainable investing, CEO of VegTech™ Invest and host of Upside & Impact: Investing for Change, Elysabeth Alfano, sat down with Annie Sanders, Director of Shareholder Advocacy at Green Century Capital Management on a recent episode. Sanders shared a compelling success story that underscores the importance of persistence and strategic negotiation in shareholder engagement.
The Costco Case: A Blueprint for Advocacy Success
In 2021, Green Century Capital Management initiated engagement with Costco over the company’s inadequate response to climate change. Despite initial resistance, the case highlights several key tactics that transformed shareholder engagement into actionable change:
1. Start with Dialogue: Initial conversations with Costco centered on encouraging the company to adopt climate targets aligned with science-based methodologies. When these discussions failed to yield results, the next step was clear.
2. Leverage Shareholder Proposals: A shareholder proposal filed in 2021 called for Costco to set full value chain emissions reduction targets. Despite facing an SEC challenge—with Costco alleging micromanagement—the proposal proceeded, ultimately receiving an unprecedented 70% majority vote. This overwhelming shareholder support signaled to Costco management that inaction was no longer an option.
3. Persistence Pays Off: Six months after the vote, Costco showed little progress. A second proposal in 2022 reignited negotiations, resulting in a withdrawal agreement. The company committed to measuring, disclosing, and reducing emissions, culminating in its 2022 climate action plan, including ambitious Scope 3 targets.
4. Monitor and Expand Engagement: Green Century continued to engage Costco on broader sustainability issues, including plastics and deforestation. These efforts secured additional commitments, such as a five-year plastics action plan and a forthcoming deforestation action plan, demonstrating the need for ongoing vigilance.
Sanders explains this process further in a clip from the interview here: https://www.youtube.com/watch?v=uS3w9rVyjRI
Key Takeaways for Shareholder Advocacy
Alfano emphasized the broader lessons from this case. “The trajectory of change often meets resistance,” she noted. “Even with strong shareholder mandates, companies may delay meaningful action. Persistence, follow-up negotiations and oversight, and clearly communicated targets are vital to ensuring commitments translate into tangible results.”
The Costco case also underscores the importance of regulatory frameworks. Alfano praised the SEC’s role in facilitating shareholder proposals, particularly given the evolving landscape of ESG disclosures. Robust policies create an environment where shareholders can hold corporations accountable.
The Bigger Picture: Aligning Investments with Impact
For investors focused on driving impact, there are many take-aways from Costco’s climate action journey. Further, in a recent VegTech™ Invest white paper, the top five successful tactics for successful stakeholder engagement are outlined for a broader look at what drives results. They are:
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Define your objectives. As the lead organization of a stakeholder initiative, identify the key aims/goals, and benchmarks that you would like communicated to the targeted company or companies, as well as to the company shareholders with the intention of coalition building. These should be clear and attainable and are the fundamental ABCs of stakeholder engagement.
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Highlight the financial upside of sustainable practices to appeal to profit-focused company board members, the CEO, and shareholders.
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Build participation in larger, diverse coalitions to exert more pressure on companies, rather than relying solely on influential individuals. This usually begins with a letter-writing campaign, augmented by social media campaigns if a secondary step is necessary.
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If initial approaches such as direct dialogue, open letters and social media don’t work, escalate by filing shareholder resolution proposals. Follow the established guidelines for the same as noted in the paper, utilizing the standard policies of proxy voting companies and current and pending regulation as tailwinds for success. This can lead to an intense stage of negotiation as was the case with Costco.
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Remain vigilant with oversight to ensure agreed upon resolutions are implemented.
To read the Top Five Tips for Stakeholder Engagement white paper, click here.
As noted in the VegTech™ Invest whitepaper, these principles are essential for catalyzing change in entrenched companies. Shareholder engagement can be a powerful tool for aligning corporate behavior with long-term value creation, benefiting shareholders, communities, and the planet.
For more insights on effective shareholder advocacy and sustainable investing, follow our podcast, Upside & Impact: Investing for Change.
Listen to the full audio podcast here. Watch the full video interview here.
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