Goldberg proxy voting initiative seeks to influence corporate boards

BOSTON (STATE HOUSE) – Signaling a more activist era at the state pension fund, Treasurer Deborah Goldberg on Thursday proposed using the $61 billion fund to make a stand on corporate diversity, environmental stewardship and wage equality issues.

A subcommittee of the Pension Reserves Investment Management Board signed off Thursday on a new policy developed by Goldberg that would direct the Pension Reserves Investment Management (PRIM) Board to use its proxy vote as an investor to oppose nominees to corporate boards unless at least 25 percent of a board’s membership is made up of women and minorities.

Goldberg told the subcommittee that the policy will have “positive economic impacts” on the companies, their effectiveness and the pension fund’s returns.

Goldberg’s policy would also direct PRIM to vote for corporate policies that invest in renewable energy and would ask companies in which PRIM invests to provide energy efficiency policies, to stop “misleading advertising” to young people, to increase health warnings on cigarettes, to adopt formal recycling policies, to implement human rights standards and workplace codes of conduct and to link executive pay to non-financial benchmarks such as meeting environmental goals, community involvement and customer and employee satisfaction.

“Demanding that companies create diverse leadership teams and confront the threat of climate change are no longer simply admirable social goals,” Goldberg said in a statement. “These reforms will help protect the stability and financial success of the companies that we invest in.”

Under Goldberg’s proposal, PRIM would also urge companies to “lead on the issue of wage equality” and “proactively seek to hire a diverse workforce.”

PRIM holds stock in roughly 9,000 companies, and can vote on corporate policies and board appointments as a shareholder.

Goldberg, who took over in January, said at a meeting of PRIM’s administration and audit committee that the changes are a “critical ingredient” of their investment strategies.

Under Treasurer Steve Grossman, the pension fund’s policy was to oppose corporate board nominees unless the board had at least one person of color or one woman.

“I felt very strongly that a single number did not address the differences in the size of boards and that we needed a percentage,” Goldberg said. “And we arrived at 25 percent as we looked at calculation of how many boards would not be in compliance if we went all the way up to 30 at this point.”

Robert Brousseau, chair of the administration committee and the PRIM Board’s longest serving member, said the proxy voting season begins in May.

“I’m not a moderate, I’m a liberal, okay,” said Brousseau, who serves as a state teachers’ retirement system representative on the PRIM board. “So I think it’s a good move. And I think more and more, the public pension funds are doing this all over the country.”

Mike Heffernan, who ran against Goldberg as a Republican during the 2014 race for treasurer and later appointed to the PRIM board by Gov. Charlie Baker, was not immediately available for comment.

Dennis Naughton, an elected member of the state teachers’ retirement board, referred to the policy changes as “refinements.” “I think they make a great deal of sense,” he said.

Advocacy groups welcomed Goldberg’s move, with praise coming from Mindy Lubber, president of a sustainability group directing a $12 trillion investor network on climate risk; Mailli Gero, president and co-founder of 2020 Women on Boards; Urban League of Eastern Massachusetts President and CEO Darnell Williams; and Environmental League of Massachusetts President George Bachrach.

The full nine-member board is expected to vote on the policy when it meets on April 7.

Copyright 2015 State House News Service

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