Building Better Companies for a Better World
Corporations can be persuaded to do the right thing for the world when that is also the right thing for their business. This idea is at the heart of the mission of As You Sow, a nonprofit organization dedicated to applying the power of company shareholders “to create lasting change and align investments with values” in areas encompassing climate change, environmental health, social justice, and biodiversity.
The 32-year-old group, based in Berkeley, CA, might be best known for spearheading resolutions at corporate shareholder meetings to press executives to take a certain action, with As You Sow as the stock owner or more often representing a like-minded shareholder. The resolutions are non-binding but can catalyze change by demonstrating support of a publicly traded company’s owners for that act. It’s a popular approach to advocacy, with roughly 400 resolutions filed annually by organizations ranging from the Ceres Investor Network to New York City public pension funds.
In one recent case, As You Sow was the lead filer for a resolution voted on in June by shareholders of Alphabet Inc., the parent company of Google, demanding it disclose the steps taken to ensure that current investments in companies with high carbon emissions do not harm beneficiaries of its retirement plan. The resolution argues that investing in companies that contribute to climate change and deforestation is bad for employees (risking their life savings) and for Alphabet itself (potentially making it harder to recruit and keep employees).
Only 3.8% of all voting shareholders supported the resolution, but in many cases a low vote percentage can still represent a win, says CEO Andrew Behar. Core to its goals are research and conversations that can occur before or after the vote. “Even if you get a really high vote, you're still going to go sit down with the company and say, you know what, 60% of your shareholders think this is important, or 20% that this is important, and you have that conversation,” he told Earth Hero. “So we've gotten some of our biggest wins with a 6% vote. The votes are not really as significant as people might think. It's really kind of just a step on the path.”
Executives often come to meetings with As You Sow with open minds, with oil companies being a major exception, according to Behar. “They somehow think they're going to just get every last drop out of the planet. I don't know what they think about their own children and their grandchildren.”
In the following Q&A, Behar discusses As You Sow’s history, its expansion into climate and energy issues, its approach to corporate change, and the mechanics of shareholder resolutions. The interview has been edited for length and clarity:
Has shareholder advocacy always been at the core of As You Sow's mission and why was that the approach that the organization led with to help generate change at the corporate, national, and international levels?
As You Sow was founded in 1992, and its mission has always been corporate accountability and through the lens of shareholders. We started as a plaintiff, doing cases around carcinogens and reproductive toxicants in products. So we were addressing corporations in that way through the legal system. And what happened is we won a lot of those cases and some of that settlement money was then used to develop a staff to say, ultimately, we believe that corporations have an incredible amount of power, that when a corporation makes a decision, particularly at the board level, it ripples through their entire supply chain, through all their customers, through all their employees. A company like Walmart makes a decision and literally millions or tens of millions of people can be impacted.
So we looked at that, and went, that's a lot of power. If we can find the right leverage points that are going to be good for the company and good for all the stakeholders—and the stakeholders include employees, communities where they operate, their customers, their shareholders, and their supply chain—then as a small nonprofit we can have much greater leverage. And so that's basically what we've done. And we've done it very successfully over the years because we never ask a company to do the right thing, we always do deep research, and we figure out what are they doing, what are the key performance indicators, how do they measure themselves, and how do we as shareholders measure them in order to help them optimize and to become more competitive?
So it's evolved over the years, but fundamentally, we sit down with companies, we bring them a better business plan, and it's hard for them to say no because they want to be more successful.
As you said, As You Sow dates to 1992. Was there a particular point at which you expanded the focus to climate and energy issues? And why did that seem a good area to tackle?
When As You Sow was founded it was founded around the ideas around environmental health. And so that was its early years. I was brought in during 2010 to actually write a strategic plan. And one of the things in that strategic plan said that the organization should really start looking at energy issues, at coal and climate, at methane, all the different things around the energy sector, but also at racial justice, at diversity, equity, inclusion, at gender equality, LGBTQ, basically at justice. And those were really the two big adjustments that I made. And after I wrote the strategic plan, the board asked me to stay on as the CEO and execute the plan. So we started in 2010, really building out the climate work.
First working on coal ash ponds. And most people aren't aware, but when you burn coal, you have this ash and they mix it with water and make this slurry. And they put it in these billion-gallon, what they call lagoons. And there's thousands of them, there's like 2,000 of them around the country that have no liners, and all the cadmium and mercury and just everything lead just seeps right into the water systems. So that's not even climate. So we started working on it in that way, saying we got to retire coal.
And what we found is that utilities were fairly agnostic as to how they get their electrons. And as renewables have become less expensive, the transition from coal to renewables just makes business sense. You can get those electrons less expensively, all the better without all that risk.
But that led us into fracking. We were the first group to start to engage and file resolutions on fracking, which led us of course to pipelines because of methane, fugitive methane, which led us into the whole value chain. And then we got into banks and insurance because of the Dakota Access Pipeline where the banks had funded [pipeline builder] Energy Transfer Partners and the banks were saying we had nothing to do with it, we just gave them money, we didn't know what they [were doing]. And now Morgan Stanley's brand is associated with that. [We] kind of connected the dots between a loan book and what gets done with it, which translates now into what's called financed emissions.
So we've gotten all the banks to actually disclose the risk in their loan book and the way that they make the loans. Insurance companies underwriting, similar things. So that's been a real evolution over the years. Every year we're figuring out new, different ways of just exposing the risk within all the infrastructure that is leading to climate change. And then of course the biggest risk, which is this warming planet and you know, and the harm to every agricultural crop which is now we call climate inflation. And we've dedicated a site to that, climateinflation.org, where we just look at why is chocolate so expensive? Well, because you can't grow it where all the cacao trees are because it's too hot. Same thing with coffee.
To go back to a comment you made earlier, describe the process of the research you do and how you select companies through which you will file resolutions.
First of all, the resolution is an escalation. So we engaged, last year, 210 companies. Ninety-nine companies said, thank you for the research, we're going to go about becoming a better company; 111 didn't. So we escalated by filing the resolution. And once we did that, 56 of those companies said, well, you know, we agree with you, and if you'll withdraw we'll start to take action. So only about 30% ever go to a vote. Just realize the vast majority of the work is actually the relationship with the companies.
So, yeah, even if you get a really high vote, you're still going to go sit down with the company and say, you know what, 60% of your shareholders think this is important, or 20% that this is important, and you have that conversation. So we've gotten some of our biggest wins with a 6% vote. The votes are not really as significant as people might think. It's really kind of just a step on the path.
We start with core research. How do you rate and rank companies on these issues? On plastics, we just released a plastic scorecard last week. We have 35 key performance indicators. Now, these are all developed by bringing together a team of experts, people who spent their whole career on these issues. And then we vet them with the company. So is this accurate? Is this how you rate and rank yourself? And then these evolve and we get them right. And we come up with a rubric to score them because some of the key performance indicators might have twice the weight of another. What companies say overall might only be 20% of the score. What they do is 80% of the score.
So we develop all that, the rubrics, and then we test it. So does this make sense? We show it to the companies. Then we go about the research. So we'll go in one sector and we'll say you got a D, or in some cases numerical, you got a seven and your direct competitor got a B+ or got an 11. Here's why, these are the two things they're doing you are not. And here's the cost of doing those two things. You could become competitive at very little cost and here's the benefit of doing those. Here's the risk of not doing those. And so we just lay it out for them. And generally the companies go, you know what, you're right, you're dead on. We could make this change. And sometimes it's very insignificant to them but they become competitive and now investors are going to, rather than overweighting their competitors and their portfolios, they'll see them as either equivalents or see that they're doing better.
And for the resolutions themselves, what is the mechanics of teaming either with shareholders who have enough stock?
Sometimes As You Sow is the shareholder, but for the most part we represent other shareholders. The thresholds are you hold the stock for a year it's $25,000, you hold it for two years it's $15,000, and three years and beyond it's $2,000.
So let's say we're working on an issue around disposal of plastic in the ocean. We know that there's shareholders who are part of what we call an activate your shares network who really care about these issues, who are reading our reports, who know about this. And we say, we're engaging this company. And they go, oh, you know, I've owned that company for three years, I've got at least $2,000. And we say, well, we can represent you. And they sign a Docusign and they authorize us to represent them.
Over As You Sow’s lifetime, and in particular on the clean energy and climate issues, do you know how many resolutions you've filed?
I think in that database, it only goes back to like 2011, I think there's a thousand or so. I know that last year was 111, this year was I think 92. We'd like to file zero, frankly. If every company we met with said great idea, let's go get it done, it uses much less resources and we can talk to more companies. You know, the resolution process is a bit of a distraction from the actual work. We just care about companies optimizing their long-term sustainable growth, and the shareholder process, it's fairly cumbersome.
In the total scope of engagements, how many have come out to what you would consider to be a successful resolution? And what generally might that look like?
It depends on sector. So here's one I'll give you. We engaged Starbucks about the use of Styrofoam. Now, Styrofoam, a lot of it ends up in the ocean and it breaks down into tiny particles and gets eaten by marine life, and then they get eaten by marine life and up and up, and then humans end up eating the fish, and they're getting phthalates and DEHP and other endocrine disruptors from the plastics. And also just choking and killing ecosystems within the sea. We went to them and had a conversation with them, and, and they agreed that this was not good for their brand to be associated with this level of devastation. And so they signed a pledge that they would phase out Styrofoam in all their stores. So we used that to go and talk to, I think Starbucks was first, then McDonald's, and then Dunkin’ [Donuts]. All told, about 3 billion Styrofoam cups are not being produced this year because of that.
[Companies] actually make real changes and change their entire procurement systems because they don't want their brand associated with these kind of practices because they're going to lose market share.
The one area that's the hardest is the oil companies, because they just don't care about their brand. It's kind of like, what can you say? Darth Vader's a really bad guy.
You can have the Exxon Valdez and, well, still going to put gas in my car, although now everybody’s been switching to electric. So we have to go into the oil companies and we're making a case that [as shareholders] our business model is not viable, that the internal combustion engine is going to be obsolete very soon, and that what's our plan? It's a very different conversation with them about how is an oil company going to become an energy company?
And they're very resistant. And also culturally, they're very resistant to any kind of change. They somehow think they're going to just get every last drop out of the planet. I don't know what they think about their own children and their grandchildren.
How many times has As You Sow engaged with oil companies, and is there one particular process that stands out either for the pushback you got or perhaps you got a result that you would see as successful?
We've filed 29 resolutions at Exxon since 2010. Every one of them they've tried to block at the [U.S. Securities and Exchange Commission]. And we have won the vast majority of those cases.
In 2014, we talked to them about stranded assets, about the fact that they're counting as assets reserves that will never be commercialized, and how are they accounting for that? In 2017, there was a majority vote around these issues, about transition planning, and that led to putting new people on the Exxon board in 2021.
Chevron's a little different. They're very tough to shift the culture at all. You know, some companies are much more willing to consider that.
The banks have been interesting. They actually have a brand. They have people who look at their brand and go, yeah, JPMorgan, that's a good bank. Even though they're the No. 1 investors in burning down the Amazon, Indonesian rainforest, in the world. That's what they fund, they fund every oil project. It's hard to find a clean bank. They're out there.
There’s not a generic way to engage a company because people are very bespoke. And the people at the company, that is the company. You meet with them, they’re just generally really good human beings who don’t look in the mirror and see that they are inherently trying to destroy the planet.
Where do you see your work, As You Sow’s work, the mission overall going from here?
We feel blessed that we are in an era where change is happening, where we are in a position to actually help find a glide path into a new regenerative economy. The whole world's rebuilding a whole new energy system. We can power the entire planet with renewables. We don't need these commodities. We don't need to be held by these cartels charging whatever they want to charge. So there's this level of freedom that's going to be happening.
How we feed ourselves—entire farming systems across the world, we do not need petroleum products, we do not need pesticides. And each acre could triple the output. We can feed the world.
We see that there is a great lack of justice and a great lack of just reparations for all the harms that have gone before. There is a way to actually build this new world.
Earth Hero is focused on climate efforts at the individual and community levels. Are there ways that people and small groups can contribute to the work of As You Sow and likeminded organizations?
At the individual and community level, people have so much more power and they are aware of. First, most people have some type of retirement plan, usually a 401(k) or a 403(b), that is generally invested in the entire extractive economy. This means that they're investing their hard-earned dollars out of every paycheck in an unlivable planet, rainforest destruction, private prisons, and injustice. The person who earns the money has the right to invest it aligned with their values. If each person spoke to their retirement administrator at their company, and also spoke to their peers who would then raise the same issue, soon they would find that the majority of the participants in the plan want the same thing and the plan would change.
If you go to our website www.investyourvalues.org and click on “how this works” there is an action toolkit that includes emails you can send to peers to start the conversation, template letters you can send to your plan administrator, resources for the administrator to better understand their options, and a range of other resources. If everyone decided that they were going to use their savings to capitalize a future that is different than the status quo, things would change.
Everyone should realize that where they bank, the credit card they use, the products they buy, and how they save for retirement, all send signals to the broader economy that they are either satisfied with the status quo or they want to capitalize a different vision of the future.
Supporters can assist As You Sow’s mission with donations. Earth Hero has also compiled a list of more than 50 environmental and climate organizations that you can get involved with.
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