Green Century Funds is a partner of Equities.com. In the recent webinar “Transforming Giants: The Investor’s Role in Shaping Sustainable Changes,” Leslie Samuelrich, president of Green Century Funds, and Annie Sanders, director of shareholder advocacy, spoke on the mutual fund’s recent wins securing sustainable change at major corporations like Costco and Coca-Cola.
The process of persuasion
Founded in 1991, Green Century Funds was an early pioneer in sustainable investing. The mutual fund is 100% owned by environmental and public health nonprofit organizations, with all proceeds belonging to those organizations. Green Century Funds holds more than $1 billion in assets spread across three funds.
Green Century Funds relies on several strategies to influence large corporations to adopt more sustainable practices.
“We identify environmental issues that pose risks to our portfolio companies through research and conversations with external stakeholders and experts. Then we determine which of those risks are most material to a given industry or company. We send a letter of inquiry to about 50 companies each year to inquire into their risk mitigation strategies on different topics,” Annie Sanders, director of shareholder advocacy, said during the October webinar.
Green Century Funds engages companies to determine whether they are reducing specified risks, and if companies are willing to adopt new policies. Once Green Century Funds receives written confirmation from the company, they move on. “If not,” Sanders explained, “we often file a shareholder proposal to bring the issue before the company’s shareholders.”
Convincing Costco
Green Century Funds spoke to 54 companies and filed 42 shareholder proposals in 2023, including asking companies to reduce their contribution to climate change, eliminate deforestation, and reduce plastic waste and usage. Ultimately, Sanders said Green Century Funds withdrew 20 proposals and won six commitments just through dialogue.
“Typically, we’ll withdraw about half the proposals that we file in exchange for a commitment from the company to address the issues that we raised. For example, we filed a proposal at Costco this past summer asking the company to address risks posed by deforestation and its Kirkland brand supply chain,” Sanders said.
Green Century Funds ended up withdrawing the proposal to Costco after the company committed to conducting a “comprehensive, deforestation assessment” and agreed to put out a deforestation action plan.
Sanders said Costco was also willing to put out a five-year plan that outlines the steps the company will take to reduce total plastic in its Kirkland signature packaging.
Leslie Samuelrich, president of Green Century Funds, added: “At the beginning of the shareholder season, which runs like a school year, we give every company a chance to address our concerns, and if need be, to keep escalating through the proxy ballot, and further negotiations.”
Tackling plastics
Sanders warned that plastics are increasingly problematic, impacting, for example, tens of thousands of marine animals who consume or become entangled in plastic products.
“Eleven billion plastic items have been caught on coral reefs across the Asia Pacific region alone, including whales washing ashore with stomachs filled with plastic waste, and sea turtles with straws up their noses,” she added.
Sanders said recycling is not the solution to plastics in the ocean, noting that plastic recycling facilities release huge quantities of microplastics into the environment, negatively impacting human health and the planet.
Sanders said Green Century Funds is working with companies across various industries to tackle the problem of plastic pollution, including Marriott, Hilton, Disney, Mattel and Coca-Cola.
“We worked with numerous companies to reduce their plastic usage, especially on single-use plastic in packaging materials,” she added.
Coca-Cola commits to reduce plastics
After a dialogue with Coca-Cola, Green Century Funds made the call to file a shareholder resolution.
“Fortunately, we were able to withdraw the resolution when the company agreed to reduce its production of new plastic by three million metric tons by the end of 2025. This is equivalent to taking 200,000 plastic bottles out of the waste stream every minute for a year. This was a pretty significant commitment and a huge step for Coca-Cola,” Sanders said.
Green Century Funds didn’t stop there. They asked Coca-Cola to increase the use of refillable or reusable bottles, and filed another shareholder resolution. “We withdrew that proposal in exchange for a commitment from Coca-Cola,” Sanders added.
Coca-Cola set a goal that 25% of its containers would be refillable or reusable by 2030, a goal that Sanders said is “pretty significant.”
“That means that 173 billion beverages would be sold in reusable packaging by 2030. It keeps a lot of plastic out of the waste stream,” she added.
Sanders said Green Century Funds wants portfolio companies to reimagine their business models for a sustainable future. Such reimagining not only benefits their bottom line, but helps to ensure the health of the ecosystems they depend on.
[To learn more about the work by Green Century Funds to reduce electronic waste at Microsoft, watch the recorded webinar.]
Bringing companies to the table
Sanders admits that not all companies are interested in engaging in sustainable strategies. That is when Green Century Funds files a shareholder resolution.
“The filing often gets companies to the table if they’re not open to dialogue initially or are not responsive. Filing a shareholder proposal can often motivate companies to negotiate for the withdrawal of our proposal as companies generally don’t want shareholder proposals on their proxies. It invites unwanted attention or potential gaps in their policies,” Sanders said.
Companies like Green Century Funds are stepping up to ensure the long-term sustainability of the planet and the companies in their portfolio. More corporations are recognizing the benefits of improving the way they do business, thanks in part to mutual funds acting as shareholder advocates.
Read more: Do proxy advisory firms really have shareholders’ best interests at heart?
