SRI Funds Stronger Supporters of Shareholder Resolutions

April 12, 2005 (PLANSPONSOR.com) - Socially responsible (SRI) mutual funds are much stronger proponents of corporate governance shareholder resolutions than their conventional brethren, according to a study by a group that supports the actions of such funds.

According to a study from the Social Investment Forum Foundation, socially responsible mutual funds are twice as likely as conventional funds to support corporate governance shareholder resolutions. Looking at data gathered in the year since mutual funds were required to release how they voted on proxy issues, the study suggests that there is very little common ground between the two categories of funds.

According to the report, SRI funds averaged 95.2% withhold voting record from directors at the four most-targeted companies in 2004, compared to only 51.8% for conventional mutual funds. SRI funds are more likely to support issues of separation of CEO and chairman ( 83.3% to 12.7%), as well as limiting consulting by auditors (66.7% to 0.0%).

SRI funds are also more supportive of social/environmental resolutions, not surprisingly. In July 2003 to July 2004, 84.6% of such resolutions were supported by SRI funds, compared to only 15.1% of conventional funds. Of the more conventional funds, Charles Schwab stood out in its support of such resolutions, according to the company, as did PIMCO. Vanguard tended to abstain from such votes, neither supporting nor opposing such initiatives, the study said.

SRI and conventional funds did agree on one issue, however: declassifying board/annual elections. According to the report, an almost equal number (85.7% and 86.3%) supported such moves.

The fund groups that often supported corporate governance issues (as compared to social/environmental issues) were Citigroup, Dreyfus, Franklin Templeton, Merrill Lynch, and Schwab, according to the study.

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