Impact Investing Success Story: Fighting for Racial & Gender Justice Through Shareholder Engagement

Pat Miguel Tomaino is the director of socially responsible investing at Zevin Asset Management and is a leader in using shareholder advocacy to advance racial and gender justice initiatives.

We met recently at an impact investing event in Philadelphia and I’m excited to include his recent impact investing success story in my series of interviews.

Sonya: Tell me a little about where you work and how your shareholder advocacy role fits into the big picture there.


Pat: I work at Zevin Asset Management, a socially responsible investing firm based in Boston. We use shareholder advocacy to move portfolio companies toward positive impact and risk management on climate change, economic justice, and civil rights.

Sonya: Before we get into the impact story, let’s take a step back. Tell me about how you started working in impact investing.

Pat: I entered the industry right out of college in 2007 when I was hired by a London-based sustainable investment firm F&C Asset Management (now BMO Global Asset Management). I worked five years at F&C as a senior responsible investing analyst, developing sector expertise in retail and food and beverage and eventually leading the firm’s impact investing work in Latin Amer­ica and Canada. Then I took a break from financial services and worked on Sen­a­tor Eliz­a­beth Warren’s 2012 cam­paign and for the Ser­vice Employ­ees Inter­na­tional Union (SEIU). The work varied but often had a familiar focus: researching and calling out bad corporate practices. Joining  Zevin Asset Management in 2016 was a natural progression because of our firm's long legacy of socially responsible investing and willingness to push companies on emerging social and environmental issues, making the business case for change.

Sonya: Did you have an impact investing “a-ha” moment?

Pat: Yes, in the course of a shareholder engagement with Abercrombie & Fitch early in my career. When I initially wrote to A&F to address working conditions in their supply chain, the company ignored me. They were completely dismissive. But my follow up shareholder proposal pressed the company to finally publish a code of labor standards for its supply chain factories. Seeing the process from beginning to end made me realize that using shareholder rights can re-focus companies on problematic practices and accelerate change.

Sonya: Tell me about some of the racial and gender justice shareholder engagement work you’ve been doing.

Pat: Major tech firms like Apple, Facebook, Amazon and Alphabet (the parent of Google) say that diversity and inclusion is mission critical for their business. However, at best they are failing to make progress, and, at worst, many of these companies can deliver hostile workplace issues, and long-term human capital risk. This makes so little sense from an investment perspective: McKinsey research  shows that firms in the top quartiles for gender and racial/ethnic diversity are more likely to have above average financial returns. So, we rolled up our sleeves contacted the major tech firms in our portfolio with a raft of suggestions for improving their approaches to diversity and inclusion.

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The biggest ask was a simple one: tech firms should put their money where their mouth is and tie a portion of executive compensation to progress on inclusion. Linking executive compensation to goal outcomes is a strategy that has worked to drive sustainability and performance at firms across many other sectors. We wrote to more than a dozen firms, conducted meetings with several of them, and where we weren’t getting traction we filed shareholder proposals to propel this issue into the boardroom. Our pioneering shareholder proposal led to a successful negotiation at Citrix Systems- the internet security firm agreed to spell out how diversity and inclusion factors influence annual CEO performance evaluation. And our shareholder proposal at Alphabet (Google’s parent company) received international media attention and the votes of more than a quarter of external investors.

Sonya: For context, do you consider a vote of that magnitude successful?

Pat: Yes, majority votes  in on shareholder proposals are extremely rare., So getting 25% at a closely held company like Alphabet is significant. It enables us to re-submit the proposal in future years and build support, and it gets the attention of the board and senior executives. Shortly after the vote on our proposal, Alphabet announced a good first step: senior executives will now play a more direct role in the racial and gender inclusion strategy. We plan to re-submit that measure for 2019 and keep pressing for change and leadership.

Sonya: One of the challenges firms face when trying to move clients to higher impact portfolios is selling stocks that have low ESG scores in which the client has low basis. This is especially true now, with the increasing interest in ESG, and the extended bull market we’ve had in the past 10 years. How do you manage that challenge?

Pat: When our clients hold legacy shares in high-risk companies, we use the opportunity to do challenging advocacy work. For example, where some of our clients may have legacy shares in oil companies, we deploy their shareholder voices to push those fossil fuel giants. Notably, a shareholder proposal we led this year at the pipeline company Kinder Morgan received support from nearly 60 percent of the company’s investors. That’s a landmark vote that shows the big opportunity that stock investors have to make an impact when they use their voices and also make a strong business case for our proposals. A fossil fuel company that is more honest and rigorous about the risks of climate change may be more open to strategic changes to mitigate those risks in the future. Now the company is forced to respond to our request and publish a rigorous climate risk analysis. We’ll be pushing forward these and other initiatives all year.

Sonya: What other interesting projects are you working on now?

Pat: Our work is always moving ahead on climate change. We want push companies to develop good-faith, stretching targets for greenhouse gas reductions that will set them up for long-term risk management. We’ve had success pressing companies like CVS Health and PepsiCo to develop science based targets. You can read more about our work on Zevin Asset Management’s website and our Medium blog.

Sonya: I’ll link both of those below as well as your social media links. 

Follow Pat's work:
Medium Blog 
Zevin Asset Management

Articles about the recent shareholder proposal at Alphabet (Google’s parent company):
Fast Company