Franklin Resources, the parent company of US mutual fund firm Franklin Templeton Investment (FTI), has won SEC approval to omit a shareholder proposal from SRI investor Zevin Asset Management that sought a review of its voting practices at company AGMs.
Boston-based Zevin, a shareholder in New York-listed Franklin, had filed a proposal for the company’s own AGM next year seeking a board review of proxy voting policies.
Zevin argues they are in stark contrast with a stated commitment to sustainable investing and affiliation, since May 2013, with the Principles for Responsible Investment (PRI). Franklin manages $898.4bn.
To support her call for a review, Zevin President Sonia Kowal pointed out that during the 2013 proxy season, FTI’s mutual funds voted against sustainability proposals at US AGMs 97% of the time.
In a letter to the SEC, she said: “Other mutual fund companies such as DWS, GMO, Oppenheimer, Morgan Stanley and Wells Fargo have excellent and detailed proxy voting policies and practices regarding sustainability resolutions.” FTI apparently does not, so “the shareholders of Franklin Resources deserve to be heard on this issue,” she added.But the SEC approved Franklin’s bid to avoid having to include the motion on its next AGM agenda, meaning the San Mateo, California-based firm may omit Zevin’s proposal from its 2015 proxy materials.
The SEC agreed with the company’s view that the proposal would “micro-manage the company by probing too deeply into matters of a complex nature upon which shareholders would not be in a position to make an informed judgment.”
Kowal told RI she couldn’t understand the SEC’s decision. “Since Franklin Templeton has made this commitment to follow the Principles for Responsible Investment, which includes a commitment to consider its proxy voting practices’ consistency with the Principles, this means that has created a clear nexus of its business to the issues of corporate responsibility and environment – issues which themselves transcend ordinary business.”
She also said that Zevin would re-file its proposal for Franklin’s 2016 AGM – and that it would submit a similar one at T. Rowe Price, another US mutual fund company.
A Franklin spokesperson said: “We would like to point out that the SEC has recently granted exclusion of this proposal from our proxy statement based on the matter being one of Franklin’s ‘ordinary business’. We do not have any further comment.”