Companies are starting to take shareholder feedback seriously, says TIAA-CREF

$523bn giant reflects on recent experience

TIAACREF, the US financial services giant with $523bn (€397.9bn) in assets under management, says its recent experience suggests that companies seem to be taking more account of shareholders’ views.

It says that in 2012, it supported the pay plans at 85% of the companies whose plans it had opposed the year before – “suggesting that many of these companies changed their policies after hearing shareholder concerns.”

“Our experience over the last few years suggests that companies are taking shareholder feedback seriously,” the investor says in its new Responsible Investing report.

TIAACREF, which provides retirement services in the academic, research, medical and cultural fields in the US, added that while the companies initially resisted greater levels of engagement and disclosure, it has seen progress in the quality of information being made available.

For example, many companies now disclose the chemical contents of the injection fluid they use for natural-gas extraction, which will help to determine whether groundwater is being contaminated.

TIAACREF believes in talking to companies via the “quiet diplomacy” of private meetings. This “constructive, nonconfrontational” approach is preferred to the “last and final recourse” of divestment.The company also tackles the sometimes controversial subject of investment in farmland and timberland, saying its provision of capital is “part of the solution” for landowners.

“By directing investment capital to land maintenance and development, we have made the investor community part of the solution to financial challenges facing landowners.” It acknowledges this is not simple as institutional investors typically have not been large holders of farmland because of high barriers to entry.

TIAACREF, a founding member of the Principles of Responsible Investment in Farmland and with some $4bn investment in the asset class, is currently developing key performance indicators (KPIs) to measure the impact of sustainable farmland practices.

It recently launched the TIAACREF Center for Farmland Research at the University of Illinois to help shed light on the “complex process of investing in farmland”.

TIAACREF revealed also that it now has more than $14bn in its Social Choice product suite which incorporates ESG factors and that it launched the Social Choice Bond Fund last year.

It also has nearly $1bn allocated to ‘Proactive Social Investments’, its framework for identifying fixed-income securities that provide potentially competitive returns and measurable social and environmental benefits.