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Domini Social Investments Urges Sec to Mandate Proxy Disclosure

Submitted by: Domini Social Investments

Categories: Business Ethics

Posted: Dec 11, 2001 – 11:00 PM EST

 

Socially Responsible Firm Says Mutual Fund Investors Have a Right to
Know

Dec. 11 /CSRwire/ - Domini Social Investments, manager of the Domini Social Equity Fund (NASDQ: DSEFX), the nation's oldest and largest socially responsible index fund, has sent a letter to the Securities and Exchange Commission (SEC) urging adoption of a rule requiring all mutual funds to adopt and publish proxy-voting policies and to record and publicly disclose their proxy votes. The letter from Amy Domini to SEC Chairman Harvey L. Pitt states that proxy voting disclosure "should be considered a fundamental fiduciary obligation that mutual funds owe to their shareholders, and should be required as a matter of law."

Two years ago, Domini Social Investments became the first mutual fund manager in America to disclose the actual proxy votes it casts for each company in its portfolios. All proxy votes are published on Domini's website (www.domini.com) along with the firm's annual proxy voting guidelines, which cover more than ninety corporate governance, social and environmental issues. "We think our shareholders have a right to know how we intend to vote their shares on important issues of corporate governance and social and environmental responsibility," says Ms. Domini, the firm's founder and a managing principal.

In her letter to the SEC Chairman, Ms. Domini commends the SEC on its recent efforts to encourage greater disclosure and transparency by mutual funds, including the plain English prospectus and detailed disclosure requirements regarding investment strategies, risks and fees. "Disclosure [of proxy voting] would promote accountability and transparency," writes Domini, "which are not only guiding principles of our financial regulatory system but have been special concerns of the Commission in recent years."

"I can think of no other instance where the Commission countenances opacity rather than transparency in the discharge of fiduciary obligations," continues Domini. "Indeed, when it comes to proxy voting there is not even a record-keeping requirement, let alone a disclosure requirement. I believe it is time to address this anomaly."

Ms. Domini notes in her letter that proxy votes have helped convince companies to change their policies toward apartheid in South Africa and to be responsive on other social and environmental issues. "Proxy voting is the most direct means by which individual investors - either directly or through financial intermediaries like mutual funds - can play an active role in influencing corporate behavior," says Ms. Domini.

Ms. Domini's letter also points out that "there is mounting evidence that progress on social, environmental and corporate governance issues is linked to long-term corporate performance."

"The Commission need not embrace the notion that proxy voting on social, environmental or corporate governance issues positively impacts fund value or corporate financial performance in order to acknowledge that many investors surely believe that it does," writes Domini. "And if this is true, then they should be entitled to this information - just as they are entitled to information on mutual fund strategies, risks and fees."

"Proxy voting disclosure will provide the information that mutual fund investors need to ensure that their mutual funds are accurately representing their interests when they vote on corporate governance, social and environmental issues," concludes Ms. Domini. "I would urge the Commission to propose for adoption a rule requiring all mutual funds to adopt and publish proxy-voting policies and to record and publicly disclose their proxy votes."

Domini Social Investments manages more than $1.5 billion in assets for individual and institutional investors seeking to create positive change by integrating social and environmental values into their investment decisions. Its flagship fund, the Domini Social Equity Fund, was the first socially and environmentally screened index fund and is the nation's largest socially responsible index fund. The Fund includes companies with positive records in community involvement, the environment, diversity and employee relations, and excludes companies deriving significant revenues from alcohol, tobacco, gambling, nuclear power and weapons contracting. In addition to the Domini Social Equity Fund, the company also offers the Domini Social Bond Fund (NASDQ: DSBFX) and an FDIC-insured money market account (in partnership with ShoreBank), both of which focus on community economic development.

The full text of the firm's letter to SEC Chairman Pitt is available on the Domini Social Investments web site, www.domini.com.

The Domini Social Equity Fund and the Domini Social Bond Fund are subject to market risks and are not insured. You may lose money. Some of the Domini Social Bond Fund's community investments may be unrated and carry greater credit risks than the Fund's other investments. Please obtain a prospectus by calling 1-800-762-6814 or online at www.domini.com. Read it carefully before you invest or send money. DSIL Investment Services LLC (DSILD), Distributor. The Domini Social Equity Fund is not affiliated with any bank and is not insured. DSILD and ShoreBank are not affiliated.

Domini Social Investments, Domini Social Equity Fund, Domini Social Bond Fund and Domini Money Market Account are registered service marks of Domini Social Investments LLC. 12/01

For more information, please contact:

Sigward Moser Domini Social Investments
Phone: (212) 217-1110

 

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