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Newground Blog:
Reflections, Musings, and Ruminations on Impact Investing

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Listen to the Public Radio Feature on Newground
It tells the inside story of a transformational shareholder engagement with McDonald's.

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Newground Featured on KEXP "Sustainability Segment"

Tune in to KEXP 90.3 FM this Saturday to hear Newground’s Bruce Herbert discuss shareholder engagement and the 2018 proxy season.

He’ll be the featured guest on KEXP's Mind Over Matters “Sustainability Segment” with host Diane Horn.

Date:       6/23/18 Saturday
Time:       7:00am Pacific
Tune:       90.3 FM
Stream:   www.kexp.org/listen
(listen to program live)
Podcast:   click to listen later (available July 2nd, look for show dated 6/23/2018)
A podcast will be available starting July 2nd – just click the URL then look for this show, dated 6/23/2018.

Enjoy listening, and we’d love to hear your thoughts!

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DowDuPont: Newground Proposal on Justice for Bhopal

[ 4/24/18 ]   Newground proposal calls for DowDuPont, Inc. to lower threshold for calling a Special Meeting of stockholders so shareholders can discuss liability for 1984 Bhopal disaster.
by Bruce Herbert, Chief Executive

On Wednesday, April 25, 2018 in Chicago, supporters of survivors of the devastating 1984 gas eruption in Bhopal, India will protest outside the annual stockholder meeting of DowDuPont, Inc. ($DWDP). Inside the meeting, Investor Voice will stand to present a shareholder proposal it filed on behalf of multiple shareholder clients of Newground Social Investment that calls on the Company to take responsibility for its disaster. The proposal will be presented by Bikash Kanungo, PhD student and environmental justice activist with the Bhopal Shareholder Group, supported in Chicago and around the globe by a broad coalition of investors and activists – including actor Martin Sheen – who are concerned about justice for the Bhopal victims.

The Newground proposal specifically calls for management to modify DowDuPont’s governance rules, to lower the threshold for stockholders to call a Special Meeting from an impossibly high 25% down to 10%. This rule change is necessary so shareholders can discuss important topics that arise between annual shareholder meetings, such as evolving liability for the 1984 Bhopal disaster the Company acquired when it purchased Union Carbide in 2001. Ever since Dow Chemical acquired Union Carbide (and subsequently merged with DuPont in 2016), the Company has denied any responsibility for the tragedy – which ultimately caused as many as 16,000 deaths.

The Company claims that it should not be held liable for any site cleanup, be required to pay any restitution to families of the deceased, or contribute to the ongoing medical costs of thousands of survivors who for 34 years have lived with the horrific impacts of the accident. Why? Because, it asserts, the Bhopal plant did not belong to Dow at the time. However, in corporate acquisitions the purchaser knowingly takes possession of both the assets and liabilities of the company being purchased. Since it knew about the Bhopal disaster, Dow presumably bought Union Carbide – and DuPont subsequently merged with Dow – with the assumption that it/they could stall, engage in legal maneuvers, and enjoy use of the assets while reneging on any responsibility for the liabilities.

Despite an ongoing lawsuit in the Indian courts and calls for the Indian government to seize DowDuPont’s assets worldwide if it does not act responsibly in regard to the accident, the Company has never disclosed this very real threat to shareholders or to the SEC, which we consider a dereliction of management’s fiduciary duty to its owners.

If enacted, this proposal would allow stockholders representing 10% of shares to call a Special Meeting where shareholders set the agenda, not management, whether to discuss this topic or any other.

Below is the full text of the Newground proposal and supporting arguments, as they appear on page 81 of the 2018 DowDuPont Proxy Statement:


RESOLVED: Shareowners request that the Board of DowDuPont Inc. (“Company”) take the steps necessary to amend Company bylaws and appropriate governing documents to give holders of 10% of outstanding common stock the power to call a special shareowners meeting. To the fullest extent permitted by law, such bylaw text in regard to calling a special meeting shall not contain exceptions or excluding conditions that apply only to shareowners but not to management or the Board.


Under DowDuPont’s certificate of incorporation, a special shareholder meeting can only be called by 25% of shareowners. This impossibly high threshold – which could require $39.4 billion in stock – is unreasonable and out of line with Company peers.

This Proposal would grant 10% of shareowners the ability to convene a meeting to consider important matters. The Proposal does not alter the Board's power to call special meetings; rather, it grants shareowners the reasonable right to call for consideration of important matters that may arise – and have arisen – between normally-scheduled annual meetings.

It appears that management has mishandled a variety of issues in ways that have increased both cost and liability for shareowners – sometimes significantly.

When Dow Chemical acquired Union Carbide in 2001, it acquired significant legal, financial, and reputational liabilities that stemmed from the 1984 Bhopal gas disaster, and other pollution of the lands and water of communities around the former Union Carbide Bhopal plant.

For over twenty-five years Union Carbide has been declared an “absconder” from Indian criminal proceedings – making itself subject to an Asset Attachment Order designed to compel a court appearance. Parent company Dow acquired this escalating legal risk from the same case, having just this year received formal notice to appear from the same Indian court. Dow now confronts the prospect of becoming subject to a national Asset Attachment Order.

Following intense public pressure, India filed a Supreme Court petition to reopen civil litigation that seeks compensation of over $1 billion. A number of parties have filed briefs in the case to request a Mareva Order – which would freeze assets of the Company. This is the equivalent to having a senior-level claim or lien on the Company, which would allow seizure of DowDuPont assets worldwide.

India’s economy has grown between 7-9% annually and its chemical sector is expected to reach $403 billion by 2025. This emerging legal threat to the Company’s Indian assets may block or diminish participation in this growth, a risk that would significantly deprive shareowners.

However, despite having a legal duty to do so, DowDuPont has failed to disclose these risks in public filings or statements to shareowners. It has instead issued inadequate or misleading reports – a possible dereliction of Directors’ fiduciary duty.

For these reasons, shareowners need a reasonable 10% threshold to call a special meeting.

THEREFORE: Please vote FOR this common-sense governance enhancement that offers shareowners a critical right which DowDuPont’s 25% threshold places out of reach.

To follow the 4/25/18 DowDuPont annual shareholder meeting live, join the audio webcast at 12:00pm EDT on Wednesday, April 25 – be sure to log in early to get any registration details out of the way before it starts.

Audio Webcast dial-in number: 800-289-0462 (no visuals) | Participant Passcode: 772234

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Beyond Thoughts & Prayers: Use Your Investments to Make Change

[ 3/29/18 ]   People filled the streets across America on Saturday, March 24th for the March For Our Lives, which was both a heartful and strategic response to the shock, sadness, and anger that has persisted since the Valentine’s Day school shooting in Parkland, Florida. What a blessing that these emotions remain fresh – the national conversation feels palpably different and more enduring than after any prior mass shooting.

What can we do to propel this forward?

How we vote

For starters let’s each call on our electeds to pass meaningful legislation, and encourage every eligible young person to register to vote.

While passing strong gun laws is critically important, even absent new legislation there is much that can be accomplished by changing the policies and practices of American corporations. Here’s how...

How we buy

Consumer pressure has already forced a large and growing list of companies to quit co-branding and doing business with the NRA. You can join this tide and stop doing business with companies that maintain their NRA business ties.

How we invest

As an investor, there are additional ways to wield influence and make this country safer and less violent.

For decades shareholder proposals have been filed with a large number of companies – ranging from manufacturers and retailers that make or sell guns and accessories, to the banks that provide credit to manufacturers while facilitating the retail purchase of firearms.

In fact, in 2013 Investor Voice filed, on behalf of Newground Social Investment, what may have been the first-ever “Sandy Hook Principles” shareholder proposal – it asked Amazon to institute sweeping constraints on the sale of gun-related accessories, which the company embraced the spirit of.

4 Ways Investors Can Flex Their Economic Muscle:

1. Check your Portfolio

Research your portfolio to see if you own stock in any gun manufacturer.

On-line tools are in development that will make researching guns in mutual funds easy to do; in the meantime, ask your financial advisor, HR specialist, or 401(k) contact to do the research for you.

If you’re a Newground client, rest assured that that you do not own gun manufacturers. In fact, Newground and other socially aware impact investors have been divested from weapons manufacturers for years.

2. Talk to your Money Manager

Engage with your money manager. If your portfolio includes gun makers, find out why. Ask your financial advisor or mutual fund both to divest from gun makers and to endorse the “Sandy Hook Principles”.

If your money is in a company-controlled 401(k), band with other employees to encourage-pressure HR to make a change. Be noisy and persistent – the squeaky wheel gets the grease.

3. Divest
/> If you manage your own investments, consider divesting of gun and accessory manufacturers. Since these companies are generally quite small relative to the market or any broad index as a whole, there is limited financial risk to doing so.

4. Become an Active Shareholder

If you can’t divest, or want to keep a minimal holding (just $2,000 worth, held for a year) for the purpose of advocacy, then consider filing a “shareholder proposal” under rules set forth by the Securities and Exchange Commission.

Shareholder proposals are printed in the company proxy for all the world to see, and so are excellent tools for educating the public and opening the eyes of company management. The outcomes can be transformative – listen to one local NPR station’s feature story on the remarkable possibilities created by shareholder engagement.

Besides filing a proposal with gun manufacturers directly, you could also file with the banks and credit card companies that finance and facilitate the gun trade – an excellent idea amplified by Andrew Sorkin in a 2/19/18 New York Times article.

Shareholder advocacy of this sort is one of the services that Investor Voice offers. You can read more about the process and perhaps do it yourself, or reach out to discuss a possible engagement.

Because we live in a money culture, investors – in particular – have options, tools, and levers available to help them become more powerful and effective citizens.

Commit to using these tools, then join with like-minded others to learn, collaborate, and amplify your voice.

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Fair Vote-Counting

[ 3/9/12 ]   Investor Voice, SPC filed a shareholder proposal today on behalf of Newground Social Investment at the JM Smucker Company that asks for a bylaw change to establish fair and transparent vote-counting procedures.  The request is for the Board to adopt what's being called the "SEC Standard" vote-counting formula across-the-board for all categories of votes.  The "SEC Standard" is:


It is astonishing, but companies are not required to use a consistent methodology and can typically adopt any vote-counting formula they wish when tallying votes.  They may count shares that "abstain" or even "broker non-votes" on ballots not returned – and companies are frequently found using several different vote-counting formulas in the same proxy (usually according to what advantages management the most). 

These practices distort the vote and disadvantage any issue of concern to progressive investors.

This is possible because vote-counting is a matter left to state law, and most states allow remarkable latitude – with the notable exception of New York State, which mandates the "SEC Standard" across-the-board (excepting certain votes that require a supermajority).

Smucker's used four different vote formulas in its 2011 proxy.  Not surprisingly, each formula was the one (for that type of vote) that provided maximal benefit to management at the expense of shareowners.

There is a quote usually attributed to Joseph Stalin that reads: I don't care who gets to vote, so long as I am the one who counts the votes.  It seems to be a sentiment that is alive and flourishing in corporate America today.

This resolution (unless applicable laws dictate otherwise) calls for the fair, simple, and consistent “SEC Standard” across-the-board.  It is a proposal that Investor Voice has presented – and boards of directors have adopted – at other S&P 500 companies. 

The honoring of voter intent is a hallmark of fair and democratic voting – but such principles are sadly absent in the way voting is handled today by much of corporate America.

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Click here for more on Newground and Investor Voice engagement activities.

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Bruce Herbert is Founder and Chief Executive of Newground Social Investment.  Herbert, an Accredited Investment Fiduciary, is a former Governing Board Member of ICCR (the Interfaith Center on Corporate Responsibility), and was Co-Founder and first Director of the Northwest Coalition for Responsible Investment.

Mr. Herbert began his financial career with Merrill Lynch in 1984, and has practiced sustainable & responsible impact investment since 1986.

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Now enjoying its third decade, Newground Social Investment provides individual, institutional, LGBTQ, and not-for-profit clients with:

Socially responsive (SRI* / ESG*) money management that integrates investment decisions with social concerns and personal or institutional values.
Competitive financial returns along with positive social impact.
Financial coaching and Life Planning that creates peace of mind, a sense of integrity, and financial security.
Community investment for strong local benefits.
Shareholder advocacy for transformation, transparency, and accountability.

Newground is a fee-only Registered Investment Advisor serving institutions and individuals of means who are principled, proactive and inspired to make a difference with their investments.

    * SRI = Socially Responsive.., Socially Responsible.., or Sustainable & Responsible Investment
    * ESG = Environmental, Social, and Governance factors

Newground Social Investment, SPC is a Registered Investment Advisor that is incorporated and registered in the State of Washington.  In accordance with applicable law, we may only conduct business in states where appropriately registered or exempted from registration.  Newground currently serves clients in a number of states nationwide, and we would be pleased to discuss whether it is permissible (given your state of residence or incorporation) for us to serve your financial needs.


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