Who Decides How Woke Corporations Should Be?
Most investors are passive bystanders in boardroom battles. Tumelo wants to get them involved—and take fund managers out of the ideological crossfire.
She dismissively says, "When I was there, they divested from the tar sands." She continues, however, that 'divestment does not always result in the best outcome. It just leads to shareholders who don’t care. A business idea emerged from those sour grapes. Stewart, 27, is chief executive of Tumelo. A five-year-old firm based in Bristol, England that allows investors to voice their opinions through proxy contests, Tumelo is a five year-old company. She says, "We want transparency and accountability." Tumelo has 57 employees and $22million in venture capital. However, it is well-positioned to make it in the black. It is on the front lines of a battle between do-gooders who promote gender equality and carbon reduction, and anti-wokers who believe corporations should only be there to make a profit.
Exxon Mobil shareholders control the company and can vote to replace oil wells by solar panels, if they wish. There are two problems with this. The first is that your shares are likely to be owned indirectly. You can own 12 shares of Exxon if you have $100,000 in an S&P 500 Index fund. However, you won't be able to get the proxy. You get the proxy from the fund operator. Then, what would your plan be if you were granted voting rights? Do you have an opinion about Proposal No. 6. At the Exxon meeting last year, "Reduce company emissions & hydrocarbon sales" Are you able to read 500 proxy statements in a reasonable amount of time? Tumelo collects fees from funds and brokers who want to offer voting features as a selling point. Tumelo is granted read-only access by the retail client to his brokerage account. The client then chooses from nine policy options. One supports worker rights, while another is anticarbon. The report includes all the preferences and shares of Tumelo-active investors. Legal & General, a £1.6 trillion asset manager in Britain; Cushon, a London-based investment firm that promotes carbon-free pensions; as well as the international arm Fidelity Investments, have shown some interest in Tumelo so far. These shareholder counts are wishes and not orders at the moment; both in the U.K. as well as the U.S., the fund manager holds the voting power. In fact, flow-through voting was not an option in Tumelo's early days. The firm only helped investment firms to inform their clients about the behavior of various funds in proxy contests. Stewart states that if our stewardship had started with giving votes, money managers would have laughed at us. Stewart conceived this business with two of his risk-loving Cambridge friends, Benjamin King and Will Goodwin. Goodwin is now the head of U.S. operations. It was a low-cost operation. The trio hid in Goodwin's basement for the first year and received free advice from the University of Bath's business incubator. Are you concerned about the climate? Your S&P index can be accessed from Engine No. 1 Transform 500 ETF, whose sponsor used their proxies and its power of persuasion to get three dissidents onto Exxon Mobil's board in 2021. Vivek Ramaswamy’s Strive 500 ETF is available to those in the opposition camp. This ETF promises to 'focus more on profits than politics/ESG. Both charges 0.05% annually. The third option is to buy the slightly less expensive S&P funds (expenses 0.03% in the BlackRock iShares or Vanguard lineups) and donate your savings to a cause that you believe in. The founders did not have the funds to do a brand search. They typed "belief" into Google Translate, scrolled through the languages, and searched for words whose URL was not taken. Tumelo's timing seems to be perfect. Money managers, who might not have been open to the idea of customers voting a few years back, seem to be more open to the idea today. Take Larry Fink, the BlackRock chief executive who manages $9 trillion in other people's funds. He has made statements about how corporations should cut carbon emissions and pursue justice. Solution: Let the clients do all the legwork. BlackRock offers a way for institutional clients to make proxy selections. It's no problem for the fund managers and brokers to create their own systems to track investor wishes. Once they have paved the way, smaller organizations that want to offer a voting option can go to Tumelo to get a ready-made solution. This will also help the portfolio manager to stay out of the middle ideological battles. "A Walmart fund manager did not anticipate that they would be required to vote on abortion this year. It is easy to see how Stewart and her cofounders believe democracy can take over the corporate world, from now until when they cash their pension funds. She says that retirement is more than the money in your bank account. However, savers may be willing to give their proxies away to raiders promising bigger dividends. Stewart replies, "At this moment, you can't decide."
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