- Proposal 7— A shareholder proposal to institute transparent procedures to avoid holding investments in companies that, in management’s judgement, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights. Such procedures may include time-limited engagement with problem companies if management believes that their behavior can be changed.
That's when Jack Bogle came to mind. As an unassailable authority on the mutual fund industry — Vanguard in particular — and a pillar of moral standing in general, I wondered: What is Jack Bogle's perspective on the merits of this proposal? Surely, Jack Bogle would be in a good position to assess any potential impacts of well-meaning environmental, social, and governance proposals.
As it turns out, Mr. Bogle has written a great deal on this topic, and he is a champion of greater activism on the part of the mutual fund industry. Below is the closing paragraph of Chapter 3, The Silence of the Funds, from Mr. Bogle's 2012 The Clash of Cultures: Investment vs. Speculation.
Considering Jack Bogle's informed advocacy, and based on the 5 points articulated (see Pages 50 - 52 of Vanguard's proxy booklet), and what seems like a reasonable proposal, I am inclined to support Proposal 7.Jack Bogle wrote:Since 2004, the SEC has mandated that our nation's mutual fund agents break their silence and disclose to their principals how they have voted. But in terms of being active participants in corporate governance, the silence of nearly all mutual funds remains. The same silence also emanates from pension funds and their managers. With critical issues like executive compensation and political contributions now in the spotlight, it is high time for fund managers to stand up and be counted on the controversial issues of the day. They also must break their long silence and actually make their own proposals, demanding that they be placed in corporate proxies. I see these steps toward greater activism in corporate governance by our giant investor/agents who represent the shareholder/principals, as essential to sound long term investing, to our system of modern capitalism, and to the national interest. The mutual fund industry should be in the, well, vanguard of this movement. I discuss its evolution in the chapter that follows.
Note: I realize there is a current thread on the general topic of the proxy campaign, and many members have expressed their own views. However, I didn't want this question to be lost in that thread with a broader topic.