Domini declares victory on mutual fund proxy disclosure



“Concerned investors and the socially responsible investment community should celebrate. We have won an important victory on behalf of mutual fund transparency, shareholder rights, and improved corporate governance.”

This was the reaction of Amy Domini, founder and CEO of Domini Social Investments, when the Securities and Exchange Commission voted to adopt two rules requiring mutual funds and investment advisers to disclose their proxy voting policies and voting records. Domini Social Investments filed a rulemaking petition calling for this landmark change in mutual fund regulation, and the company has championed the cause of proxy voting disclosure for a number of years.

“The mutual fund industry owns approximately 19% of the publicly traded securities in the U.S., and casts votes at the annual meetings of these companies on behalf of ninety million individual investors,” Ms Domini continued. “Until now, these investors had no way of finding out how their fund managers were voting on critical issues like executive compensation, board diversity, offshore tax havens and other issues with broad social and environmental impact. By contrast, corporate managers have been lobbying hard for passage of their proposals, and only they have had access to these votes. We have all seen the tragic results of this system, which has operated in complete darkness, rife with conflicts of interest.”

“The socially responsible investment community has led the way on this issue, demonstrating that SRI firms value transparency and accountability first and foremost. Until now, the only mutual fund managers that have published both their proxy votes and voting guidelines have been members of the socially responsible investment industry. ”

In 2001, Domini Social Investments filed a rulemaking petition calling for this landmark change in regulation. (Petitions were also filed by the AFL-CIO and the International Brotherhood of Teamsters.) Two years earlier, Domini became the first mutual fund manager in America to publicly disclose its proxy votes. Domini has published comprehensive voting guidelines regularly since 1992. (Domini’s current proxy votes and guidelines are available on its website,

Following September 19, 2002, when the SEC issued the proposed rules to require disclosure, Domini mobilized investor and public support for the rules. Domini not only sent its own comment letter to the SEC but urged its shareholders and other members of the public to do the same, and enabled supporters to email their comments to the SEC through the Domini website (

Domini’s lobbying effort, undertaken in cooperation with Working Assets, the communications and credit card company, and Citizen Works, an organization founded by Ralph Nader that works on corporate reform, generated more than 2,500 investor letters in support of the proposed rule — the greatest number generated by any investment firm. The SEC received more than 7,000 letters during the public comment period — the most for any proposed rule in the SEC’s history. The vast majority of these letters supported proxy voting disclosure, in the face of vigorous opposition from the mutual fund industry.

“I applaud the SEC’s decision,” Ms. Domini said, “and I thank everyone who helped galvanize investors into writing thousands of letters to the SEC in support of the new rules — including the AFL-CIO, Calvert, Pax World, and the Shareholder Action Network.”

“These rules will make mutual funds and investment advisers more accountable to their investors. As a result, we believe they will be less likely to rubberstamp corporate management’s proposals and more likely to take an independent view of what is in the best interests of shareholders,” added Adam Kanzer, General Counsel and Director of Shareholder Advocacy at Domini. “In any case, these rules will enable investors to select those managers who are doing their part to strengthen corporate governance and hold corporations more accountable.”

“The new rules aren’t perfect,” said Ms. Domini. “But the importance of this reform cannot be overstated: The Commission has chosen to act at a critical time. Restoring confidence in America’s corporate leadership and the integrity of financial markets requires that corporations be made more accountable to their shareowners and other stakeholders.

“Proxy voting transparency will protect America’s investors while having positive effects not only upon corporate governance, but on the social and environmental performance of corporations whose power and influence — and hence responsibilities — in our own society and globally have never been greater. We commend the Commission for taking this bold step.”

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