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July 09, 2009
Canadian Mutual Funds Continue to Vote Against Shareowner Proposals
    by Robert Kropp

Study finds that SRI funds offered by mainstream fund companies vote in favor of management, even on core ESG issues.

A recently published study by the Shareholder Association for Research and Education (SHARE) and Fund Votes found that while Canadian mutual funds were more likely to oppose management nominees for boards of directors in 2008, the majority of mutual funds continued to vote overwhelmingly in favor of management proposals, and against proxy items proposed by shareowners.

The report, entitled Proxy Voting by Canadian Mutual Funds, analyzed votes cast on 5,560 proxy ballots of 178 companies, by 154 funds in 21 fund families that collectively manage 85% of mutual fund assets under management in Canada. Included in the analysis were the voting patterns of 31 socially responsible investing (SRI) funds in 9 fund families.

According to the report, "most Canadian mutual fund families continue to vote in a management—friendly manner." Of the fund families analyzed, Fidelity supported less than 2% of shareowner proposals, the smallest percentage in the study. Other mutual fund families whose support for shareowner proposals was very low included AIC and Mclean Budden.

The report found that three SRI funds—Inhance, Meritas, and Northwest & Ethical—supported shareowner proposals at least 40% of the time, and voted against management proposals on at least 20% of proxy ballots.

However, when it came to the voting patterns of SRI funds sold by diversified fund companies, the report found that proxy voting patterns were the same as in mainstream funds offered by the same companies. "This is often the case even for shareholder proposals asking companies to be more attentive about the impacts of their operations on human rights and the environment," the report stated.

Laura O’Neill, SHARE’s Director of Law and Policy, said, "When you invest in a fund from an SRI family, you can count on very progressive proxy voting. We found that in most cases, an SRI product managed within a non-SRI fund family votes in the same management friendly way for all its funds."


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