In an attempt to limit risks to its investments, an Oklahoma state board plans to try to shape some major companies’ policies pertaining to the dispensing of medications, “discrimination” in charitable giving and images of child sex abuse.
The Tobacco Settlement Endowment Trust’s board of investors voted 3-1 Wednesday to ask the shareholders of 10 companies to vote on changing policies related to a variety of issues including images of child sex abuse, “politicized and anti-religious discrimination in charitable gift matching,” “gender ideology activism,” and the dispensing of mifepristone. The board also wants the companies to disclose “risks of executive compensation plans” that include diversity, equity and inclusion and environmental, social and governance policies, and the risks of “China exposure” on investment returns.
They would not say which companies would be targeted. The requests would be made publicly available once submitted, according to a spokesperson for Treasurer Todd Russ, who serves as chair of the board.
Members of the Oklahoma board said they were concerned the policies at the 10 companies could open their trust, which oversees the investment of about $2 billion in public dollars, up to backlash and potential litigation.
Jerry Bowyer, CEO of Bowyer Research, a portfolio construction and asset allocation consulting firm, said the sale of mifepristone, which can be used to help induce abortions, could prevent pregnancies. That would reduce future sales of items like diapers, which could harm overall investment returns.
He also said a company that has diversity, equity and inclusion policies that run counter to the Trump administration’s position could lose out on federal contracts, harming shareholders.
“One could be credibly accused of not exercising full fiduciary responsibility,” he said.
Bowyer said public pressure brought by “activists” often drives company policies. TSET’s proposals would offer shareholders and management an alternate option.
“It helps them to resist activist pressure,” he said. “And that’s generally the design of these proposals, to help companies to do what they want to do and do what they know they should do.”
Most public companies give shareholders the opportunity to vote on compensation packages for executives and let management know their views on issues that could affect the value of shares.
Some shareholders also have the opportunity to add proposals or recommended action items to the agenda at shareholder meetings. That’s what the TSET board voted to do.
TSET’s board of investors makes decisions on investing the proceeds of Oklahoma’s settlement with the tobacco industry. A different TSET board then spends the interest on programs and other grants aimed at improving health.
Russ, who chairs the board of investors, said the proposals are a way to “responsibly protect shareholder value and financial returns.”
“These investments currently have good financial returns, so simply pulling them is not the solution,” he said in a statement after the meeting. “Submitting proposals allows us to address potential risks while maintaining the value of the investments for the fund.”
Russ said the board wasn’t acting in response to a directive from any official. He said it is the board’s responsibility to pay attention to these issues and protect the fund’s investments with the processes available.
“The goal of the proposals is to bring attention to shareholder concerns and encourage companies to avoid behaviors that could ultimately create financial risk,” he said.
He said he doesn’t know what the TSET board will do if the companies’ don’t take action on the concerns.
John Waldo, the sole dissenting vote, said the board should communicate directly with these companies to express their concerns before telling them how to conduct business.
Some companies have already separated from diversity, equity and inclusion policies, he said.
A previous attempt by Russ to pass similar proposals failed in June. At the time, he had targeted companies like Amazon, Lululemon and Netflix for policies on issues including diversity and gay rights, according to reporting from Oklahoma Watch.
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