Let’s Talk About Corporate Accountability with Andrew Behar, CEO of As You Sow

Andrew Behar is CEO of As You Sow, the nation’s leading non-profit practitioner of shareholder advocacy and engagement. Since 1992, As You Sow has used shareholder power to align investments with values and compel companies to reduce material risk on issues including climate change; toxins in the food system; ocean plastics; diversity, equity, and inclusion; racial justice; and wage equity. Previously Andrew was a documentary filmmaker and entrepreneur founding start-ups developing an innovative physiological monitoring medical device and grid-scale fuel cells. He is on the XPrize Brain Trust for Abundant Energy and the advisory boards of Real Impact Tracker and 1-Earth Institute.His book,The Shareholders Action Guide: Unleash Your Hidden Powers to Hold Corporations Accountable, was published in November 2016 by Berrett-Koehler.

One episode 147 of Bigger Than Us, Kelly goes in-depth on how Charm Industrial is striving for pre-industrial carbon levels, her personal mission to help people with the superpower of invention, encouragement for female engineers, and more!

By leading technological efforts to make bio-oil a viable solution for solving climate change and setting an example for girls in engineering, Kelly is having an effect that is Bigger Than Us. 

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Pioneers of Corporate Accountability

Excerpts from the Bigger Than Us podcast. These quotes have been edited for brevity and readability.

When As You Sow started, it was doing a lot of work on litigation — litigating with big corporations that had carcinogens and reproductive toxicants in their consumer products. We started realizing, well, we’re interacting with all these corporations. Are there other ways to interact with a corporation? And one of the ways that we did was through direct engagement.

There were faith-based groups doing this kind of thing back in the 1970s. Most famously, there were priests and nuns who showed up at the General Motors meeting to talk about South African apartheid. And as shareholders, they showed up, and a board of executives at General Motors looked at them and said, “What are you doing here?” And they said, “We own shares, and we object to the fact that General Motors is still doing business in South Africa, that they have plants there, and that they are supporting the apartheid regime.” And that was, very famously, the first time that shareholders were really heard.

What we do is just from that legacy, standing on the shoulders of amazing people who have stood up to power in this way. Last year in 2020, we had 131 engagements, where we sat down with senior executives at many companies to talk about things like climate change, ocean plastics, toxins in the food system, racial justice, diversity, equity, inclusion, wage justice, a whole range of issues.

Now, we’re a small 501c3 nonprofit, we’re 20 people, basically. And so we’re leveraging our position as shareholders to help these companies to find better environmental, social, and governance policies and practices.

Peer Pressure For Good

We saw this risk around what are called superbugs. When you feed poultry antibiotics in their feeds, they’re getting it every single day. What happens is that the bacteria evolve, they become superbugs, and now they’re antibiotic-resistant. So we approached the big poultry producers, Tyson, Perdue, and Sanderson Farms. And we talked to them about it. And they said, well, we’re just not interested in this. Basically, it was, “Take a hike.”

So we did. We took the hike down to their customers. We talked to McDonald’s, with who we have relationships. Wendy’s. KFC. They were not that interested. So we took another hike, and we started talking to parent groups who had organized, saying that they did not want their kids exposed to superbugs. We met with them. We helped them amplify their message a bit. And we took that back upstream.

We said, “McDonald’s, we have a McNugget crisis here. We see a material risk. It’s going to impact our market share.” Once you start talking about market share, they get very interested.

They said, “Wow, what do we do?”

We said, “Well, you tell your suppliers that you want chicken that’s raised without medically important antibiotics.” So they signed the pledge.

We took that to Wendy’s. They said, “McDonald’s is doing it? Okay, we’ll sign.” We took it to KFC. They signed. We took all those signatures upstream to the same group — Tyson, Purdue, and Sanderson — and said, “Look, all of your customers are saying they want a different product. If you don’t supply it, you’re not going to be in business.” They all said, “Okay,” and they all changed.

The whole industry just wasn’t acknowledging that there was a scientifically known problem that was going to affect market share, and, ultimately, affect public health. And so we brought that information to them. And once they understood the impact that it would have on them, they agreed that there was a sensible solution.

The Impact of As You Sow’s Revolutionary Grading System

One example of a scorecard: after the George Floyd murder last summer, we created a racial justice initiative. And we started looking and saying, “Well, how do we evaluate one company versus the other?” And we realized there’s no data.

So we brought together an incredible Advisory Council, people with real deep expertise on this issue. We developed 22 key performance indicators. We had our researchers go out and read the Corporate Social Responsibility reports, the annual reports, what’s on the website of these companies, and the news from the companies to see how they fit into these key performance indicators. We came up with an aggregated score for the company. And we then could look across the S&P 500.

Now, we also did this for diversity, equity, and inclusion. What we found is that there was so little data that was out there that we started just to grade the companies on: Did they disclose data? Did they disclose their Equal Employment Opportunity form, which every company fills out but only some companies disclose?

But that’s not even a great metric. We wanted much deeper data. So we started asking the companies for data on recruitment, retention, and promotion, cut by gender, cut by race, cut by ethnicity. Then you could see if a company hires a lot of people of color, but they never promote them, and they don’t pay them well — you don’t see that in the EEO-1.

But the feedback we got was that for some of the companies that came out in the top 10, their business model is not necessarily beneficial to communities of color. That’s why we added the five new key performance indicators that more evaluate the overall: what does the company do for a living?

You Might Accidentally Be the Bad Guy

We have a whole other set of data that evaluates mutual funds. And the idea was that most people own mutual funds. There are 100 million people who work at companies that have a 401k plan, or a 403b plan if you work at a college or nonprofit. No one knows what they own. No one knows what’s actually inside a mutual fund.

You will see that you own companies that are burning down the Indonesian and the Amazon rainforest, you’ll see that you own big banks that are funding their destruction. And you’ll see the consumer brands that use palm oil, that use paper, rubber, timber, cattle, and soy, that are creating demand to continue to destroy the rainforest. So then we go deeper and we started looking at weapons and we looked at: Are you profiting from cluster munitions, landmines, nuclear weapons, assault weapons?

I do a lot of talks at different organizations about their 401k plans and about how they invest and aligning investing with values. I was at the World Bank, and they gave me a list of what’s in their 401k plan. And there it was. You couldn’t miss it, that they had an F because they were invested in cluster munitions and landmines.

Now, a lot of the people in the audience have spent their entire career trying to eradicate cluster munitions and landmines, and they were horrified. And there was no way for them to know it.

BlackRock just put out a new fund called the US Carbon Transition Readiness Fund. So people thought, “Oh, well, this will reduce my climate risk.” And I’m sure most of those people went there because they thought they were getting climate risk.

But if you do the analysis, Exxon, Chevron, Duke, Southern, all the big utilities, all the coal-fired utilities, Schlumberger, all the oilfield services, the pipeline companies, the big banks, JP Morgan, that funds all the destructive projects — it’s basically the Carbon Business as Usual Fund. And I don’t think they would have gotten as much investment had they named it more appropriately. I find the naming misleading, but the SEC allows it.

So this is the nature of investing today. You have to do your homework because there are Fossil Free Funds, literally called Fossil Free Funds, with 27 fossil fuel companies in them. You have to do your homework. You got to read the label to know what’s inside.

We’re not telling people how to invest, what we’re saying is: invest with intention.

The Companies Belong to Us: Shareholder Power

You know, I’ve always felt that corporate power was outsized. Of the 100 largest financial entities in the world, 69 are corporations. So Walmart sits right between Canada and Spain. These are the largest, most powerful entities on the planet, and they control our lives.

But companies that are showing their leadership are the ones who need signals from their investors and from their customers to say, “Yes, keep leading.” And there’s this whole other paradigm based on destruction and extraction — it’s dying away. There’s a new purpose of a corporation, that the Business Roundtable on the World Economic Forum has endorsed, that permits companies to take care of their employees, to take care of their communities, their supply chain, their customers, and their shareholders. This is the emergence of a whole new paradigm.

We own these companies, we are the beneficial owners of these corporations. As shareholders, we have a right to make sure the company avoids material risk. That’s why we own the shares. That’s why people buy shares of stock. And that is absolutely a right.

We’re midwives for this new economy. And the birth pangs are painful, and we’re in the middle of it right now. So this is the moment to become aware of your power as you emerge from your COVID isolation. We’ve all been in our little cocoons, and in our cocoons, we have transformed, we’ve metamorphosized. We now realize how powerful we are. We own all these companies. And if as shareholders, we get together and say, “We own this company, and we want it to act differently,” then that will be what happens. And so this is a moment in time to look at your power. Don’t abdicate your power. That’s what’s been going on for too long. And we can have a completely changed world.

Ultimately, this is about truth. This is about truth and power. People want to have a world that is regenerative, that is sustainable, and takes care of people. Our vision is a safe, just, and sustainable world for all. A safe, just, sustainable world for everybody. That’s our North Star.

The Transcript: Bigger Than Us Episode 149

This transcript has been lightly edited.

Host Raj Daniels  01:01

So I like to open the show by asking my guests the following question. If you were asked to share something interesting about yourself, what would it be?

Andrew Behar  02:31

I don’t know. The work that I do is, as you say, is so interesting. It’s the most interesting thing about me, I believe. I gotta say, it really is. I am so fascinated with all of the mechanisms and machinations of the way corporate America works and the power that shareholders have but don’t realize they have. When I’m asked to do one of these icebreakers where you write something on a piece of paper, and they pass it around the room and somebody has to guess, the thing I generally put is that I appeared on stage at the Metropolitan Opera with Pavarotti. And so nobody can ever guess that. But I did do that. I was a spear-carrier. Totally randomly, a friend called and said, we’re short on spear carriers, what are you doing tonight, and I lived in New York, and my cousin and I jumped on the subway and we got there. And they put us out on stage. And there I was in Aida carrying a spear at the Metropolitan Opera.

Host Raj Daniels  03:38

I love that it’s beautiful. And you know, since you mentioned As You Sow, can you give the audience an overview of As You Sew and your role at the organization?

Andrew Behar  03:46

Sure. So I’m the CEO of As You Sow and by the way, it’s spelled s-o-w, As You Sow, as in the biblical, “as you sow, so shall you reap.” I’ve been the CEO for the past 11 years. So since 2010; it was founded in 1992. And so we’ve been around almost 30 years working on corporate accountability.

Host Raj Daniels  04:07

30 years is a long time, and we’re in a different place today. Can you perhaps share maybe some ideas of how it’s changed in the last 30 years from an awareness standpoint?

Andrew Behar  04:19

Well, when As You Sow started, it was doing a lot of work on litigation––litigating with big corporations that had carcinogens and reproductive toxicants in their consumer products. That was essentially what As You Sow was doing. So some of those cases settled. And so the settlement money came into As You Sow and so we start realizing, well, we’re interacting with all these corporations. Are there other ways to interact with a corporation? And one of the ways that we did was through direct engagement. So even back then, and by the way, there were faith-based groups, doing this kind of thing back in the 1970s. Most famously, there were priests and nuns who showed up at the General Motors meeting to talk about South African apartheid. And as shareholders, they showed up, and a board of executives at General Motors looked at them and said, “What are you doing here?” And they said, “We own shares, and we object to the fact that General Motors is still doing business in South Africa, that they have plants there, and that they are supporting the apartheid regime.”

And that was very famously, the first time that shareholders were really heard; the power of shareholders. And what happened is, they filed a shareholder resolution, which is a formal way that a shareholder can address a corporation. And there’s a vote. And they found that a lot of shareholders agreed. And this was a major shift. So what we do is just from that legacy, standing on the shoulders of amazing people who have stood up to power in this way. And so we talked to a lot of companies. Last year in 2020, we had 131 engagements, where we sat down with senior executives at many companies to talk about things like climate change, ocean plastics, toxins in the food system, racial justice, diversity, equity, inclusion, wage justice, a whole range of issues. Now, most of the companies, when we approach them, we say, “Look, we’re shareholders. We represent shareholders. And we’ve identified a material risk. And we have a solution that’s going to make a better company, that’s going to help the company avoid potential litigation or a potential problem.” And so when we present it in that way, it sometimes takes a little time. But eventually, the company says, “Oh, this is actually a really good idea, we’re gonna benefit from this.” And they adopt it. So we had 131 engagements last year. 55 of those, the company said, “This is a great idea, let’s go do it.” 76, we escalated by filing a shareholder resolution. And of those 76, all but 22 agreed to a settlement. 22 went to a vote, and we had four majority votes, and about $800 billion worth of shares were voted yes on As You Sow resolutions. Now, we’re a small 501c3 nonprofit, we’re 20 people. And so we’re leveraging our position as shareholders to help these companies to find better environmental, social, and governance policies and practices.

Host Raj Daniels  07:36

So it’s obviously punching above your weight. How many shares does an individual or your organization have to hold to get that engagement or get that audience?

Andrew Behar  07:47

Currently, you need to hold $2,000 worth of a company for one year to file a shareholder resolution. Now, last year, the SEC changed those rules, and they put new rules in place that will go into effect on January 1 of 2022 that make it much more. You’ll have to hold $25,000 worth of shares. But between now and then, we’ll see if that ever actually gets instituted because there’s both a Congressional Review Act that’s being looked at and potential litigation against it. So they’re trying to make it more difficult for shareholders to have that engagement with the company. They’re trying to make people with wealth have a louder voice. They’re trying to suppress new ideas. This is all from the last administration’s SEC, which tried to silence shareholders, and we will simply not be silenced. We own these companies, we are the beneficial owners of these corporations. As shareholders, we have a right to make sure the company avoids material risk. That’s why we own the shares. That’s why people buy shares of stock. And that is absolutely a right. That is a right that’s not going to be taken away from them.

Host Raj Daniels  09:10

Going from 2000 to 25,000 is quite a leap.

Andrew Behar  09:15

We think it is. We think it’s not a good idea at all. We wrote many comment letters to the SEC objecting to it. I’m not getting into too much more of the nuance. There are four things that they’re changing. One of them would not allow As You Sow to represent other shareholders. So currently, As You Sow, we represent shareholders. So for instance, if we’re going to be talking to Yum! brands about styrofoam, which just literally happened––one of our programs has to do with ocean plastics and the destruction of the ocean ecosystem. So we had a conversation with Yum! brands and we said, “You guys use a lot of styrofoam, and a lot of it is going into the ocean. It breaks down as tiny particles, and the fish think it’s food, and they eat it. And it’s destroying marine ecosystems.”

So, from that engagement, we then found a shareholder: a person who had held the stock $2,000 for a year. In this case, they held it for a decade and much more stock than that. They signed a document authorizing As You Sow to file on their behalf. And then we went and talked to the company. Now the company said, “Well, we’re not gonna do anything.” So we filed a shareholder resolution, we got a good vote. Now, by the way, these votes are all what are called precatory. That means that they are non-binding. Even if you get a 90% vote, the company doesn’t have to do it. But if you get a 20% vote, if one out of five of your shareholders wants you to do something, you’re going to take a good look at it. So Yum! brands, after much negotiation, agreed to stop using styrofoam in 6700 stores across the entire planet. Similarly, with McDonald’s, similarly, with Dunkin, if you combine them all, about 3 billion styrofoam cups will not be produced this year because of three engagements that As You Sow had with these three companies that suggested they could be using recycled cardboard, that they could also recycle that cardboard,  that they could be part of a circular economy, that it would be good for their brands,  it would cost them less, etc. So that’s kind of how it works in one simplified example.

Host Raj Daniels  11:32

That’s a pretty amazing change you made there. What’s some of the pushback besides––I’m going to state the obvious maybe––saving money or not wanting to spend additional money for recycled materials? What’s some of the pushback you get from some of these companies?

Andrew Behar  11:49

A lot of times they’re just not that aware that this risk exists. So another example would be, we saw this risk around what are called superbugs. When you feed chickens, poultry, antibiotics in their feeds, they’re getting it every single day. What happens is that the bacteria evolve, they become superbugs, and they’re antibiotic-resistant. So we approached the big poultry producers, Tyson, Perdue, and Sanderson Farms. And we talked to them about it. And they said, well, we’re just not interested in this. Basically, it was, “Take a hike.” So we did, we took the hike down to their customers, and we talked to McDonald’s, with who we have relationships. Wendy’s. KFC. They were not that interested. So we took another hike. And we started talking to parent groups. Some groups had organized saying that they did not want their kids exposed to superbugs. And so they weren’t going to be allowing them to eat Chicken McNuggets anymore.

So we met with them, we helped them amplify their message a bit. And we took that back upstream. We said McDonald’s, we have a McNugget crisis here. They didn’t see it coming. It wasn’t on their radar. We said we see a material risk. It’s going to impact our market share. But once you start talking about market share, they get very interested. They said, “Wow, what do we do?” We said well, you tell your suppliers that you want chicken that’s raised without medically important antibiotics. So they signed the pledge. We took that to Wendy’s. They said, “McDonald’s is doing it? Okay, we’ll sign.” We took it to KFC. They signed. We took all those signatures upstream to the same group––Tyson, Purdue, and Sanderson––and said, “Look, all of your customers are saying they want a different product. If you don’t supply it, you’re not going to be in business.” They all said, “Okay,” and they all changed. So the whole industry just wasn’t acknowledging that there was a scientifically known problem that was going to affect market share, and ultimately affect public health. And so we brought that information to them. And once they understood the impact that it would have on them, they agreed that there was a sensible solution. So that’s an example of how you use market forces to help to inform these corporations.

Host Raj Daniels  14:15

Market forces and peer pressure, I guess, too.

Andrew Behar  14:18

Yeah. I’d say that peer pressure is a very powerful thing. We do this a lot where we do scorecards, so I mentioned ocean plastics. Right now we’re working on a second report. It’s our sixth report on ocean plastics. But two years ago, we did one where we looked at 50 companies on 35 key performance indicators on plastic, and we’re now redoing it to see how the companies have improved. We also looked at 14 food companies on their pesticide use. Did they spray their food with glyphosate, which is a known carcinogen? In this case, basically every food company in America, every major one, was spraying Roundup, which is a known carcinogen. It’s also known as glyphosate. That’s the chemical term. They spray it on their wheat, oats, and beans right before they harvest it. And this is to desiccate it. It’s called a desiccant. What it does is if you’re going to go in with a thresher on a wheat field, some of the wheat’s a little greener, some of its browner. You want it all evenly brown so you get the highest yield. So they spray it with this toxic poison a week or two before harvest, and then it increases the yield. But it also puts a carcinogen in all of our food. All of our wheat, all of our beans, all of our oats. And so we went and talked to Kellogg, and we said, “Hey,”––we sent them a letter because we usually send a letter first.

We said, “We think there’s a real problem here having to do with putting toxic material into your food products. And we believe Kellogg food should be safe to eat.” So we came in, we had a meeting with them. And we explained to them the risk. Now, when we presented it, and we’re saying, “We think it’s just bad business to be poisoning your customers.” And they’re looking at us and going like, “How so?” And we’re saying, “Well, because there have been two cases,” at that time, on glyphosate. Now, these were cases where somebody was spritzing glyphosate in their backyard to knock down the weeds. That had gotten a $200 million and a $400 million settlement.

We said, “Imagine, every single bowl of Special K has glyphosate in it. This is going to be bigger than tobacco settlements because people are eating it. And they’re eating it every day.” And then they went, “Oh, okay, this is real risk.” And we said, “Yes.” And they said, “We agree.” Kellogg’s signed a no-glyphosate policy. They’re moving it through their entire supply chain. It’s going to take them a few years, but they are going to drive this practice. Now, nobody was spraying glyphosate 10 years ago. Everybody was harvesting their food, and in fact, they don’t do it anywhere else in the world. Europe banned it years ago because, of course, they have what’s called the precautionary principle, where you have to prove something’s safe before you put it in your food. In the United States, you can put anything in your food, and then you have to prove that somebody got sick from it and prove the causation, which is nearly impossible. So we just have it upside down here in the United States. But Kellogg agreed, they said, “Yeah, we’re gonna do this.” And now, you mentioned peer pressure. So now we’ve brought that to all the other food companies and said, “Look, Kellogg’s is doing it. Kellogg’s food is safe to eat. Don’t you want yours to be safe to eat?” And they’re all saying, “Yeah.” We explained to them that they don’t have to buy these expensive chemicals.

They don’t have to hire these airplanes to spray them on the crops. They can harvest it and they’ll have a 3% lower yield, but they’ll make more money because the cost of doing all of that mechanized toxic farming costs more than what they were making from the gain of it. We have a system that just oftentimes does not make sense. If you just think about it in the most basic, common-sense way, these farmers didn’t want to spray their crops, but they felt they had to, and they were pressured by Monsanto and other big corporations to do it. So Kellogg’s, a leader, we got them. Now we’re getting all of their competitors to follow them. And soon we will have a glyphosate-free food system in the United States.

Host Raj Daniels  18:41

Well, I appreciate you for doing that, especially with three young kids who happen to love Kellogg’s cereals.

Andrew Behar  18:46

Oh, good! They’re going to be safe to eat soon.

Host Raj Daniels  18:46

Absolutely. How do you get access to the data from the companies regarding what they’re doing?

Andrew Behar  18:56

Well, first of all, anything that we have in our scorecards is something that is publicly disclosed, which means that it is a material disclosure by the company. The company must be truthful, or they risk a material breach. Another example of a scorecard: after the George Floyd murder last summer, we created a racial justice initiative. And we started looking and saying, “Well, how do we evaluate one company versus the other?” And we realized there’s no data. So we hired a woman, her name is Olivia Knight, she’d written her master’s thesis about environmental justice. And she put together a team, and we started gathering data on the S&P 500 on racial justice. So we brought together an incredible Advisory Council, people with real deep expertise on this issue. We developed 22 key performance indicators. We had our researchers go out and read the CSR, the Corporate Social Responsibility reports, the annual reports, what’s on the website of these companies, the news from the companies, to see how they fit into these key performance indicators.

And what it did is we came up with an aggregated score for the company. And we then could look across the S&P 500. And if you go to our website, if you go to asyousow.org, right on the front page, click on The Today Show. The Today Show did a five-minute video on the racial justice scorecard. If you click right there, you’ll get to see the video. But it’ll also take you to a page where you can click on a data visualization tool where you can search any company and you can compare it to any other company. And you can slice it by sector. Now, we also did this for diversity, equity, and inclusion. What we found is that there was so little data that was out there that we started just to grade the companies on: Did they disclose data? Did they disclose their EEO-1, which is their Equal Employment Opportunity form, which every company does, but only some companies disclose? So, were they disclosing that? But that’s not even a great metric. We wanted much deeper data. So we started asking the companies for data on recruitment, retention, and promotion, cut by gender, cut by race, cut by ethnicity. Then you could see if a company hires a lot of people of color, but they never promote them, and they don’t pay them well––you don’t see that in the EEO-1. We want to see that. We want to see the pay gap for women. There’s a promotion gap for women. I’m not sure if you know this. Most people talk about how women get paid less than men for doing the same job. And that is true.

But an equally problematic data point is that if 50% men and 50% women started at entry-level, when you get to a senior vice president level, then you have 18% women and 82% men. The women are not getting promoted. And so that shows up in the data we’re looking for. You wouldn’t spot that looking at an EEO-1. In any case, we now have a scorecard for the S&P 500 looking at diversity, equity, and inclusion disclosure. And we have one for racial justice. We’re about to expand racial justice to incorporate five new key performance indicators on environmental justice. And then we’re going to expand the whole thing out to the Russell 1000. So we’re going to add another 500 companies later this year. And in this way, it gives companies a way to benchmark themselves also. So this is important for companies to see how they’re being scored, how they’re being evaluated, how they’re being seen by the world. And for customers, it will change their loyalty. If they see a company that they’re loyal to getting really bad grades on racial justice, well, they might just shift over to one that has a better score, and that drives the company to then improve their policies and practices. One company that got a very poor score was Abbott Labs. It’s a major pharmaceutical company. And we engaged them in a conversation about what they should change. But they decided they didn’t want to implement the changes we had in mind, which were incremental over time. And so we went to a vote, and we just got a 40% vote.

So almost half of Abbott’s shareholders believe that racial justice is a really important thing for the company to work on. And just this morning, we got a majority vote on American Express on diversity, equity, and inclusion. So what you’re seeing is that shareholders are sending a very strong message to management in the boards, that these are important, material issues that they must deal with in a very sincere way. And it’s not a mystery of what they need to do. We know what they need to do. We know what best practices look like. And it has to do with justice. It has to do with basic justice and transparency. So this is not rocket science for these companies to fix this issue and therefore get better scores. This is just a matter of internally, for the company, deciding that this is important.

Host Raj Daniels  24:27

I was going to ask you, and maybe you could give an example of a company, you mentioned Abbott, that has challenged the metrics that you’ve chosen for your scorecard and pushed back and said, “We disagree with you.”

Andrew Behar  24:38

No, Abbot didn’t disagree. Abbott actually said, “You know, you’re right. Our CEO didn’t sign a racial justice statement, and we didn’t call for a change for systemic racism. And we don’t disclose all of our diversity, equity, and inclusion information.” But they agreed with us, and they agreed that the metrics that we were looking at were important. But the feedback we did get was that some of the companies that came out in the top 10––their business model is not necessarily beneficial to communities of color. And therefore, that’s why we added the five new key performance indicators that more evaluate the overall: what does the company do for a living? And should they be in the top 10 regardless of how well they address their racial justice issues within the company? Their very business itself is problematic. So that’s something that we’re looking at really closely. Again, we brought our advisory committee together to talk about and figure it out––to look at past studies, who’s done work––trying to do it in as thoughtful a way, and as transparent a way as possible. All of our methodologies are clearly put out on our website. And we welcome anybody who says, “Hey, you could have done this better.” That’s how we get better. We have a whole other set of data that evaluates mutual funds. That has evolved, we started in 2015. And the idea was that most people own mutual funds. There are 100 million people who work at companies that have a 401k plan, or a 403b plan if you work at a college or nonprofit. No one knows what they own. No one knows what’s actually inside a mutual fund. Now, mutual funds are a basket of stocks, it could be 500 stocks, it could be 1000, it could be 3000 stocks. It could be 50. If you read the prospectus, it’ll tell you how many, but they’ll only ever talk about the top 10 holdings. That means the companies with the greatest proportion of money associated with them.

But you could be owning all kinds of companies. And so we were involved with a whole movement around divesting fossil fuels. And, again, we don’t work alone. We coordinate with a lot of other groups. And in any case, there was a statement: “I want to divest from fossil fuels. I don’t want to own big oil, I don’t want to be part of climate change. I don’t want to be destroying the planet.” And about 50,000 people signed this pledge. And what we discovered when we talked to them is nobody knew what they own. They said, “What do I do now? I don’t even know if I own anything.” And there was no way to find out. So what we did is we built a tool. It’s called Fossil Free Funds. If you go to fossilfreefunds.org, there’s an entry bar. You could type in Vanguard, or you can type in, you know, VINIX, which is a ticker, or you can just write the name of the fund. And what pops up is an analysis. So, this particular Vanguard fund has 22 companies that are big oil companies, it has this many 18 coal companies, it’s got 16 fossil-fired utilities. Now, you might think this fund, because it’s called something––the Vanguard, you know, the Admiral fund––oh, it’s about admirals, of course, must be good. But in fact, you own all these fossil fuel companies.

So then we went deeper, and we partner with the Friends of the Earth. And we started looking at that same basket of stocks from the lens of deforestation. Well click on the deforestation score right there, and it’ll take you over to the deforestation site. And you will see that you own companies that are burning down the Indonesian and the Amazon rainforest, you’ll see that you own big banks that are funding their destruction. And you’ll see the consumer brands that use palm oil, that use paper, rubber, timber, cattle, and soy, that are creating demand to continue to destroy the rainforest. So then we go deeper and we started looking at weapons and we looked at: Do you own? Are you benefiting? Are you profiting from cluster munitions, landmines, nuclear weapons, assault weapons? When there was that Walmart shooting, the site was just so overwhelmed with people wanting to know, “Am I profiting from assault weapons?” I do a lot of talks at different organizations about their 401k plans and about how they invest and aligning investing with values.

An example: I was at the World Bank, and they gave me a list of what’s in their 401k plan. And I started just bringing these up just to show people what’s inside. And there it was. You couldn’t miss it, that they had an F because they were invested in cluster munitions and landmines. Now, a lot of the people in the audience have spent their entire career trying to eradicate cluster munitions and landmines, and they were horrified. And there was no way for them to know it. But here it was, and all we’re doing is we’re just comparing your databases and we update it once a month. We make sure it’s always present and always as up to date as possible. It’s just about transparency. We’re not telling people how to invest, what we’re saying is invest with intention. So, we then added a gender equality funds one. And then most recently, this summer, as part of our racial justice work, we added private prisons. And I can tell you that if you own Vanguard, if you are in a Vanguard fund, you are profiting from private prisons, you are profiting from the prison industrial complex.

And that’s just the way Vanguard invests. All have their top funds get D’s and F’s on our site because they own actual private prisons and also other companies that support the prison industrial complex. So the manifestation of racist policy, which is the incarceration system in the United States, you are making money from if you invest at Vanguard. That’s just the way it is. You know, I can keep going here. BlackRock just put out a new fund called the US Carbon Transition Readiness Fund. So people thought, “Oh, well, this will reduce my climate risk.” And $1.2 billion invested in this fund the first day, that’s a record. That is the most money ever flowing into an ETF––an exchange-traded fund––in one day, $1.25 billion. And I’m sure most of those people went there because they thought they were getting climate risk. But if you do the analysis, Exxon, Chevron, Duke, Southern, all the big utilities, all the coal-fired utilities, Schlumberger, all the oilfield services, the pipeline companies, the big banks, JP Morgan, that funds all the destructive projects. It’s basically the Carbon Business as Usual Fund. And I don’t think they would have gotten as much investment had they named it more appropriately. I find the naming misleading, but the SEC allows it. So this is the nature of investing today. You have to do your homework because there are Fossil Free Funds, literally called Fossil Free Funds with 27 fossil fuel companies in them. You have to do your homework. You got to read the label to know what’s inside.

Host Raj Daniels  32:19

So, Andy, I’m busy, have a family, work, kids, you know, just life in general. This is an automatic “set it and forget it” kind of ETF perhaps. Where can I go? Or is there an easier way for me to find out where I can do responsible, sustainable investing?

Andrew Behar  32:39

The tools we’ve built are pretty easy. You will know where you’re at in under three to five minutes. If you look at your 401k and write down the ticker numbers, you’re probably invested in maybe four or five different mutual funds. If you go to our site, just type them in, and you’ll see it’s a report card. And you can see your grades across all seven different issue areas. So you’ll know pretty quick?

Host Raj Daniels  33:05

What’s the alternative? Where can I invest my money responsibly? What kind of effort do I have to go through to go invest responsibly?

Andrew Behar  33:13

You may find in your 401k plan, some 401k plans have 20, 50, 80 different choices. You may find that there’s another choice that might have––I’ve seen 401k plans where people were invested in one fund that had 300 tons of carbon per million US, like the number 300. Remember that in terms of carbon. And there was another fund that was pretty equivalent that had 20. So they could reduce their carbon footprint massively, just with one click. But they just didn’t know that.

A lot of funds, though, are invested, there’s nothing sustainable in them at all. This means it’s going to be more problematic in terms of, you’re going to need to talk to your 401k administrator and say, “There’s nothing I can invest in. I need you to add a fossil-free, a weapon-free, gender-positive fund, a prison-free.” And frankly, every mutual fund manager should just add–– we believe at least 20% of the holding of the funds in the plan should offer some alternatives to people. And they should vet them the way they vet any other fund, looking at their returns over five or 10 years or three years, whatever they require. They should be looking at, some funds say, “You can’t have a fund in here that’s got less than 2 billion in assets.” We understand that. There are so many good funds. When you go to our site, you click on Show Me the Best Ones, you see funds that get all A’s or all B’s or B’s and better. And they are just literally hundreds and hundreds of these.

There is a whole industry of people, of really brilliant investment professionals, that have spent their whole careers figuring out how to do this right. Many of them belong to an organization called US SIF––social investing forum. If somebody is a member of US SIF, there’s a pretty good chance they’ve got the real McCoy. They’ve got real funds that have environmental, social, and governance. And when you compare them, you’ve got to do your own comparison and decide on returns, on fees, on whether you want something that’s an ETF or manage. And I know this is getting more complex, but there’s a certain amount of responsibility. It’s your money. And if you just put it into the default option that your company gives you, and you feel good about profiting from private prisons, and from burning down the Amazon, then that’s your personal decision. But I don’t think many people have thought that through. And it’s not that difficult. It really is not. They will make it seem like it’s very, very difficult. And when you go and talk to your 401k administrator––and by the way, on our site, on Fossil Free Funds, if you click on the toolkit, we have a letter that you can download, and you can fill in your company name to bring to your 401k administrator, that explains all this stuff. We have a toolkit and we have videos, steps 1-2-3, how you do it, how you talk to your peers about this.

We are going to be coming out with, and this should probably help: a report card for every company. So for example, Amazon. They are great on climate change, what can I say? They’re in the middle of buying 100,000 electric vehicles. Their data centers will all be powered by renewables. Operationally, A+. But every single person who works at Amazon owns the destruction of the Amazon. That’s right, every single fund that Amazon has gets a very poor grade for rainforest destruction, and not to mention big fossil fuels and private prisons and all that. But the irony is not lost on me, nor should it be on anyone who works at Amazon. And frankly, Jeff Bezos, if he just said, “You know what, fix this,” it would be fixed in about––if it takes more than a month, then you got the wrong advisor. You should get a new financial advisor. This is not rocket science. You can add to a plan. You could add 20 more funds to the plan. Do your due diligence and add them, and then train people and teach them what it is. This is the thing. At Amazon, they actually do have a, quote, “sustainable fund,” but only 1.88% of the money in the plan is being put in that sustainable fund. And by the way, it’s not a great fund, it’s a Vanguard fund, and it does really poorly on private prisons, and really poorly on rainforest destruction. But it’s at least named the sustainable fund. And one more note about naming. In the 3000 funds that we evaluated, 88 have ESG, environmental, social, and governance, in their name. That’s the name of the fund. And of those, half of them, literally 43 of them, get a D or an F on one of our metrics. These are funds with ESG in their name. So buyer beware, it is not laid out for you easily. The SEC is not doing a very good job of actually making things so that they’re not misleading.

Host Raj Daniels  38:26

Well, for those of you listening, I would highly recommend––I’m on the site right now––the Invest in Your Values tab. You could spend an entire morning there going through your funds and the report. I think it’s an extremely robust site. And I appreciate the work you’ve been doing. You know, you mentioned something about personal decisions earlier. And earlier in the conversation you said you’ve been with the organization, I believe, 11 years. What’s your why? Why did you come to the organization? And what keeps you going? You mentioned earlier, too, that your work is very interesting, and I appreciate that. But what are your personal underlying motivations?

Andrew Behar  38:57

You know, I’ve always felt that corporate power was outsized. Of the 100 largest financial entities in the world, 69 are corporations. So Walmart sits right between Canada and Spain. These are the largest, most powerful entities on the planet, and they control our lives. If you look out and you say, “I don’t like climate change, I don’t like what’s happening to the oceans. racial injustice. This current paradigm that we’re in is not what I would consider being sustainable. It can’t be self-sustaining, nor is it taking care of people.” Well, that’s because of corporate policies and practices. And so I’ve always felt that shifting those practices can be beneficial to the company and the triple bottom line, people planet. There’s a path to a regenerative economy based on justice and sustainability. I believe that. I see it. I’m seeing it happen. I’m seeing it emerge right now every day.

Companies that are showing their leadership are the ones who need signals from their investors and from their customers to say, “Yes, keep leading.” And there’s this whole other paradigm based on destruction and extraction–– it’s dying away. The whole idea, the ideas of Milton Friedman, have been overturned. There’s a whole new philosophy. There’s a new purpose of a corporation, that the Business Roundtable on the World Economic Forum has endorsed, that permits companies––they’ve all signed up for this––to take care of their employees, to take care of their communities, their supply chain, their customers, and their shareholders. This is the emergence of a whole new paradigm. And that, to me, is what keeps me going because I see it clearly. I see that it’s not only possible, but it is beneficial for everybody. We’re midwives for this new economy. And the birth pangs are painful, and we’re in the middle of it right now. So this is the moment. And this is the moment for people to become aware of your power, as you emerge from your COVID isolation. We’ve all been in our little cocoons, and in our cocoons, we have transformed, we’ve metamorphosized. We now realize how powerful we are. We own all these companies. And if as shareholders, we get together and say, “We own this company, and we want it to act differently,” then that will be what happens. And so this is a moment in time to look at your power. Don’t abdicate your power. That’s what’s been going on for too long. And we can have a completely changed world.

Host Raj Daniels  42:17

So we’re 50 years into the years after Milton Friedman and his famous letter that he wrote in the paper regarding shareholders, shareholder primacy. How long do you think it will take us to unwind it?

Andrew Behar  42:34

Well, it took 50 years to win the battle of ideas, took 50 years for shareholder advocates. And I mentioned the nuns, the faith-based groups that were at the General Motors meeting in the 1970s. Though, what they were asking for was stakeholder capitalism. So it took 50 years for the idea to shift. I think we can change the rest of it now, to follow. I give it within the next three to five years. I think the companies that don’t do this will be out of business. I think they’ll be winding down. I think most of these big oil companies that don’t transform will be winding down. I think you’re going to see people kiddingly call it Exxon Kodak. Well, there’s a reason for that: because they have a decade of losing money. They don’t seem to realize that all those European oil companies are transforming. You look at the Danish natural gas company that’s become Orsted. That’s now the world’s largest offshore wind company. You can power the whole planet with offshore wind; I mean, there are so many opportunities. And yet, all these companies just keep sticking their head in the ground. They will not be in existence.

Coal, everybody said. The coal industry’s lost 80, 90% of its value. We’re in a transformation. And so we’re going to be seeing a lot of companies winding down in the next few years. And we’re going to see a lot of companies that are willing to be bold leaders who will be taking the forefront. And so this is an amazing time. This is a remarkable time to be alive and to help midwife in this new era. Now, you wouldn’t think I’d be quoting the World Economic Forum, but they put forth a new manifesto, the fourth manifesto for the fourth era of business. I mean, that’s what you’re hearing from the World Economic Forum. Those aren’t my words. And what they’re talking about, literally, is the adoption of stakeholder capitalism, where you take care of your employees and your customers and your community. You don’t dump in the commons. You don’t externalize your costs. They always come back to bite you. You think long term. And this is what we’re in the middle of. There are corporate executives and corporate boards that are thinking about this right now. And this year, the proxy votes are going to be off the charts. I’ve already seen more majority votes than I’ve ever seen. And there’s a reason. It’s because shareholders are waking up, and they’re saying, “I don’t want the company that I own to do this anymore.” And we all know, so we’re the boss.

Host Raj Daniels  45:34

So, in my research for this compensation, I watched a TEDx talk you gave back in, I believe, 2010. So 10 years ago now. You’ve been with the company 11 years, you’ve said. What’s the most valuable lesson you’ve learned about yourself on your journey?

Andrew Behar  45:48

Tenacity. That if I just stay true, to the north star of empowering shareholders, to own their power, that they’ll come around. When I started, people were kind of looking at me and going like, “Yeah, come on.” When we put out the first investor value tool, people saying, “Well, this is interesting.” I mean, we couldn’t get any funding for this. I mean, for six months I talked to foundations about the importance of data that is transformational. And now people are coming around to it. So it’s just pure tenacity of believing in these ideas, believing in these ideals, and doing the work. Doing the hard work in the weeds, looking at the real data, making sure it’s accurate, making sure our methodologies are absolutely transparent. Listening. So it’s really about tenacity and knowing that, ultimately, this is about truth. This is about truth and power. And that people want to have a world that is regenerative, that is sustainable, and that takes care of people. Our vision is a safe, just, and sustainable world for all. A safe world, just world, sustainable world for everybody. That’s our North Star. And so that’s it.

Host Raj Daniels  47:25

So speaking of believing in your ideals, let’s fast forward. It’s 2030. If Forbes or Business Week, were to write a headline about As You Sow what would it read?

Andrew Behar  47:37

It would read, Shareholder Power. I think that’s about it. Because here’s the interesting thing. You look and people say, “Oh, these boards of directors, they’re inaccessible.” No, they work for us. Like every board of directors and every CEO works for the shareholders, we are the boss. So it’s just a matter of us realizing that we have the power and then voting. Most people don’t even vote. 30% of votes are basically retail, and only about 18% even vote. We just actually created a new voting service called As You Vote. It sits on the Proxy Edge, the Broadridge Proxy Edge platform, and we want everybody to vote. And we’re gonna make it so simple. We’re gonna make it one click. And everybody will vote. And everyone’s gonna vote and say, “Yeah, I don’t want this company to be destroying my environment. I don’t want my company to be abusing its employees. I don’t want slavery in the supply chain.” And you’ll be able to vote. And it’s really about exerting our power. So I think we’re gonna see a lot of new boards of directors. I think you’re going to see all kinds of new rules around auditing because right now, there’s not a lot of transparency. Companies need to be transparent with all their environmental, social, and governance disclosures. We got companies saying one thing out of one side of their mouth, and then, you know, they’re saying, “Oh, yeah, we’re going to work on climate change.” And then on the other side, they’re funding dark money groups to go and try to destroy any kind of policy or any kind of change on climate. You’ve got this duplicity. And the more we call them out on it, the more we say this cannot––and these people just should lose their jobs.

I mean, that’s lying. That’s not something that we want in our corporate cultures. So just get it straight, and say who you are. And I’ve said this many times now in this interview: it’s not rocket science. This is simply common sense. You don’t need a Ph.D. in economics, to know that you don’t lie to your shareholders. And we get a lot of companies who say one thing and they do another. We’ve been asking that question of BlackRock a lot lately. At last year’s AGM, I asked directly, if you can see the videotape of my talk there, how words become actions. Larry Fink’s letter points out the problems, and they have the solutions in their grasp, but they don’t do it. And this is one thing that is a really big question in my mind. Larry Fink, and people like Jamie Dimon; they’ve amassed power over their lives. And they’ve identified the problems. Larry Fink’s letter brilliantly talks about how every company must have a Paris compliant transition plan. And he stopped short of saying, “And if you don’t, we’re gonna vote against your board. And if you don’t, after six months after that, we’re going to drop your company from our managed funds.” If he said that, every company would have a climate transition plan. If Jamie Dimon said, “JPMorgan will no longer invest in any extraction projects,” it’s going to change the nature of the cost of capital to do an extraction project. It’s going to go through the roof. And so this is the ability of these––just picking up these two––if they just did those two things tomorrow, it would change the nature of the battle to save the planet from climate catastrophe. And yet they don’t. And if they did, they would make more money. Their brands would be through the roof, people would be saying, “Oh, my gosh, BlackRock, they’re using their power.” BlackRock just voted for a climate resolution. They basically voted against every climate resolution for the last 10 years.

They’re starting to just now begin to vote because of pressure from around 10, different NGO groups that are pressuring them and pointing out how they say one thing and do another. So we have the capacity to fix these problems. But our leaders are choosing not to, and I don’t understand why, because they could be on the cover of Time magazine as world heroes. You probably win Nobel prizes and make more money. And yet, they decide, “Nah, I could be Batman, but I’m going to be Penguin.” I don’t get it. If I could be Batman, I’d be Batman. I wouldn’t be Penguin.

Host Raj Daniels  52:22

I love the idea of the headline, “Shareholder Power,” hopefully, it’ll come out sooner than later. And you’ve already given some very tactical advice. But if you can narrow it down, let’s say someone listening today. What’s one or two things they can do, professionally or personally, words of advice, words of wisdom, what would it be?

Andrew Behar  52:40

Know what you own, understand your power, align your investing with your values, and you just use your power to exert what is yours. Don’t abdicate your power.

Host Raj Daniels  52:56

Andy, I think that’s a great place to end. Don’t abdicate your power. I know I’m going to be on your site for quite a bit. I’m gonna see if I can download the letter and send it off to our 401k provider and see what changes we can make personally. I enjoyed speaking with you. And I, again, highly recommend the audience to go to your site and check out all the tools and the reports. You’ll spend an entire day there. The information is amazing. Thank you so much for your time. Is there anything else you’d like to share before we go?

Andrew Behar  53:23

No, no, thank you, I appreciate your time, and really, just great appreciation for what you do. Because spreading the word is so important. The communication around that is critically important. A lot of people just don’t even know that this whole world exists. And so just putting it out there and spreading the word is just hugely important. And I guess I can’t end without saying we are a 501c3 organization, we run on a shoestring of a budget, and we appreciate any donations from anyone. We have huge gratitude to the foundations who support us and also for our personal or individual donors.

Host Raj Daniels  54:07

I appreciate it. And speaking of spreading the word, I do want to give a quick shout-out to Glenn Hallam of Green Wave where I learned about you when you presented there. It was a phenomenal conference and if it wasn’t for him, I wouldn’t have heard about you. So thank you, Glenn.

Andrew Behar  54:20

Thank you, Glenn. Alright, you be well.

Before we go, I’m excited to share that we’ve launched the Bigger Than Us comic strip, The Adventures of Mira and Nexi.

If you like our show, please give us a rating and review on iTunes. And you can show your support by sharing our show with a friend or reach out to us on social media where you can find us at our Nexus PMG handle.

If there’s a subject or topic you’d like to hear about, send Raj Daniels an email at BTU@NexusPMG.com or contact me via our website, NexusPMG.com. While you’re there, you can sign up for our monthly newsletter where we share what we’re reading and thinking about in the cleantech green tech sectors

Raj Daniels

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