Through the power of the proxy vote, we are at the dawn of a new era of shareholder activism. Shareholders will be able to redirect corporations that don’t act on emissions, pollution, and key social issues. If the turning point was the successful Exxon Mobil proxy contest last year, then Carl Icahn’s pig welfare campaign against McDonalds is this year’s poster child. He objects to the treatment of pregnant sows that go into McDonald’s sausage and bacon. Icahn is running an activist campaign to put two new members on the Board to honor a promise McDonalds made in 2012 to stop using crated pigs.
In an interview with CNBC-TV this week, the normally ruthless Icahn said: “I’m not doing [it] to make money. We are a country that hates unnecessary cruelty and I really hate it. … The pigs are feeling animals - they’ve got good brains.” … “These gestation crates are the cruelest thing you ever saw.”
Responding to a statement from McDonalds, Icahn said “McDonalds is completely hypocritical. It is a lie... It is the antithesis of ESG... Factory farming is terrible for the environment. You get huge amounts of methane. ... The pigs [that live in crates] get these diseases. They fill them up with these antibiotics… Your kids are eating this meat...Ten years ago they absolutely promised to get rid of this thing ... now they are changing their story…. [What they are saying is] complete *BS* … I think the board over at McDonalds... is a rubber stamp board. ... On environment they get an F. ...”
Icahn says that rubber stamp boards are the norm, not the exception: “When it comes to the board of directors the system [needs] fixing — there is no accountability in Corporate America.”
The path forward for social activists using the Icahn script just got a lot easier. This week, the SEC proposed rules to make companies disclose their entire carbon footprints so investors will know which ones are making real strides or are simply greenwashing. The SEC also just finalized the Universal Proxy Rule which gives dissident shareholders the right to put their board candidates on the proxy voting card issued by the corporate target. This will cut the cost of running a legitimate proxy contest by over 50%, to less than a million dollars.
Icahn’s crusade is rather unusual, but we can expect campaigns supported by organizations like The Climate Action 100+, CERES and As You Sow to force companies to take action on myriad ESG issues. One of them will be to get companies to pledge to cut their emissions by 5% per year – as opposed to vague and unenforceable net zero promises out to 2050. We call this Owner Capitalism.