What Is Shareholder Engagement and Why Does It Matter to You as an Investor?
Updated: Sep 3
When most people think about investing, they think about buying and selling stocks. Another dimension to investing that most people never hear about can be a powerful tool for investors who care about the world their money is helping to build.
Shareholder engagement is a vital part of our investment approach and due diligence process at Nia Impact Capital.
What Is Shareholder Engagement?
When you own shares in a company whether directly or through a mutual fund you do not have to be a passive bystander.
Shareholder engagement is the practice of using those ownership rights to make your voice heard on how a company operates. That can take several forms:
Proxy voting is the most common. Every year publicly traded companies hold shareholder votes on issues ranging from executive compensation to board composition to environmental policy. As a shareholder, you have a vote. Most individual investors never cast their votes. At Nia, we cast every vote intentionally. Nia seeks to exercise all proxy votes in alignment with our core strategy and material corporate objectives, supporting proposals that advance environmental sustainability, social justice, and strong governance.
Direct dialogue means getting on a call (usually a virtual meeting) with company leadership to raise concerns, ask questions, get clarification, share best practices, and push for change. This kind of engagement happens behind the scenes and rarely makes headlines, yet is often where the most meaningful progress is made. We see active ownership and being in dialogue with our companies not only as a lever for managing material risks, we also see engagement as a powerful driver of opportunity and long-term value creation. We advocate for bold climate action, inclusive employment policies, and strong governance, because these are the building blocks of resilient, futureready businesses.
Shareholder resolutions are formal proposals that shareholders can file with the SEC to bring a specific issue to a company-wide vote. Filing a resolution is a serious step, one that signals to management and to other investors that an issue is material and demands attention.
Together, these tools give investors a voice inside the companies they own, a voice that most investors never know they have.
Why Does Shareholder Engagement Matter?
When you invest in a mutual fund, do you know how that fund votes on your behalf?
Most funds vote with corporate management by default, which means most shareholder votes are not a check on corporate behavior. Rather most votes end up being a rubber stamp of the status quo. At Nia, we see voting for best practices on shareholder ballots as both a right and a responsibility.
Shareholder engagement matters for two interconnected reasons.
First, a tool for accountability. Companies make public commitments to reduce emissions, reduce water use, to diversify their boards, to close pay gaps. Without investors holding corporations to those commitments, there is little consequence for falling short. Engagement creates that accountability.
Second, a driver of long-term value. The research is clear: companies with diverse leadership, strong governance, and transparent disclosure practices tend to outperform over time. When investors push companies toward those practices, we see ourselves managing risk and building long-term value.
What Shareholder Engagement Looks Like in Practice
Examples of how Nia has used shareholder engagement on behalf of our investors.
Pushing a Water Utility to Plan for Climate Risk
In 2023, after a series of meetings and dialogues with corporate management, Nia filed a shareholder resolution with California Water Services (CalWater) requesting that the company set near and long-term science based greenhouse gas reduction targets aligned with the Paris Agreement's goal of limiting global temperature rise to 1.5 degrees Celsius. The resolution received support from 33% of votes cast, a strong showing that sent a clear signal to management, as well as to other companies in similar positions.
What followed were collaborative and productive conversations. Through ongoing dialogue with the CalWater team, the company hired on-staff sustainability experts, conducted an extensive review of its scope 3 opportunities, enhanced its public disclosure of those emissions, and completed a supplier sustainability audit covering its eight largest suppliers. In another conversation we discussed a range of sustainability topics and commended the team for their progress. CalWater has analyzed the specific climate risks facing its operations and is now building a plan to address each one.
This type of action is what productive engagement looks like: a resolution that opens a door, followed by sustained conversation that drives real operational change.
Holding Companies to Their Own Climate Commitments
When a company announces a commitment to the Science Based Targets initiative (SBTi), positive press coverage often follows. What generates far less attention is when companies quietly drop those commitments or fail to meet their own deadlines.
At Nia, we monitor our portfolio companies on an ongoing basis. When we identify a company at risk of missing its SBTi commitments, we engage directly making clear that those commitments are material to us as investors and that we are watching. We also recognize and commend companies that follow through. Accountability, in both directions, is part of the work.
Celebrating Progress on Board Diversity at Zillow
Sometimes engagement work is about showing up to recognize progress and reinforce the behavior you want to encourage.
In early 2025, Nia engaged with Zillow to celebrate the company's fulfillment of The Board Challenge, a commitment to achieve at least one Black director and 30% female representation on the board. Recognizing companies when they deliver on equity commitments matters. This type of engagement signals to leadership that investors are paying attention to progress.
Improving Workforce Diversity Disclosure at Sylvamo
Nia engaged directly with Sylvamo, a global producer of uncoated paper, to increase the transparency of their workforce diversity data. After reaching out to management and not receiving satisfactory responses, we filed a shareholder resolution focused on improved diversity disclosure, a formal signal that this issue is material to us as investors.
What followed was constructive dialogue that led to a meaningful outcome: Sylvamo's management agreed to expand their employee diversity reporting by the end of the year. When the company committed to the change we were seeking, we were able to withdraw the resolution. We were pleased with the outcome and will remain engaged to encourage additional best practices.
What Nia's Work Means for You as an Investor
If your money is invested in a mutual fund, that fund is voting on your behalf every year.
At Nia, every proxy vote, every shareholder resolution, and every direct dialogue with company management is guided by our understanding that equity: gender, racial, environmental and economic equity, is connected to long-term business performance. We are engaging because we find this behind the scenes work makes our companies more resilient and our portfolios more valuable over time.
When you invest in the Nia Impact Solutions Fund (NIAGX), you are not just buying a portfolio of companies. You are buying into an active ownership practice that works on your behalf every day encouraging companies to be better governed, more transparent, and more aligned with the kind of economy we all want to live in.
Frequently Asked Questions About Shareholder Engagement
What is shareholder engagement? Shareholder engagement, as practiced by Nia, is collaborative: ongoing dialogue, proxy voting, and targeted resolutions aimed at long-term improvement rather than short-term disruption.
Can individual investors practice shareholder engagement? Yes, individual shareholders can vote their proxies, file shareholder resolutions, and attend annual meetings. Investing through a fund like NIAGX means your engagement is handled by a team that does this work strategically and full time, on behalf of all investors in the fund.
What is a proxy vote? A proxy vote is a vote cast on behalf of a shareholder at a company's annual meeting. Because most shareholders cannot attend in person, investors often authorize their fund manager or broker to vote on their behalf. Most investors never review how their proxies are voted. We are seeking to make proxy voting more well known and better understood.
What is a shareholder resolution? A shareholder resolution is a formal proposal submitted by one or more shareholders to the SEC to be voted on at a company's annual meeting. Resolutions can address a wide range of issues from executive pay to climate risk to board diversity. A resolution that receives significant support, (anywhere from 15-50% or more of the vote), sends a powerful signal to management. A resolution does not need to receive more than 50% of the vote to send strong signals to management.
Nia Impact Capital is a women-led investment firm and one of the few fund managers in the country to combine a sustainability, gender and equity lens with active ownership practice.
Important Disclosures
Nia Impact Solutions Fund is distributed by Ultimus Fund Distributor, LLC (Member FINRA) Nia Impact Capital and Ultimus Fund Distributors, LLC are separate and unaffiliated.
We highly encourage investors to carefully consider the investment objectives, risks, and charges and expenses of the fund before investing. The prospectus contains this and other information about the fund, and we strongly recommend reading carefully before investing. Investors may obtain a copy of the prospectus by calling (833) 571-2833.
ADDITIONAL IMPORTANT INFORMATION:
As with any mutual fund investment, there is a risk that you could lose money by investing in the Fund. The success of the Fund’s investment strategy depends largely upon the Adviser’s skill in selecting securities for purchase and sale by the Fund and there is no assurance that the Fund will achieve its investment objective.
The Fund’s incorporation of ESG considerations in its investment process may cause it to make different investments than funds that have a similar investment universe and/or investment style and that do not incorporate such considerations in their strategy or investment processes.
Under certain economic conditions, this could cause the Fund’s investment performance to be worse or better than similar funds that do not incorporate such considerations in their investment strategies or processes. In applying ESG criteria to its investment decisions, the Fund may forgo higher-yielding investments that it would invest in absent the application of its ESG investing criteria.