Today, corporations make most decisions of consequence in our society. As the owner or shareholder of a stock or shares of a mutual fund, you are part owner of a corporation. That means you have both rights and responsibilities. You have the right to sit with management, be an insider and work for change through constructive activism—in short, to enjoin the good and forbid wrongdoing. We sat down with CCO Manal Fouz to learn more about how Azzad Asset Management pushes for positive change at the corporate level.

Can you give us a brief explanation of shareholder activism and how it works at Azzad?

Shareholder advocacy is essential for any socially responsible investment firm. At Azzad, it is enshrined in how we do business. It is the fifth tenet of our Seven Tenets of Halal Investing. And it helps us further our company’s goal of making investing ethical.

An important part of shareholder activism is voting on shareholder resolutions through proxy ballots. Resolutions are voted on during a company’s annual meeting and often deal with issues of importance to values-conscious investors such as labor or human rights. Shareholders do not need to be present to vote.

Unmarked proxy ballots are voted in accordance with management’s recommendations, which often opposed to shareholder resolutions on social responsibility. So, it’s critical for investors to vote their proxies. Azzad Asset Management votes proxies on behalf of clients and shareholders in accordance with our halal, ethical investment philosophy.

Do you have an example of a proxy you’ve voted recently?

Sure, we’re in the middle of proxy season, so there are plenty to choose from. One resolution we recently voted for on behalf of clients in the Azzad Ethical Wrap Program involved a request for the specialty glass-maker Corning, Inc. to abide by the Holy Land Principles. They outline steps for international corporations to implement equal and fair employment practices for Palestinian workers. Another shareholder resolution we voted on for Azzad Ethical Fund shareholders asked the apparel company Urban Outfitters, Inc. to collect and report information about human rights violations in its supplier chain.

Can anyone submit a shareholder resolution for a vote?

Any shareholder owning more than $2,000 worth of stock for a minimum of one year is eligible to propose a resolution. Resolutions must follow a standard SEC format and be no more than 500 words in length. At Azzad we not only vote on existing resolutions; as a member of the Interfaith Center on Corporate Responsibility, we also work with other faith groups on proposing resolutions for a vote.

What if a vote fails to get enough votes to pass? Can an activist shareholder resubmit?

The first year a resolution is voted on, it must receive at least a 3 percent favorable vote in order for it to be considered the following year. The second year, the resolution must receive a 6 percent vote in order to be passed along to the third year where a 10 percent favorable vote is needed.

How else can someone get involved in shareholder activism?

Of course, proxy voting is just one example of shareholder activism. Another common type is divestment. Divestment is the sale of stock in order to relinquish affiliation with an organization. Divestment was a popular method used by investors regarding companies who continued to do business in South Africa and Burma. It is currently being used to force changes from the fossil fuel industry in the interest of countering climate change. Although it sends a strong message to management, divestment is not always the most effective method of promoting change within an organization. This is because other investors who are not concerned with corporate social responsibility issues can maintain investment in the company and passively allow injustices to continue.

For more information on proxy voting, see Azzad’s Proxy Voting Guidelines document.