With big business under increasing scrutiny and pressure from forces acting to make them more accountable, it must seem to many executives as though they are being asked to take all of their clothes off in public. Some are doing so willingly, and it’s often not a very pretty sight. Nevertheless, the evolution towards greater corporate transparency continues to gain momentum.

This process has accelerated in the U.S., where the Securities and Exchange Commission recently ruled that mutual fund companies must now disclose how they vote the proxies they hold on behalf of tens of millions of shareholders. This comes as a result of some heavyweight U.S. pension funds flexing their financial muscles in order to counter corporate sleaze.

On the other hand, the Investment Funds Institute of Canada argues that this sort of disclosure would not be helpful to investors. “We do not believe that a portfolio manager’s record of proxy voting is widely desired by Canadian mutual fund investors or is meaningful in assisting them to make buy, hold or sell decisions or is otherwise conducive to greater investor protection.”

IFIC also expresses concern about the potential politicization of the voting process should proxy disclosure become mandatory. “We think that the disclosure of this information is being sought by special interest groups that wish to use the proxy voting practices of fund managers and the Canadian investment funds industry generally as a vehicle to further their respective social and political agendas,” says IFIC. Hooey says me. Is environmental protection a special interest? Do they see no effect on share performance if a company exhausts the environment upon which they likely depend, or undermine the social fabric of the communities in which they operate?

The truth is however, that the vast majority of investors choose not to exercise their rights as common shareholders to vote at AGMs, or have given over those rights to mutual fund companies who, in Canada at least, have neither the obligation nor will to disclose how they vote this proxy on behalf of their shareholders. Fortunately, exceptions to the status quo are becoming more common.

In Canada, the movement towards taking corporations to task at their AGMs has been advanced by the management at Ethical Funds in Vancouver. Ethical Funds is one of the rare money managers in this country that has embraced the concept of reporting on their proxy-voting intentions, and disclosing the results of this voting to it’s shareholders. In Canada, they have been followed by Acuity, Meritas the Ontario Teachers Pension Fund and the Ontario Municipal Employees Retirement System.

Financial Sector Lending Policies Ethical Funds has been leading a team of US investors and environmental groups in establishing a dialogue with a major financial backer of the controversial Three Gorges Dam project in China. This engagement has seen the backer respond by creating an environmental and human rights policy that addresses the terms for future development work on this project. Ethical Funds is also working with Canadian banks to have them incorporate environmental and human rights concerns into their lending policies.