The Ethical Funds Co. has issued its 2006 proxy voting guidelines as further evidence of its industry-leading position on the issues of transparency, accountability and responsible reporting, and at a time when industry standards are moving towards mandatory disclosure for proxy voting.

Proxy voting allows shareholders to influence corporate policy on a wide range of environmental, social and corporate governance issues. Ethical Funds was the first mutual fund manager in Canada to disclose its proxy voting guidelines, beginning in 2000.

“An open and transparent disclosure process is the best course of action to ensure that mutual funds are voting in the best interests of investors,” said Bob Walker, vp, sustainability, Ethical Funds, in a release.

New regulations in both the United States and Canada support this view. Mutual fund proxy voting disclosure became mandatory in the U.S. last year, and Canada is to follow suit this year, according to guidelines issued by the Canadian Securities Association. This CSA ruling seeks, in part, to lessen any potential conflict between the interests of investors and fund managers.

“We are fully in support of the CSA ruling as all mutual fund companies should be required to be fully accountable,” said Walker. “The ruling will ensure transparency in how most mutual fund managers cast their proxy votes.”

Examination of last year’s mutual fund proxy voting guidelines in the US has revealed significant discrepancies between the values of investors and fund managers’ votes. A report published by Ceres shows that seven out of 10 American mutual fund investors want their mutual funds to support climate change shareholder proposals, but none of the largest U.S. mutual funds voted in favour of any of the 33 climate change shareholder proposals submitted in 2005.1

This year, Ethical Funds has made executive compensation one of the cornerstones of its proxy voting guidelines. According to a survey conducted by McKinsey & Co., nearly 90% of directors and 82% of investors in Canada believe that executive compensation should be directly tied to sustainable development.