Originally Published on Linkedin.com.By Roger W. Ferguson, President and CEO at TIAA

As proxy season approaches, it’s good to remember the words that William Greenough, then TIAA’s CEO, wrote in a 1971 New York Times editorial. Greenough was pushing back against the notion that corporations’ chief “obligation to society” was to make a profit for shareholders. He was an early advocate for the idea that companies should look beyond just profits in making business decisions. He urged institutional investors – the insurance companies, pension funds, asset managers and others with a long-term investing horizon – to use their clout to nudge corporations toward socially responsible behavior. Nearly 50 years later, his words continue to resonate.

Today’s institutional investors are increasingly taking a broader view of corporate social responsibility. Environmental, Social and Governance (ESG) issues have become an important part of their engagement with companies, and they are increasingly monitoring company behavior and voting their proxies on issues like climate change, board diversity, pay equity, and corporate culture. Companies that ignore the ESG issues most relevant to their operations are seen as exposing themselves to significant economic, legal and reputational risk.

While corporate governance issues may have received most of the attention in years past, there’s a growing realization that social and environmental issues are material investment considerations. Over the last several proxy seasons, we’ve seen a notable shift in the types of shareholder proposals being filed, with environmental and social proposals overshadowing governance and compensation-related proposals. Climate change has been a particular focus. In 2018 alone, shareholder proposals related to climate change received majority support more times than in the previous five years combined.

As Greenough’s editorial underscores, TIAA has long been a leader in responsible investing. For decades, we have engaged with companies on ESG issues and worked to hold boards and management accountable for decisions that have a broad social impact. We have always been driven by our commitment to clients, who entrust us with their savings and expect us to be the best possible stewards of their investments. We encourage responsible business practices in the companies in which we invest because we believe such practices lower risk, improve financial performance, and drive positive social and environmental outcomes.

TIAA recently released an updated version of our Policy Statement on Responsible Investing, which outlines our expectations for companies’ corporate governance and social/environmental policies and practices. We believe that companies in which we invest need to carefully consider the strategic impact of environmental and social responsibility on long-term shareholder value. It’s imperative that they use a broad stakeholder lens when analyzing the key decisions they face in sustaining their competitiveness, relevance, and growth potential. In our view, companies that are diligent in their consideration of ESG issues are more competitive, take better advantage of operational efficiencies, and are more adept at spurring product innovation and reducing reputational risk. When businesses fail to proactively address ESG issues, they’re not the only ones who can be negatively affected; investor returns and the market as a whole can suffer too.

It’s been wonderful to see the growing interest in responsible investing, a trend that will only strengthen over time. Institutional investors continue to have a critical role to play in advancing this movement. They must keep urging companies to address ESG issues. They must continue advocating for companies to take a broader view of their social and environmental impact – and make business decisions accordingly. By doing so, institutional investors can help companies meet their full range of obligations – to their shareholders and to society at large. That was a bold and important idea when Bill Greenough voiced it in 1971. It’s an even more important idea today.