The AFL-CIO's attempt to enlist more Taft-Hartley plans in corporate proxy voting activity is a good move. Proxy rights are valuable assets. No pension fund, or its investment managers should neglect them. But the AFL-CIO should resist trying, as a Pensions & Investments story noted, "to whip Taft-Harley plans into a more solid voting bloc."
There is no doubt such a bloc could exert a powerful influence at shareholder meetings.
But participants and sponsors of Taft-Hartley funds aren't monolithic in their viewpoints, whether in politics or proxies. Many proxy issues are complex. Many require tradeoffs.
The AFL-CIO effort will lead many pension funds to examine their proxy voting. In most instances, their money managers do the voting. The funds should make sure managers make independent decisions on how to vote.
But Taft-Hartley funds and the AFL-CIO shouldn't lose sight of the ultimate objective of the pension fund: to earn the highest return for the appropriate level of risk. Proxy voting should advance that objective, not some other agenda that might be addressed better through other means.
