Research & Engagement in Action

By Heidi Soumerai and Marcela Pinilla
From the Summer 2012 Edition of Values


June marks the end of company annual meeting season, where investors may bring environmental, social, and governance (ESG) concerns to a shareholder vote via the proxy resolution process. This year Walden led or co-led 18 resolutions and co-filed five more on a variety of topics, emphasizing political expenditure and lobbying transparency in this presidential election year. Of the 18 resolutions, seven were withdrawn after successful negotiations and three were omitted by the Securities and Exchange Commission (SEC) or withdrawn due to a filing technicality (see Summary of Walden’s 2012 Shareholder Resolutions).

Behind the scenes, Walden also continues to make progress fostering sustainable business practices through company dialogues and public policy initiatives.

Workplace Equality

With a focus on small cap companies, our efforts to encourage more inclusive and transparent nondiscrimination policies have been particularly successful. In recent months, conversations with Bank of Hawaii, Independent Bank Corp., and OYO Geospace have resulted in additional website disclosure or refinements to policies explicitly prohibiting discrimination based on sexual orientation or gender identity.

Walden is pleased to be a leading investor voice in a new partnership of women’s organizations, corporate governance experts, institutional investors, and CEOs called The 30% Coalition. Formed to help catalyze an expedited effort by companies to bring gender diversity to their corporate boards, the group’s goal is to have 30 percent of board seats held by multicultural women by the end of 2015. This is undoubtedly ambitious and would require the number of women directors to double (or approximately one additional woman per corporate board). The 30% Coalition anticipates launching its first outreach effort to companies without women directors in the coming months.

Environmental Concerns

For the second year, Walden is co-leading a collaboration of Principles for Responsible Investment and CDP Water Disclosure. Investors representing more than $2 trillion in assets are encouraging a response from companies with high exposure to water related risks that did not complete the 2011 CDP Water questionnaire on water management and conservation policies, practices, and goals. The initial response rate among companies was impressive, with 50 percent of 302 companies completing the survey. Walden is leading follow-up discussions with McDonald’s and Nike.

Fluctuating oil prices and rising demand for unconventional sources of fossil fuels have spurred investor action on a range of public policy and company engagement initiatives supporting more sustainable development of fossil fuels, alternative energy production, and energy efficiency. Led by Ceres, Walden joined 37 investors, representing $500 billion in assets, in asking 21 of the largest U.S. petroleum producers to assess the financial and environmental risks associated with flaring of natural gas that accompanies production from shale formations. We provided input and endorsed a public report, led by the Investor Environmental Health Network and Interfaith Center on Corporate Responsibility, that details best practices and key performance indicators associated with hydraulic fracturing of shale gas. As part of the Investor Network on Climate Risk, Walden advocated an extension of the Production Tax Credit for wind energy which would otherwise expire at year-end. We supported the Obama administration’s proposal to dramatically increase fuel efficiency standards for vehicles between 2017 and 2025 to an average of 54.5 miles per gallon, estimated to reduce greenhouse gases and fuel consumption by 50 percent and 40 percent, respectively. Most recently, Walden supported the Environmental Protection Agency’s proposed Carbon Pollution Standard for New Power Plants as a means to help spur innovation and investment in low and no-carbon technologies as well as new energy infrastructure and energy efficiency.

Political Spending and Lobbying

Since the 2010 U.S. Supreme Court’s Citizens United decision opened the door to unlimited corporate spending in politics, Walden has been a leading investor advocate for more transparency in corporate spending and lobbying activities. Expenditures made through third parties such as trade organizations and think tanks are a critical part of our discussions with dozens of companies (see “Billboard-Sized Risk”), particularly when their corporate policies contradict a key emphasis of the organizations they support.

Hence, we were pleased to see technology giant Microsoft speak out recently against efforts by the U.S. Chamber of Commerce to undermine Dodd-Frank’s conflict minerals legislation requiring certain companies to examine their supply chains for minerals sourced from war-torn Democratic Republic of the Congo:

Given our membership in the U.S. Chamber of Commerce, some stakeholders have asked our position on the Chamber’s announcement that it would consider a legal challenge to the SEC rules on conflict minerals…Microsoft has expressed support for the SEC’s prompt action on this rulemaking and we do not support or fund the Chamber’s lobbying against the proposed rules.

Dan Bross, Sr. Director, Corporate Citizenship, Microsoft

We hope more companies will follow Microsoft’s example.