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General: Clear Momentum for Social Investors and Corporate Responsibility
SOCIAL TOPICS (Archive):
General
Clear Momentum for Social Investors and Corporate Responsibility
Published, Summer 2004
In the 2004 proxy season we see some amazing developments, prompted by
investors active in shareholder advocacy, as well as leadership by companies on
corporate social responsibility and governance. These actions contribute to a
positive difference for stockholders, employees, the environment, and society at
large.
- The pension boards of the State of Vermont passed a carefully crafted set
of Proxy Voting Guidelines covering both governance and social/environmental
issues, highlighting the importance with which they view their responsibility
to vote proxies conscientiously. This is a valuable model for other pension
funds (available at
www.tre.state.vt.us).
- Under the leadership of CERES, a coalition of investors and environmental
organizations working with companies to promote best practices in
environmental performance and transparency, investors representing over $1
trillion in assets met at the United Nations in November to discuss the
financial impact of climate change on their portfolios. The outcome was an
$800 billion strong coalition of union, state, and city pension funds working
together to press companies on climate change. At about the same time, the
State of Maine pension funds filed its first shareholder resolution, with
ExxonMobil, on climate change.
- In April, California’s CALPERS, the largest U.S. pension plan with $168
billion in investments, announced a proactive program on the environment and
climate change, becoming a hugely influential leader on these issues.
- On a parallel track but with a global perspective, the London based Carbon
Disclosure Project gathered support from institutional investors representing
$10 trillion in assets to ask the 500 largest companies in the world to answer
questions on greenhouse gas emissions. Seventy-one percent of them provided
information¾ that fact in itself a testament that
companies are increasingly responsive. Yet surprisingly, some continued to
ignore this appeal, even in instances when Carbon Disclosure Project
signatories represented over ten percent of their shares (see
www.cdproject.net).
- Continued convergence of corporate governance and social issues was
evidenced by strong YES votes for many shareholder resolutions, in part the
result of a strengthening business case for good governance and environmental
performance. Numerous resolutions won overwhelming majority votes, for
example, on annual election of directors and stock option expensing. On
environmental issues, record breaking votes poured in at Apache (38 percent),
Anadarko (35 percent) and others.
- Coca-Cola Company’s board asked its investors to vote in favor of a
shareholder resolution requesting a report on the economic impacts of the
HIV/AIDS pandemic, resulting in more than a 95 percent vote. Similarly, Tyco
supported a resolution asking for an environmental report that passed
overwhelmingly. By supporting these resolutions, the two companies acknowledge
that these proposals were consistent with their long-term best interests and
shareholder value.
- The Gap, in an extraordinary example of company transparency, released its
Social Responsibility Report (see Transparency, Not Invisible on page
6). Advised by a working group of shareholder advocates, The Gap released an
honest assessment of the challenges it faces in dealing with labor conditions
in its supply chain. With descriptions of operations from China to Nicaragua,
Lesotho to Cambodia, the report stands as a stark reminder of the hard work
ahead for companies that strive for their products to be made in safe and
responsibly run factories.
- Finally, we observe remarkable progress toward more inclusive
nondiscrimination policies. Now, 98 of the Fortune 100 companies
explicitly prohibit discrimination based on sexual orientation (with
ExxonMobil and Alcoa being the outliers).
—Tim Smith
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