Shareholders Standing Up: A Movement for the 21st Century
by Vicki Wolf
The voices of shareholders and investor coalitions grow louder and more effective every year. They demand corporate responsibility for the impact their business has on the environment. This year, investors have filed 95 resolutions regarding climate change. That’s more resolutions than any previous year and a 40 percent increase over last year. Becoming part of this movement, individual shareholders or investors have the right to vote, speak and influence corporations from the inside.
The 95 resolutions involve more than 80 U.S. and Canadian companies, including the largest coal companies, and electric power and oil producers. They include ExxonMobil, ConocoPhillips, Southern Company and others. The resolutions also address issues with homebuilders, big box retailers and financial institutions. Many of the resolutions call for these corporations to do a better job of disclosing and managing potential climate-related business impacts.
Another important development that enables investors and shareholders to have more power in calling for sustainable business practices is new guidelines on disclosure about climate risks issued in January by the U.S. Securities and Exchange Commission (SEC). This interpretive guidance clarifies what kind of disclosure publicly-traded companies need to provide to investors in terms of climate change-related material risks they face and opportunities that come with these challenges.
The SEC issued the guidance after receiving a formal request from leading investors for the commission to require that financial filings from corporations include full disclosure of wide-ranging climate-related business impacts. The request also asked for disclosure about strategies for addressing those impacts.
More than 50 investors representing $2.1 trillion in assets sent a letter applauding the SEC’s new guidance on climate change-related risks, including the California Public Employees' Retirement System (CalPERS), California State Teachers' Retirement System (CalSTRS), Connecticut State Treasurer, Florida Chief Financial Officer, Maryland State Treasurer and New York State Comptroller. "Corporate assessments of the regulatory, physical and litigation risks from climate change are critical in understanding the value of our investments," the investor letter concludes.
Ceres, a coalition of investors, environmental groups and other public interest groups, takes a leading role in bringing about guidance for more sustainable corporate practices. The organization spent 20 years looking at standards and best practices, and was instrumental in creating the Global Reporting Initiative (GRI) an international, multi-stakeholder process. The GRI is now in its third iteration, known as G3.
“G3 has been adopted by many companies disclosing sustainability,” says Natasha Scotnicki, Ceres Corporate Relations senior manager. “Among 250 of the largest companies, 70 percent are using the guidelines: the reporting is comparable. It’s an incredible movement. Companies evaluate themselves against other companies.”To assist corporations in becoming more sustainable, Ceres recently published a sustainability guide for corporations, which includes expectations and examples of best practices. "Sustainability performance is fundamental for business success in the 21st century,” says Mindy Lubber, president of Ceres. The 21st Century Corporation: The Ceres Roadmap for Sustainability (http://www.ceres.org) provides a practical guide for integrating sustainability into all aspects of business, including governance, business processes and the entire supply chains. It calls for significant performance improvements from companies by 2020. The report's 20 key expectations for companies include:
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make energy efficiency and renewable energy the foundation for company operations; |
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design and implement closed-loop systems so that air and wastewater emissions are eliminated and zero waste is produced; |
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require 75 percent of top tier suppliers to meet company sustainability performance standards; |
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dedicate 50 percent of R&D investment to developing sustainability solutions; |
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compensate and provide incentives for top executives and other employees to drive sustainability into the business. |
“If businesses deepen their efforts to solve social and environmental threats, it will position them to innovate and compete in the fast-changing, resource-constrained global economy,” Lubber says. “It is no longer enough for companies to have special projects or initiatives. Comprehensive sustainability strategies are expected.”
As shareholder campaigns gain strength, regulators, corporations and legislators pay more attention to the demand for corporate accountability and sustainability practices. “Each year we have been showing an increase of interest by numbers of resolutions,” says Rob Berridge, Ceres’ Investor Program manager. “ Policy makers see this and they take action as demonstrated with the SEC guidance this year. We also hope to get a change in the public policy area.”
Individual investors can build on the power investor coalitions have gained through resolutions and other group actions. “If more regular folks got engaged, we could make a bigger impact, says Laura Berry, Interfaith Center for Corporate Responsibility executive director. “Even if you are not a shareowner - if you work for a company, if you have a mortgage, if you are functioning in today’s economy, what happens at these governance meetings really does affect you.”
Shareholders will receive proxy ballots in the mail this spring. If you are a shareholder who usually just puts this information aside, this year look through the material and find the resolutions. You may be surprised to see that these are issues that you care about; your church, your municipal fund or the hospital where you get care may be sponsoring a resolution.
Attending a shareholder meeting also can be interesting and enlightening. With the ownership of one share or more, you have the right to attend. First hand, you can hear the leadership of the company you support with your investments talk about the past year’s performance and plans for the future. For each resolution, sponsors have a few minutes to speak about the issues of concern expressed in the resolution. And then the vote is taken.
Shareholders who invest directly in companies have access to the proxy voting process and meetings. But getting information and getting involved can be more difficult if you go through a broker or have a retirement account through your workplace. “There are so many barriers really for the individual investor to ensure their voice is heard,” says Michelle Chan, Friends of the Earth International Team senior policy analyst/deputy director. “Sometimes it’s the fact that the broker is the gatekeeper and doesn’t share information, or the 401k doesn’t have a socially responsible option.”
Chan says the best thing you can do in these situations is to talk to your broker or your employer about your investments and reclaim your power as an investor. As a shareholder and investor, you have the right to vote on resolutions. “Let’s say that you have your investments in a brokerage account, and you haven’t given your broker instructions on how you want to vote, then you can consider your vote wasted,” says Chan. “The broker is not only managing the ownership of your shares, they are managing your power.”
Your participation in steering corporations toward transparency, sane climate-risk policy and sustainable financial decisions for the 21st century can make a difference. Exercise your right as an investor or shareholder. It takes an hour or less to make a call to your broker, talk with your employer or cast your vote for the resolutions you support.
In recent years, new websites have been developed to make it easier for individuals to find out about the sustainability of the companies they invest in and their environmental, social and governance policies. For more information visit:
www.sustainableinvesting.net
www.moxyvote.com
www.shareowners.org
