Louis is a Justmeans staff writer on the topic of Finance & Investing where he covers trends in the socially responsible investment space. He is co-founder and principal of Washington Square Capital Management, a NYC-based independent investment advisory firm with a focus on socially responsible investing. His clients include individual investors, businesses and institutions. Prior to fou...
Climate Change Shareholder Resolution Roundup
Earlier this week, Ceres released a report detailing the climate and energy related shareholder resolutions due to be filed by SRI investors during the 2011 proxy season. The number of resolutions filed against electric power and energy companies is 66, which is a record and a 50 percent increase over the 44 resolutions filed in 2010. Ceres, a national network of investors, environmental organizations and other public interest groups working with companies to address sustainability challenges, has been tracking sustainable shareholder resolutions since its inception in 1989.
The bulk of the resolutions target coal, oil & gas and utility companies. Real estate, financial services, healthcare, consumer staples, construction, and food processing companies are also targeted, although to a lesser degree. Popular topics for resolutions this year include: linking sustainability metrics to executive compensation, adopting quantitative goals for reducing total green house gas emissions from products and operations, and reporting on the environmental impact of hydraulic fracturing. A complete list of the resolutions can be found here.
Leading the way with a combined 16 resolutions where they are listed as the lead filers are the New York City and New York State Comptroller's Offices. This number represents over 20% of the total resolutions filed.
In terms of socially responsible investment companies, the following firms are listed:
Calvert - lead filer on four resolutions with Dr. Pepper Snapple, Yum Brands, Energen Corp and Amazon.com
Domini - lead filer on two resolutions with RR Donnelly and Southwestern Energy
Green Century - lead filer on four resolutions with Southern Company, First Energy, ExxonMobil and Occidental Petroleum
Miller/Howard - lead filer on four resolutions with PPL Corp, SCANA Corp, El Paso and Energen.
Newground - lead filer on three resolutions with Berkshire Hathaway, Nordstrom and Time Warner.
Trillium - lead filer on three resolutions with Dominion, Royal Bank of Canada and Anadarko Petroleum.
Walden - lead filer on six resolutions with CR Bard, Emerson Electric, St. Jude Medical, Varian Medical Systems and Layne Christensen.
For Socially Responsible Investment managers who are engaged in activist investing (or, to a lesser degree, best-in-class investing), filing shareholder resolutions is one of the most effective ways to influence corporate business practices.
Shareholder resolutions are proposals submitted by a stockholder or a group of stockholders to be voted on at the company's annual shareholder meeting. They are regulated by the Securities and Exchange Commission and can be filed by any shareowner holding a minimum of $2,000 in stock or 1% of the outstanding shares (whichever is less) for at least one year prior to a company's annual submission deadline. They are most effective when filed by a large shareholder or a coalition of smaller shareholders. And while the resolutions may not pass when put to a vote, if they garner enough support, they can often pressure management to accommodate the resolution's request, or at the very least, reach a compromise that will appeal to both sides. Sometimes resolutions will be "successfully withdrawn" when management chooses to address the issue before allowing the resolution to come to a vote. This preemptive move is often done when management doesn't want too much attention drawn to the issue.
As a mutual fund shareholder, the SRI investor relinquishes his or her voting rights to fund management, which will vote on the investor's behalf. Therefore, it's very important, particularly if you are interested in changing corporate policy, to know whether or not your mutual fund is engaging companies on issues most important to you. Most SRI mutual funds will have a section of their website devoted to shareholder advocacy listing all the shareholder resolutions they have participated in. By checking in periodically, you can get a sense of just how active the fund has been when it comes to advocating an agenda of corporate social responsibility.
Image Credit: Samantha Celera