Previewing the 2013 Proxy Season's Environmental and Social Resolutions
In the 2013 proxy season, shareholder advocates for environmental and social changes at companies want to see hard numberswhether on a corporations lobbying spend or its carbon footprintaccording to the new Proxy Preview 2013 report.
The dominant theme is: disclose, says co-author Heidi Welsh, executive director of the Sustainable Investments Institute, which is based outside of Washington, D.C.
The annual compendium published by As You Sow counted 365 resolutions filed by investors on social and environmental issues as of mid-February; 284 of those resolutions are pending, meaning they appear on a companys proxy statement and are set to go to a vote. (At the same time last year, shareholders had filed 345 such resolutions, and 279 of them were pending.)
Companies saw a surge in lobbying resolutions in 2012, and that has continued into 2013. The biggest set of resolutions by fara total of 125 or one-third of all the filingsconcerns the extent of corporate influence on the political system, both before and after elections, the report finds.
Included in that tally are 51 resolutions on lobbying coordinated by the American Federation of State, County, and Municipal Employees and Walden Asset Managementup from 40 such resolutions in 2012. Approximately 50 proposals employ the Center for Political Accountability model on the corporate governance of political spending.
Additionally, a new feature of the 2013 proxy season is a resolution from NorthStar Asset Management about making a companys values and political spending congruent, filed at seven companies, according to the report.
Welsh says the main focus for shareholder advocates in this space is corporate giving to so-called dark money sourcesorganizations like 501(c)(4) nonprofits and trade associations that spend on politics but dont have to disclose their donors.
Shareholders want companies to provide information on contributions to third parties who spend the money on campaigns or lobbying, she adds.
Shareholders have also turned to another avenue to compel disclosure of corporate political spending: lawsuits.
Earlier this year, the New York State Common Retirement Fund sued Qualcomm in the Delaware Court of Chancery, arguing that investors have the right to see a companys books and records about direct and indirect political spending, the report says.
Given that a majority of S&P 500 companies are incorporated in Delaware, the stakes are pretty high in terms of a test case, Welsh notes.
Last month, Qualcomm agreed to a new disclosure policy, and NYSCRF dropped the suit. Welsh wonders if the case might open the door for similar legal action: Is this a new legal frontier for advocates of corporate disclosure who are coming at it from social and environmental angles?
Altogether, proposals on climate change, sustainable governance/reporting, and other environmental issues accounted for approximately 40 percent of the resolutions documented in the report.
Investors are pushing for quantifiable metrics with multiple years of trends, Welsh says. In other words, she explains, shareholders want companies to disclose how theyre impacting the environment and to use common measures to do so.
Shareholder advocates also want to see greater accountability on sustainability issues in a companys entire supply chain. Theoretically, the goal from the investors is to make sure the standards improve throughout the supply chain, says Welsh.
Socially responsible investors are the primary filers of this years resolutions, with 104 proposals, or 29 percent of the filings. Pension funds follow with 26 percent of the filings, and faith-based organizations filed 18 percent.
Students at more than 230 college campuses in the U.S. and Canada have also been active, urging divestiture from companies that produce fossil fuels. According to Lauren Ressler, an organizer with the Responsible Endowments Coalition whos quoted in the report, students have begun calling on their administrators to remove 200 of the worst fossil fuel companies from the investment portfolios of their university endowmentsand to reinvest that money responsibly."
While divestiture from an entire economic sector is a complicated agenda, says Welsh, she adds that student activists are an important bellwether. Student activism has been the engine of substantial change in national politics. So I dont think it can be written off.