Green Issues Play Pivotal Role in New Investors' Guide

SAN FRANCISCO, CA — Shareholder proposals related to social and environmental issues have risen dramatically over the last decade, ranging from asking companies to adopt quantitative climate goals to requesting disclosure on water scarcity risks.

Since 2000, the average vote for social proposals has more than doubled for topics as varied as anti-discrimination and political donations, leading more and more companies to engage their stakeholders in dialogue around these issues.

Climate change and sustainability are among the top issues facing public companies during the spring proxy season, according to As You Sow, a San Francisco-based NGO that recently published its annual guide to help foundations wade through hundreds of social shareholder proposals on the spring proxy agenda. The analysis and proxy vote calendar, however, would be useful for any business or organization with an interest in socially responsible investing.

"Proxy Preview 2010: Helping Foundation Align Investment and Mission" breaks down this year's proxy votes by broad category before drilling down by topic. While climate change themes dominated the environment category, investors were also troubled by a slew of other environmental issues, including pollution from concentrated animal feed operations, the impacts from toxic pollution on communities, hydraulic fracturing in natural gas drilling, pesticide use, recycling, and nuclear waste reduction. Overall, the hottest issues going into the 2010 proxy season include executive compensation -- not surprising considering the fallout from the financial crisis -- political donations, sexual orientation non-discrimination and climate change. 

These hot topics follow a notable year that saw several developments related to disclosure and shareholder rights, such as the U.S. Securities and Exchange Commission's new requirement that public companies include climate change risk and opportunities in financial filings and a ruling that shareholder proposals can include inquiries about financial risks associated with environmental and social issues.

In 2009, the top three social proposal votes were: 54.2 percent vote in favor of D.R. Horton adopting a sexual orientation anti-bias policy, a 51.2 percent vote in favor of IDACORP setting greenhouse gas emissions reduction goals, and a 45.6 percent vote for Massey Energy Co. to report on and reduce its greenhouse gas emissions.

Major players within the SRI arena also include labor unions, NGOs and pension funds. U.S. foundations with endowments greater than $550 billion often make significant contributions to grants, yet they rarely wield the full force of their financial muscle to align their investments and mission, according to As You Sow, which also published an earlier companion report explaining foundations' fiduciary responsibility around proxy voting.

"Because of the market upheaval and reduction in funds available for traditional grantmaking, an increasing number of foundations are examining ways to utilize their endowments to support their missions," Michael Passoff, senior program director of As You Sow's corporate social responsibility program and author of the Preview, said in a statement. "Most foundations only pay attention to the 5 percent of their endowments that is granted out, but there is more potential for positive impact in the 95 percent that is invested. Proxy voting is a basic first step in aligning investments and mission."

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