How Shareholder Activism Moved the Needle on Sustainability in 2011

From fracking by companies such as Chevron, Exxon Mobil and Ultra Petroleum to greater use of recyclable cups by McDonald's and Starbucks, a host of CSR issues captured shareholders' attention and support this year, according to reports on the 2011 proxy season from As You Sow and Ceres.

A record number of shareholder resolutions calling for companies to be more responsible in handling corporate sustainability challenges were filed, according to Ceres' report.

And the response -- in terms of votes cast supporting the resolutions and decisions by some companies to engage on issues before votes were taken -- illustrates the growing impact of the strategy as well as a dawning realization by shareholders of the power they can wield, according to As You Sow CEO Andrew Behar.

Click on image to view full chart of As You Sow resolutions."The number of shareholders that actually realize they have power has been increasing and, overall, the number of votes have been increasing," Behar told GreenBiz.com.

On matters such as natural gas fracking, the votes on resolutions clearly show that "shareholders are looking at issues and saying, 'This is really risky and the company has to do something about it,' " Behar said.

"Extraordinary show of support," "exceptionally strong showing" and "outstanding" were among the phrases As You Sow used to describe responses to the 20 resolutions that the organization filed or co-filed on behalf of shareholders this year. Here is a breakdown of the results, which are detailed in a report released this week:

• 11 resolutions went to ballot. The votes cast in support of each resolution exceeded the thresholds set by the Securities Exchange Commission to qualify for refiling next proxy season. The chart, right, shows the vote results.

• Seven resolutions were withdrawn as a result of company commitments to take up the issues, meaning that firms agreed they should act and pledged to do so, if they hadn't already taken steps by the time the withdrawal occurred. Companies that don't make good on their promises can expect the filers of the resolutions to press their points until the matters are resolved.

• Two resolutions are scheduled for shareholder votes in fall.

The first two stats count as "wins" in the world of shareholder proposals. Ideally, resolutions would receive a majority vote. That seldom happens, so as a practical matter, the aim is to keep issues alive and highly visible to companies, their shareholders and their market until the concerns are resolved. Refiling resolutions and the interactions that occur until companies fulfill their promises are ways of maintaining that focus on issues.

"We're seeing more proactive work by some companies," Behar said of the commitments that prompted withdrawal of resolutions. "When we're dealing with companies with brands that have customer goodwill, those companies want to protect their brands and they're willing to come to the table to hear us out in good faith." he said, pointing out Yum's decision to use receipts without Bisphenol A and successes in earlier years involving General Electric's mercury labeling for CFLs and Best Buy's e-waste takeback program.

Traditional energy companies, however, "tend not to have the same sort of goodwill from the market and those folks are more difficult to move," Behar said. But this season, three energy companies responded to resolutions calling for reports on the financial risks the firms face by continuing to use coal to generate electricity. And the organization's research on risks posed by reliance on coal led to productive outcomes where votes were taken. "Even if the votes were low this year, it was a good starting place," said Behar.