Care to invest sustainably? Don't miss these guides
Every proxy season, sustainable shareowners are gifted with two publications designed to educate them on the most important environmental, social and corporate governance (ESG) impacting relationships between investors and corporations.
Last month, I profiled the Proxy Resolutions and Voting Guide, published by the Interfaith Center on Corporate Responsibility. At the time of publication, ICCR's mostly faith-based members had filed 257 resolutions, with those addressing climate change growing the most in number.
The second guide, published by As You Sow, was introduced via a webinar this week. Report authors Heidi Welsh of the Sustainable Investment Institute (Si2) and Michael Passoff of Proxy Impact elaborated further on the insights provided by them and others in the report.
The 2016 Proxy Preview differs from ICCR's report in two fairly significant ways. Firstly, ICCR limits its universe to resolutions filed by members, while As You Sow and its collaborators include information from a wider range of sources. But while the sheer number of resolutions may differ in the two reports, the focus of those resolutions is essentially identical.
“More proposals than ever before address climate change,” the Proxy Preview states; also, “the extent to which companies should report on their spending and involvement in the political arena — is continuing and may face increased national attention in this Presidential election year,” although in fact the number of resolutions addressing the issue has decreased.
This may well be, the Preview states, because of “the growing acceptance by companies that they need to adopt better oversight and disclosure.”
Secondly, ICCR's Guide is a compendium of expertly indexed information: companies targeted, filers and co-filers, and the full text of resolutions. As it does every year, the Guide provides an overview of the shareowner advocacy process as well. The Preview differs from ICCR's approach in that As You Sow and its collaborators include extensive commentaries by several luminaries of the sustainable investment community.
One such commentary — and a critically important one, in my opinion — does not address specific shareowner resolutions, but the rescinding by US Secretary of Labor Tom Perez of a 2008 Employee Retirement Income Security Act (ERISA) directive that strongly discouraged the consideration of ESG issues in investment decision making by private sector retirement plans.
In the commentary, Lisa Woll and Meg Voorhees of US SIF – The Forum for Sustainable and Responsible Investment wrote that investors subject to ERISA “would expose themselves to additional legal scrutiny if they either:
• took into account environmental, social, and governance factors in assessing investment risks and opportunities, or
• considered the collateral environmental or social benefit an investment option might offer beyond its financial returns to the plan.”
“The new Bulletin,” the authors continued, “nods to the growing consensus that fiduciary duty may compel fiduciaries to consider ESG factors in investment analysis and ownership practices.”
As for a sampling of the resolutions themselves, the influence of last fall's COP21 agreement in Paris is readily apparent in shareowner activity this proxy season. In the Preview, Shanna Cleveland of Ceres reported that 12 energy companies have been asked “to stress test their business and capital planning decisions against the 2 degree target so that investors can understand how the company is planning to survive the energy transition.”
Coupled with several resolutions addressing executive compensation in an era of stranded fossil fuel assets, the focus of shareowners emphasizes that decades of business as usual by the oil and gas industry no longer has any relevance.
As Kathy Mulvey of the Union of Concerned Scientists wrote, “Shareholders are calling on companies such as ExxonMobil, Chevron and ConocoPhillips to disclose how they are positioning their companies in a carbon-constrained world and to address issues relating to their public policy advocacy on climate and energy.”
On the subject of political disclosure, Bruce Freed and Marian Currinder of the Center for Political Accountability (CPA)noted that the 2015 proxy season was successful, with a record 16 resolutions withdrawn after agreement was reached with the corporations.
This year, CPA's investor partners “will engage about 40 companies in the 2016 proxy season, asking them to disclose and have their boards oversee political spending with corporate treasury funds,” they wrote. An additional 40 resolutions address corporate lobbying expenditures and payments to politically active trade associations.
I ended my profile of ICCR's Guide with the following observation: “This year's Guide, which is available as a free download on ICCR's website, includes the text of all resolutions filed by members, and is essential reading for investors and concerned citizens as well.”
As You Sow's Preview, and a recording of the webinar as well, are also available as free downloads. Together, the two reports make for illuminating reading, and not just for investors. Citizens concerned with the current confluence of major global crises will find much to learn in them as well.