Investors achieved notable victories during this year’s shareholder proxy season, with a near-record 110 shareholder resolutions filed with 94 U.S. companies on corporate sustainability challenges such as climate change, supply chain issues and water-related risks, according to Ceres.
Shareholders achieved numerous successes within the energy sector, as described in a previous press release issued two weeks ago. Among resolutions filed with other major U.S. manufacturers, consumer brands and service providers, many investors requested board oversight of corporate sustainability issues and comprehensive disclosure via sustainability reports. Overall, investors withdrew more than 40 of the 110 resolutions after the companies responded affirmatively to their specific requests.
Highlights of the 2013 proxy season include:
- Dunkin Brands, Kroger and Starbucks agreed to source 100 percent certified sustainable palm oil to reduce greenhouse gas (GHG) emissions and protect workers, rainforests and species.
- Home improvement giant Lowe’s, oil and gas companies Denbury Resources and Range Resources, and UPS committed to board oversight of environmental and social matters.
- Bed Bath & Beyond, Best Buy, EMC, Gap, Kohl's, Nike, Texas Instruments, Target and Xerox agreed to encourage or require sustainability reporting by their suppliers.
- Coach Inc, Ralph Lauren, Starwood Hotels and Resorts and nine other companies agreed to issue comprehensive sustainability reports.
- Stryker, a large medical equipment manufacturer, agreed to set GHG reduction goals.
“Investors are ever more mindful of escalating environmental and social risks and want answers on how companies are dealing with them,” said Mindy S. Lubber, president of Ceres, which helped coordinate the shareholder filings. “This year’s proxy results showed strong progress on wide-ranging sustainability challenges such as water availability risks, supply chain vulnerabilities and greenhouse gas emissions.”
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Filers of the resolutions include some of the nation’s largest public pension funds, such as the California State Teachers Retirement System (CalSTRS) and the New York State and New York City Comptrollers’ Offices; socially responsible investors such as Calvert Investments, Trillium Asset Management and Walden Asset Management; and religious, labor and other institutional investors, who collectively manage more than $500 billion in assets.
A recent analysis by Ernst & Young shows that environmental and social shareholder proposals account for about 40 percent of all resolutions filed with U.S. companies. Just three years ago, environmental and social resolutions made up only 30 percent of proposals.
During the 2013 season, Ceres-tracked resolutions achieved results in several key areas:
Responsible Sourcing: Palm Oil and GHGs
In 2013, investors continued to focus attention on a rapidly growing source of greenhouse gas emissions — palm oil — that is used in about 50 percent of all packaged food products in supermarkets today. Oil palm trees are cultivated primarily on plantations in Indonesia and Malaysia, as well as other countries with tropical forests, by clearcutting and burning carbon-storing rainforest and peat lands. According to the WWF, palm oil accounted for 65 percent of produced and traded vegetable oils globally by 2006. As this statistic continues to rise, palm oil cultivation results in significant emissions of greenhouse gases and endangers rare species such as orangutans.
Sustainable Supply Chains
Against the backdrop of a disastrous fire and building collapse in Bangladesh, which claimed the lives of more than 1,200 workers, New York City Comptroller John C. Liu’s Office moved The Gap, Nike and Target to commit to make their supply chain more sustainable by working with key suppliers to issue sustainability reports, including worker safety issues. Technology giants EMC and Texas Instruments made similar commitments in response to resolutions by Liu's office. Kohl's also made a commitment on this topic to the Laborer's International Union of North America (LIUNA), as did Bed Bath & Beyond, Best Buy and Xerox in response to resolutions filed by the New York State Comptroller's Office.
Corporate Sustainability Reporting
Companies in numerous sectors agreed to issue comprehensive sustainability reports in response to resolutions tracked by Ceres (lead filers are listed in parenthesis). In addition to company-wide reviews of policies, governance structures, and goals related to ESG performance, several of these resolutions request information on how companies are mitigating the risks of water scarcity and/or water pollution.
Greenhouse Gas Reduction Goals
Walden withdrew its shareholder resolution from Stryker after the company agreed to gather data on its greenhouse gas emissions and begin setting goals to reduce them.
“We believe it is critical for all companies to be able to measure and manage their greenhouse gas emissions by setting specific reduction goals and a clear plan to meet them,” said Timothy Smith, Senior Vice President and Director of Environmental Social and Governance Shareowner Engagement at Walden Asset Management.