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Should Shareholder Resolutions or ‘Shared Value’ Drive Sustainability Efforts?

SustainableBusiness.com reported recently that a record 109 shareholder resolutions were filed during this year’s proxy season to urge U.S. and Canadian companies to address climate change, fossil fuel usage and related sustainability issues. An additional 48 resolutions were withdrawn after the companies made voluntary commitments to address these issues, according to the report on research conducted by the Interfaith Center on Corporate Responsibility.

The most common sustainability-related topics were natural gas fracking, fossil fuel usage for electric power, water scarcity, oil refinery safety, and sustainability reporting (including climate or greenhouse gas reduction strategies).

Among the examples cited in the report was Walden Asset Management re-filing a resolution with Layne Christensen to push the company to issue a sustainability report. Last year’s resolution on the same topic produced a 60.3 percent vote in favor. This year, Layne Christensen of Mission Woods, Kansas, which provides drilling services for water infrastructure, mineral exploitation and energy, recommended a “FOR” vote on Walden’s resolution, which led to a 92.8 percent vote in favor. The company also published its first sustainability report.

Many so-called experts believe the success of such resolutions, and companies’ willingness to at least entertain the possibility of additional sustainability measures, will embolden the activists to be ever more aggressive. But I’m not convinced. I actually think there is an opportunity here for many well-intentioned, communications-savvy companies to get ahead of the activists, who certainly have other, potentially more contentious issues that they are pursuing through shareholder resolutions.

My sense is that even many mid-sized companies are now acknowledging the potential “shared value” (see this Harvard Business Review article for a discussion of this concept) in proactively addressing sustainability issues at the Board and senior management level without being under the high-profile pressure of a pending shareholder resolution or other “hammer.” Implementation will be smoother and the results will be better.

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Shareholder Activists Push for Genocide Vote

At tomorrow’s annual meeting, JPMorgan Chase shareholders are being asked to vote on a genocide-free investing proposal, put forth by the Massachusetts-based nonprofit Investors Against Genocide (IAG).

The group is using the proposal in the proxy to call attention to JPMorgan Chase’s investment in PetroChina, a company that IAG claims provides Sudan’s government with revenue that has been helping fund genocide in Darfur. IAG claims that JPMorgan Chase owns a billion-dollar stake in PetroChina. The proposal states, “Reasonable people may disagree about what constitutes socially responsible investing, but few people want their savings connected to genocide.”

JPMorgan Chase said the firm’s existing policies and procedures, including its Human Rights Statement, appropriately address these issues. JPMorgan Chase asked the Securities and Exchange Commission to allow the firm to exclude the genocide-free investing proposal from the proxy ballot, but the SEC denied the request.

IAG apparently has no delusions about winning the vote, noting that its similar proposals submitted in previous years to a variety of mutual fund companies have earned as much as 31 percent of the votes. But they’re going ahead nonetheless, and the long-term strategy seems to be to force companies to act, even if the vast majority of shareholders do not support the specifics of the proposals.

And IAG isn’t stopping with investors. IAG’s communications campaign also includes Facebook ads asking JPMorgan Chase credit card and banking customers, “Genocide in your wallet?” The ads link to an online petition which generates an email message to JPMorgan Chase’s CEO urging him to avoid investments in companies tied to genocide.

Shareholder activists are already mobilized. What might consumers and consumer activists do?

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