There’s been tremendous activity this month in the area of Environmental Governance, ranging from major shareholder activism at corporations to actions at the government level. In addition, more companies are reporting voluntarily or being publicly rated and listed by third parties. All of these actions raise the sustainability bar for both public and private companies as influential stakeholders continue to ask for measurement and reporting of environmental performance.
Here are some questions Wallace Partners can help you answer:
- Are your stakeholders serious about your sustainability performance?
- Is your sustainability performance being accurately communicated by your company, within the market and among your stakeholders?
- What kind of sustainability information are your stakeholders seeing from other companies, peers and competitors?
- Are your departments (EH&S, IR, HR, PR, etc.) aligned and working together to address the growing demand for sustainability information?
- What’s the most effective way to strategically address these growing market demands while staying focused on your business objectives?
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Increasing Shareholder Activism
Exxon’s Shareholder Action
ExxonMobil’s major shareholders (including the Rockefeller family) were pushing for changes ranging from traditional corporate governance issues to climate change. Over 30 percent of Exxon’s shareholders voted for specific environmental resolutions.
"ExxonMobil's go-slow approach in addressing greenhouse gas reductions and investments in renewable energy sources places long-term shareholder value at risk," said California State Treasurer Bill Lockyer, who serves on the board at CalPERS and CalSTRS, two of the nation’s public pension funds. "Instead of dragging its feet, Exxon Mobil should be taking the lead in providing long-term climate solutions."
Despite the inability of shareholders to obtain the votes for the ExxonMobil resolutions, these actions are part of a growing shareholder movement that is affecting Board responsiveness to shareholders.
"Boards are taking much more notice of these winning votes, says Fabrizio Ferri, an assistant professor at Harvard Business School and a co-author of Board of Directors’ Responsiveness to Shareholders: Evidence from Shareholder Proposals. The study found that boards were almost twice as likely to make changes now, than in the 1990s. The authors found that the rate of implementation of shareholder proposals approved by the majority of voters almost doubled to 40% in 2003-2004 compared to 22% in 1997-2002."
(Source: Dow Jones Newswire - May 14, 2008)
Investor’s Call on Congress
Shareholders are not limiting their actions to corporate boardrooms. A group of investors managing over $2.3 trillion in assets urged the US Senate to pass the Lieberman-Warner bill on climate change to help them make better long term investment decisions.
Man Group, the world's largest listed hedge fund, and CalPERS, the nation's biggest public pension fund, signed off on a letter sent this month to Senate Majority Leader Harry Reid of Nevada and Senate Minority Leader Mitch McConnell of Kentucky.
"In the current unpredictable national climate policy environment, it is difficult and risky for businesses to justify the large-scale, long-term capital investment needed to seize existing and emerging opportunities to transition to a clean, low-carbon economy,'' according to the letter.
Dozens of public pension plans, institutional investors, foundations, endowments and corporations are part of this growing call for federal action on climate.
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Market Ambiguity
At a recent Duke Energy shareholder meeting, shareholders cautioned CEO Jim Rodgers from overemphasizing global warming.
Duke Energy and other corporations are hesitant to join the call for restrictions of carbon emissions. Board members and executives continue to communicate to shareholders the potential financial cost of imposing an aggressive policy too quickly.
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Ratings, Rankings & Listings
In a report published by Moody’s Investor Services, the EU's climate change policies could erode profits made by power generators and energy-intensive industries, and have implications on their credit ratings unless safeguards are put in place.
Companies are increasingly under scrutiny from third-party organizations that are publishing results on corporate environmental impacts. For instance, Climate Counts recently released their updated results for 2007, which identifies and ranks 56 corporations on climate change actions. These results are capturing the attention of the mainstream media and other influential stakeholders.
The Climate Registry designates "reporters" as organizations that demonstrate their environmental leadership by voluntarily committing to measure, verify, and publicly report their greenhouse gas emissions to the Registry. Reporters consist of corporate, non-profit, and government entities. Founding Reporters are organizations that demonstrate outstanding environmental leadership by joining The Climate Registry prior to May 1, 2008, thereby supporting the Registry in its initial formation. As of May 31, 2008 there were a total of 251 reporters.
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How can Wallace Partners help?
Wallace Partners offers a unique approach to assessing current market conditions and integrating sustainability into organizations. We apply a methodology that enhances your existing management systems, identifies unforeseen assets, and increases operational efficiency. Our strategic approach will help you identify the financial and reputational benefits of measuring and strategically disclosing sustainability performance data to priority stakeholders and the broader market. By identifying internal and external opportunities, we will help you lay the foundation for efficiently measuring and managing environmental, social, and economic performance, and disclosing sustainability information in a manner that:
- Increases business resiliency
- Reduces reputational risk
- Clarifies external perceptions
- Enhances access to investment capital, and
- Aligns with broader branding initiatives
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New Publications
- "The Sustainability Question"; STP Enviro Source, April 2008
- Climate Change: A Guide to Carbon Law and Practice features a key chapter on Corporate Social Responsibility by Mike Wallace of Wallace Partners. You can order your copy online here, or use the order form.
As a valued Wallace Partners contact, we are pleased to offer you a special 20% discount. Simply enter the code IBA07 in either order form to obtain your discount.
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