The nation’s largest private water utility company has joined a federal lawsuit that aims to force the manufacturer of atrazine, a widely-used herbicide, to pay for its removal from drinking water. The class action lawsuit was filed in U.S. District Court for the Southern District of Illinois alleging that Syngenta, Inc. made billions of dollars selling atrazine while local taxpayers were left “the ever-growing bill for filtering the toxic product from the public’s drinking water.” (Nation’s Largest Private Water Utility Joins Lawsuit Against Herbicide Maker, Common Dreams, 3/31/10) Governance questions:
- Will the fact that EPA registered atrazine provide adequate legal protection?
- Did Syngenta’s board fully consider the risk of such lawsuits?
- What about your company’s products and board?
In a related story, Harrington Investments, Inc. (HII) announced that Intel agreed to amend the Charter of their Corporate Governance and Nominating Committee to include “corporate responsibility and sustainability performance.” Intel also provided Harrington with an outside legal opinion stating that under Delaware Law, directors have a fiduciary duty to address corporate responsibility and sustainability performance as specified in the committee charter. Said John Harrington:
Intel has acknowledged in their committee charter, that directors must take into consideration corporate responsibility and sustainability performance, including long and short term trends and impacts on Intel’s business, as part of their fiduciary duty. This is a major victory for advocates of corporate responsibility and environmental sustainability, and others who strongly believe that these issues are essential in recognizing directors’ and officers’ fiduciary duty.
For the second year, Harrington Investments introduced a shareholder resolution to amend Intel’s bylaws to create a Board Committee on Sustainability. Intel initially opposed the resolution but then engaged in a dialogue with HII. This resulted in Intel agreeing to change their corporate charter to require the Governance and Nominating Committee to:
review(s) and report(s) to the Board on a periodic basis with regards to matters of corporate responsibility and sustainability performance, including potential long and short term trends and impacts to our business of environmental, social and governance issues, including the company’s public reporting on these topics.
Intel also had their outside legal counsel Gibson, Dunn & Crutcher LLP write a legal opinion specifically stating that pursuant to Delaware law, corporate responsibility and sustainability reporting based upon the committee’s charter, was part of the fiduciary duty of company directors. With this agreement in hand, HII agreed to withdraw its bylaw amendment resolution. Harrington concluded by saying,
I am very appreciative of the work put in by Irving Gomez, Intel Shareholder Relations and Cary Clafter, Intel Corporate Secretary, on this very progressive change in Intel’s Committee Charter. It will be of great assistant in moving forward with other corporations in our efforts to get corporate management to recognize that corporate social responsibility, including environmental sustainability and human rights, is an integral part of directors’ and officers’ fiduciary duty.
Harrington Investments, Inc. is a 28 year-old Napa, California-based socially responsible investment advisory firm that manages assets of individual and institutional investors requiring social and environmental as well as financial portfolio performance. Harrington utilizes a comprehensive social and environmental screen, commits clients’ assets to community investing and engages in shareholder advocacy, recently introducing shareholder resolutions specifically on U.S. economic security, corporate governance, CEO compensation and advancing human rights and sustainability as part of corporate officers’ fiduciary duties.
See also, Don’t Ask, Don’t Tell: A Poor Framework for Risk Analysis by Both Investors and Directors, HLS Corpgov and Financial Regulation blog, 11/15/09), Is Responsible Investing a Must, or a Should? UNEP FI on Fiduciary Responsibility, RMG blog, 7/24/09), and How companies manage sustainability: McKinsey Global Survey results, 3/2010.