As the Gulf oil disaster focuses national attention on the huge environmental problems caused by corporate irresponsibility and the enormous tolls environmental impacts can have on shareholders, Green Century Capital Management (Green Century) shares a more positive story – shareholders are taking action to change the corporate course and advocate for improved corporate responsibility. According to Larisa Ruoff, Director of Shareholder Advocacy for Green Century:
Shareholder advocacy is a critical component of environmentally-responsible investing. Recent environmental disasters such as the BP* oil well blowout and the Massey* mine tragedy are stark reminders that a company’s environmental performance can have dramatic implications for shareholder value. Green Century believes it is now more important than ever to use the rights and responsibilities that come along with stock ownership to encourage companies to increase transparency, mitigate risk and protect shareholder value.
Green Century files shareholder resolutions each year calling on companies to address environmental problems related to corporate operations or policies. “The resolutions that we file and the pressure we are able to put on companies are powerful ways to protect both the environment and our shareholder value,” said Ruoff.
The 2010 shareholder advocacy season this spring was a record-breaking season for Green Century. They filed resolutions at 22 companies asking them to increase transparency on issues ranging from hydraulic fracturing, the controversial natural gas extraction process, to coal ash, the toxic byproduct of burning coal that made headlines when the Tennessee Valley Authority coal ash dam collapsed in December 2008.
Nine of Green Century’s resolutions were withdrawn after companies agreed to take positive action, and two were eliminated because of a merger or a technicality. The 11 remaining received groundbreaking votes, including 42%** voting support on a hydraulic fracturing resolution with the energy company, Williams Companies, Inc.* (Williams). The resolution asked the company to report on the environmental impact of the company’s hydraulic fracturing operations and for a discussion of the potential policies the company could adopt, above and beyond regulatory requirements, to reduce or eliminate hazards to air, water and soil quality from those activities.
According to Securities and Exchange Commission regulations, new shareholder proposals must receive three percent of the vote to be re-filed the following year. Said Ruoff:
The 42%** vote on our new hydraulic fracturing resolution at Williams* is truly remarkable, and our 26.4%** vote on the first-ever resolution asking ExxonMobil* to report on risks associated with oil sands development was similarly impressive. These votes are sending strong signals to companies that shareholders are wary about operations that could carry serious environmental risk and that they need more information on these issues.
According to an analysis by the non-profit group Ceres, climate change-related resolutions that came to votes so far this year with U.S. and Canadian companies received 25%** average voting support, up from 22%** in 2009. The trend towards higher voting support indicates that institutional investors are becoming increasingly concerned about environmental impacts. Green Century argues that companies should pay attention to this trend by candidly disclosing environmental risks and proactively and effectively working to reduce their environmental impacts.
*As of March 31, 2010, BP plc, Massey Energy Company, and ExxonMobil Corporation were not held by the Green Century Balanced Fund or the Green Century Equity Fund; Williams Companies, Inc. was not held by the Green Century Balanced Fund and comprised 0.25% of the Green Century Equity Fund. Please refer to the Green Century Funds website for current information regarding the Funds’ portfolio holdings. These holdings are subject to risk as described in the Funds’ prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor. ** The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.