Part 4 28th Annual SRI Conference in San Diego. Search #AllinForImpact on Twitter to see more posts. See Parts 1, 2, and 3. Yes, I know, this conference was held months ago but I’m still digesting… maybe until the next one. I could spend a productive year just exploring links to the work of the speakers. Mark your calendar for November 1-3, 2018. The SRI Conference returns to the Broadmoor in Colorado Springs. Get on the mailing list. Continue Reading →
Tag Archives | sustainability
Sorry, this Caterpillar Inc Proxy Voting Guide comes late, since tomorrow is the last day to vote unless you attend the annual meeting. Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. Caterpillar is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two fund families when I checked and voted on the last day. Their annual meeting is coming up on June 14, 2017.
I voted FOR our proposal to reduce the threshold required to hold a special meeting. See how and why I voted other items below. I voted with the Board’s recommendations 70% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →
PayPal Proxy Voting Guide by CorpGov.net. PayPal Holdings, Inc. (PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. PayPal is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of three fund families when I checked and voted. Their annual meeting is coming up on May 24, 2017.
I voted FOR #5 Provide Right to Act by Written Consent and two shareholder proposals seeking reports. See how and why I voted other items below. I voted with the Board’s recommendations 40% of the time. View proxy via SEC’s EDGAR system (look for DEF 14A). Continue Reading →
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 7 of the book, Governance of Sustainability. This is why I got into the field as an NIMH Fellow in the late 1970s studying what forms of corporate governance would be best for corporations AND society. This part of the Handbook is worthy of a separate 100-page book by itself, probably with broader appeal to the general public. Continue Reading →
#ICGN16 was the hashtag for tweeting about the 2016 annual meeting of the International Corporate Governance Network held in San Francisco, June 27 – 29th, 2016. Check Twitter for additional posts to #ICGN16. What follows are a few of my rough notes from the conference. Accuracy for details isn’t one of my noted strengths, so I’m tempted to say the notes are for entertainment purposes only but I do hope readers will get some sense of the proceedings.
#ICGN16: PreConference Rethink of ‘One Share, One Vote’
Even before the ICGN16 (International Corporate Governance Network annual conference) met in San Francisco last month, two prominent former board members kicked off lively debate by proposing a radical rethink of what has been a guiding principle for many in the movement for good corporate governance. Peter Clapman and Richard Koppes argued in a WSJ opinion piece that longterm shareholders should have greater voting rights.
…the shareholder-rights agenda has been largely achieved. Only 10% of S&P 500 boards are classified today, while some 90% are elected by majority vote. Only 3% have a poison pill in force. More than 35% of S&P 500 companies have adopted proxy access…
Activists increasingly demand board representation to implement their agenda, often meaning that short-term investors take and quickly relinquish boards’ seats. Boards frequently settle with activists out of fear of losing a proxy battle—or worse, winning a Pyrrhic victory. (Time to Rethink ‘One Share, One Vote’?)
Facebook Inc (NASD:FB), one of the companies in my portfolio, builds products that enable people to connect and share through mobile devices and personal computers. Their annual meeting is coming up on June 20, 2016.
ProxyDemocracy.org had collected the votes of three fund families when I checked. Vote AGAINST pay, pay committee, board; FOR all shareholder proposals. I voted with the Board’s recommendations 13% of the time. View Proxy Statement via iiWisdom. Continue Reading →
Chipotle Mexican Grill, Inc (NYSE:CMG, $CMG) develops and operates Chipotle Mexican Grill restaurants, which serve a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. It is one of the stocks in my portfolio. Their annual meeting is coming up on May 11, 2016. ProxyDemocracy.org had collected the votes of 2 funds when I checked. Vote AGAINST pay, compensation committee, audit chair, fake management reforms; FOR all shareholder proposals, especially genuine proxy access. I voted with the Board’s recommendations 37% of the time. View Proxy Statement. Continue Reading →
CivicSpark, a partnership of California’s Local Government Commission and the Governor’s Office of Planning & Research is an AmeriCorps program dedicated to building capacity in local governments to address climate change. They are now recruiting team members for the 2015-16 service year. Follow on Facebook and Twitter @LGC_media.
CivicSpark: Climate Leaders
If you are interested in joining the next generation of climate leaders, building your already considerable skills and creating a meaningful and lasting impact, now is the time to start the application process.
CivicSpark members work on projects that provide local governments with the support they need in their climate and sustainability initiatives. (Local governments can also propose projects at this time and volunteer support is welcome.) Continue Reading →
Sustainability innovation is powering business growth, according to a new research report. Between 2010 and 2013, revenues from company-defined portfolios of sustainable products and services grew by 91% among the companies examined in the report. For S&P Global 100 companies that break out revenue for sustainable products or services separately, that revenue stream grew at six times the rate of overall company results. Continue Reading →
Facebook Inc (NASD:FB) operates as an online retailer in North America and internationally. It is one of the stocks in my portfolio. Their annual meeting is coming up on 6/10/2015. ProxyDemocracy.org had the vote of three fund families when I checked and voted on 6/8/2015. I added the votes of CalSTRS in the table below. Like ALL the pre-disclosing funds, I voted with management 0% of the time. I assigned Facebook a proxy score of 0. Continue Reading →
Chipotle Mexican Grill, Inc. (NYSE:CMG) is one of the stocks in my portfolio. Chipotle Mexican Grill develops and operates fast-casual, fresh Mexican food restaurants throughout the U.S., which serve a focused menu of healthy burritos, tacos, burrito bowls and salads. The company also has restaurants in Canada, England, France and Germany. Their annual meeting is coming up on 5/13/2015. ProxyDemocracy.org had the votes of four funds when I checked and voted on 5/6/2015. I voted with management 24% of the time and assigned Chipotle Mexican Grill a proxy score of 24. Continue Reading →
Gilead Sciences $GILD is one of the stocks in my portfolio. They are a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need Their annual meeting is coming up on 5/6/2015. ProxyDemocracy.org had the votes of four funds when I checked and voted on 4/28/2015. I voted with management 47% of the time and assigned Gilead Sciences a proxy score of 47. Continue Reading →
Tractor Supply Company (TSCO) is one of the stocks in my portfolio. They offer a comprehensive selection of merchandise, which include equine, livestock, pet and small animal products; hardware, truck, towing and tool products; seasonal products, including lawn and garden items, power equipment, gifts and toys; maintenance products for agricultural and rural use, and work/recreational clothing and footwear. Their annual meeting is coming up on 5/5/2015. ProxyDemocracy.org had the votes of three funds when I checked and voted on 4/27/2015. I voted with management 100% of the time and assigned Tractor Supply a proxy score of 100.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Tractor Supply Company 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
Starbucks Corporation $SBUX, which operates as a roaster, marketer, and retailer of specialty coffee worldwide, is one of the stocks in my portfolio. Their annual meeting is coming up on 3/18/2014. ProxyDemocracy.org had the votes of four funds (now more) when I checked and voted on 3/8/2015. I voted with management 81% of the time and assigned Starbucks a proxy score of 81.
View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Walt Disney 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →
The Conference on the Use and Misuse of Stock Price will take place on Friday, September 19, 2014, from 9:00AM-5:30PM at Columbia Law School in New York City and will be hosted by the Millstein Center and IRRC Institute. Mark your calendar. Continue Reading →
CalPERS Senior Portfolio Manager and Director of Global Governance, Anne Simpson, discusses how environmental, social, and governance behaviors impact corporate performance and highlights recent Board policy statements concerning three forms of capital: financial, physical and human.
Read the transcript on the CalPERS site.
Chipotle Mexican Grill, $CMG, is one of the stocks in my portfolio. Their annual meeting is coming up on 5/15/2014. ProxyDemocracy.org had collected the votes of three funds when I checked and voted on 5/8/2014. I voted with management 0% of the time. View Proxy Statement.
Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime) Continue Reading →
Corporate boards are exceeding legal oversight requirements on environmental and social issues, with more than half of S&P 500 companies providing board level oversight of environmental and/or social issues above and beyond that required by law. Board Oversight of Sustainability Issues finds that many industries subject to scrutiny – paper, forestry, healthcare, utility companies – are among the most likely to have board oversight of sustainability issues. But, the retail sector lags despite criticism for recycling and labor and human rights practices. Continue Reading →
The Hong Kong Corporate Governance Excellence Awards 2013, jointly organized by The Chamber of Hong Kong Listed Companies (“CHKLC”) and the Centre for Corporate Governance and Financial Policy (“CCGFP”) of Hong Kong Baptist University is open for nomination until September 23, 2013. Continue Reading →
I received my copy of the November edition of Corporate Governance: An International Review a couple of weeks ago (yes, they usually run late). It is a special issue on executive compensation with the usual diversity of well-researched articles from around the globe. I notice that most, if not all, of the articles are available online for free, so if you don’t subscribe to the best journal on international corporate governance research, this is your opportunity to see a little of what you are missing… although each issue is substantially different. Continue Reading →
(Reuters, 18 December 2012) The number of S&P 500 and Fortune 500 companies managing and reporting performance on environmental, social and governance (ESG) issues more than doubled from 2010 to 2011, according to an analysis by Governance & Accountability Institute.
G&A Institute, the data partner for the Global Reporting Initiative (GRI) in the US, UK and Ireland, says in last year’s report, 19 percent of the S&P 500 reported. In the 2012 report, the number jumped to 53 percent. Continue Reading →
The Golden Peacock Awards Secretariat receives over 1,000 entries per year for various awards, from over 25 countries worldwide. IoD sees the Golden Peacock Award as a powerful way to build a company’s brand.
Corporate Governance and the Global Financial Crisis: International Perspectives by William Sun, Jim Stewart, and David Pollard addresses the worldwide crisis that cost Americans an estimated average of $188,000 per household. We will be paying back that debt for decades… or perhaps more accurately, our children will be paying back that debt. Yes, we’ve passed the usual spate of laws after a financial crisis and regulations are still being written, but almost nobody I talk to, except perhaps those on Wall Street, thinks we have solved the issues. This book discusses some of the weaknesses, such as executive pay, risk management, board practices, regulation capture, the failure of shareowners to obtain and/or exercise rights, etc. Perhaps more importantly, many of the contributing scholars offer possible solutions. Continue Reading →
Last year, the International Finance Corporation (IFC) produced a report, the goal of which was to help the Shanghai Stock Exchange (SSE) improve the quality of sustainability reporting by Chinese companies.
While SSE was “one of the first stock exchanges to issue a directive for companies to publish a sustainability report,” IFC noted, “Existing frameworks provide guidance that is either too vague or too broad.” One way in which stock exchanges can encourage corporate sustainability reporting, IFC found, is by establishing sustainability indexes, as has been done in South Africa and Brazil.
The UK’s industry-led Investment Governance Group (IGG) recently published a best practice guidance for defined contribution (DC) pensions, which include six principles for DC schemes designed to encourage better investment governance and decision making by all stakeholders, including trustees, employers, advisers, providers, and members.
As I glance at this guidance it makes me realize how little I know about how my own plan is run and where opportunities for input are for plan participants. I contacted the administrator years ago, asking about how the funds vote their stocks and if the program has any requirements in that regard. The answer came back that they must be voted in the interest of fund holders (which, in practice, generally means in the interest of fund and corporate management).
I just got a statement the other day and was looking at how poorly my international investments have been doing this year. I concluded it is probably because the only options they offer are heavily invested in Europe and Japan, instead of emerging markets like China, India, Brazil and Indonesia.
How does your fund operate? The UK best practices guidance could be used as a framework for questions to understand how your program operates and what input you/we, as those who have invested our hard earned dollars, have in the system.
Ten years ago, James P. Hawley and Andrew T. Williams wrote extensively about “universal ownership” and the likely shift in norms (see The Rise of Fiduciary Capitalism: How Institutional Investors Can Make Corporate America More Democratic).
Since universal owners internalize positive and negative externalities of the firms in their portfolios and since they bear the consequences of firms’ norm based liabilities, their fiduciary duty requires universal monitoring of their portfolio. It is in their long-term interest and the interest (by definition) of their investors and beneficiaries to maximize the positive externalities of their holdings and minimize the negative externalities. This may create direct costs (e.g. pollution abatement, product and process redesign) for some firms and sectors of the economy, but will generate gains to other sectors and firms. However, as a general proposition, negative externalities impose costs on affected firms that outweigh – sometimes greatly outweigh – the benefit to polluting firms. Thus it is in the long-term interest of a universal owner, one that owns all firms, to pursue externality monitoring in an attempt to reduce negative externalities and to encourage positive externalities among portfolio firms. This should be combined with portfolio wide norm shift linked risk monitoring resulting in universal portfolio analysis and universal monitoring. (Norm Shifts, Center for the Study of Fiduciary Capitalism)
During the last ten years there’s been a shift away from defined contribution plans, where trusteeship is often held jointly with union or other employee based or elected representatives, toward DC plans where such influence is often less direct. While union and employee representatives seem to give a lot of thought to issues like the need to minimize negative externalities, many management dominated DC plans do not appear to do so. Movement in the direction of a more equitable and environmentally sustainable economy isn’t likely to come about on its own. Change depends on informed public participation, political will, and acquiring the democratic tools necessary so that those who invest our funds on our behalf are more fully accountable to us.
I’d love to hear from readers about their DC plans. If it is mostly invested in stock of the company you work for you, do they pass voting rights along to you? If your plan is like mine, with several fund alternatives, how are those funds chosen? What input opportunities are provided to you on that decision or others? Please let me know.
Disclaimer: Given Dodd-Frank, proxy plumbing and all those comments I want to provide the SEC, the report below doesn’t do the ICGN Mid-Year Conference justice. I wrote this up more than a week later with poor notes and memory. Comments, corrections and substitute photos are solicited.
The Financial Crisis Inquiry Commission will report in December to give an unbiased historical accounting of the causes of financial crisis. It will be out in book form but will also be available through download.
$11 trillion in wealth was wiped away. The market took until 1954 to get back to the levels of 1929. Let’s hope this one doesn’t take as long but, more importantly will we learn the lessons necessary to prevent or minimizes future bubbles?
It was a failure of accounting and deregulation. Too many were rewarded based on volume not on performance and their was no continuity in risk (they thought) after all the slicing, dicing and creative complexity.
Rewards can’t be asymmetric and function properly. This was not a natural storm; the clouds were seeded. Signs were there, such as a 2004 warning from the FBI about a housing fraud epidemic, but they were glossed over. Now, our remaining investment banks are largely trading banks, not focused on generating capital but on gaming the markets. The betting market is much larger than the real economy… with more than 85% of transactions being synthetic.
Dodd-Frank requires the investment banks to hold 5% of the securities they sell but I’m not sure what good that does since that portion of their business is now minor. We need to rethink the role of finance in our economy. Continue Reading →
The John Lewis Partnership’s 2010 Corporate Social Responsibility (CSR) report, A shared passion, summarizes the business’s progress during 2009/10 at
The report includes an update on the Partnership’s commitments to dealing fairly with suppliers, selling responsibly sourced quality products, making a positive difference to the communities in which it operates and reducing its impact on the environment. The examples of the co-owners’ shared passions, and the loyalty and support of customers, suppliers and business associates, help to demonstrate how the Partnership continues to offer a better and more sustainable way of doing business.
- Waitrose and John Lewis exceeding targets to improve shop energy efficiency
- New Responsible Development Framework to govern and guide building projects
- Setting out its ambition to achieve an absolute reduction in carbon emissions by 2020, despite looking to double the size of its business during that time
- Reducing emissions from transport by 6.3%, relative to sales, since 2005/06
- Charitable and community contributions totaling £7.9 million, equivalent to 2.59% of pre-tax profitGRI
- Waitrose named UK’s most compassionate supermarket 2009/10
- John Lewis achieving its target to sell 100% FSC-certified garden furniture.
For the first time this year, the report is aligned with the Global Reporting Initiative’s G3 Sustainability Reporting Guidelines, at a self-declared Application Level C.
The John Lewis Partnership’s 70,000 permanent staff – known as Partners – own 29 John Lewis shops, 231 Waitrose supermarkets, an online business, a direct services company (Greenbee), a production unit and a farm, with a combined turnover of nearly £7.4 billion last year.
A model system for developing key performance indicators (KPIs) relevant to mandatory UK sustainability reporting has been put forward in a new research report which can be downloaded from Ethical Performance who also summarized the above report the the John Lewis Partnership.
The company was one of many I studied under a grant from the National Institute of Mental Health about 30 years ago, when I was looking for the ideal form of corporate governance. In the case of the Partnership, employees were very lucky to have a founder, John Spedan Lewis, who thought beyond his own family (much like Billionaires Giveaway: Who is Worthy?).
Lewis was careful to create a very forward thinking governance system, including a Constitution, that would allow the firm to be competitive and democratic, giving every Partner a voice in the business they co-own. Billionaires of today might leave a greater legacy by adopting democratic principles to govern their own companies rather than by donating their riches to charities that often address the externalized costs of businesses.
In the 21st century, corporate health and success are inextricably linked to the adequacy of security management. Poor security management can lead to operational disruptions and financial losses. For this reason, boards of directors need to take ownership of security in the same way they take ownership of other critical aspects of the business. To achieve long-term sustainability, security should be integrated into daily management activities and elevated to strategic concern… Investment in security can pay rich dividends to the organization in many ways, not only by enhancing reputation and market share but also by improving efficiency through operational cost reductions, minimized disruptions, and increased productivity.
Security as a Critical Component of Corporate Defense by Sean Lyons published as The Conference Board Executive Action Report, No. 330, July 2010, provides boards of directors, who tend to be removed from the conception and design of corporate defense management programs (CDMs), a top-down strategic approach that ensures a cohesive corporate culture attentive to defense issues. It aims to for reduce the typical silo-type mentality by promoting information-sharing procedures and collaboration across the enterprise through a four phase approach involving: Risk Identification, Risk Assessment, Risk Response, and Risk Monitoring.
Michael R. Young offers advice in The Board and Risk Management (The Corporate Board, July-August/2010). At the board level, risk management “best practices” have yet to be written. Although every company is different, “Expertise and sophistication can be strengthened by having a Chief Risk Officer report directly to the risk committee as well as to the CEO… such an approach might be the best way to capture the desired expertise and sophistication, while integrating information and perspectives.
From Transparency to Performance: Industry Based Sustainability Reporting on Key Issues, co-authored by Steve Lydenberg of Domini Social Investments, Jean Rogers of Arup, and David Wood Hauser of the Center for Nonprofit Organizations at the Harvard Kennedy School of Government, to devise a method to identify ESG factors that are most relevant to the full range of stakeholders, and can best promote improved corporate performance on vital social and environmental issues.
The report develops a system to identify key performance indicators (KPIs) by industry sector, with the goal of creating a regulatory regime with concise, comparable metrics that set a mandatory floor for sustainability reporting. The report applies this method to five sample industries to demonstrate how such a system might hypothetically be implemented within a US reporting context. These KPIs are based on three core principles — simplicity, materiality, and transparency.
To meet the dual challenges of comparability and practicability for establishing KPIs by industry and sector, the authors developed a six step method as follows:
- Assemble a broad universe of sustainability risks or opportunities that could apply to all industries.
- Select an industry classification system.
- Establish a definition of materiality to address non-financial issues.
- Apply the materiality test to the sustainability issues potentially applicable to each industry sector.
- Rank the materiality of these issues within each industry and establish a threshold that defines those issues that are key.
- Create a tailored set of key performance indicators for the most material issues for each sector.
The authors then apply the approach to six industries, chosen in order to represent a diversity of business practices. Five categories of impact were then evaluated at the sector or sub-sector level:
- Financial impacts/risks: Issues that may have a financial impact or may pose a risk to the sector in the short-, medium-, or long-term (e.g., product safety)
- Legal/regulatory/policy drivers: Sectoral issues that are being shaped by emerging or evolving government policy and regulation (e.g., carbon emissions regulation)
- Peer-based norms: Sustainability issues that companies in the sector tend to report on and recognize as important drivers in their line of business (e.g., safety in the airline industry)
- Stakeholder concerns and societal trends: Issues that are of high importance to stakeholders, including communities, non-governmental organizations and the general public, and/or reflect social and consumer trends (e.g., consumer push against genetically modified ingredients)
- Opportunity for innovation: Areas where the potential exists to explore innovative solutions that benefit the environment, customers and other stakeholders, demonstrate sector leadership and create competitive advantage.
Among the report’s key findings are:
- Mandatory reporting regimes create better disclosure, which, when incorporating key sustainability performance indicators, can lead to better performance in those areas most crucial to stockowners, other stakeholders, and society.
- Defining a limited number of KPIs that relate to core business activities can help contribute to a balanced reporting regime that serves the dual demands of comprehensiveness and practicability.
- A method for identifying KPIs for all industry sectors that is simple, material and transparent can be developed and implemented with a reasonable degree of effort by oversight bodies.
- Mandatory reporting on a basic of set of KPIs is ultimately necessary to fill varying disclosure needs of our diverse society and complete the convergence of financial and sustainability reporting.
Although both British Director accountability and American CEO primacy tackle the fundamental principal-agent problem, a basic comparative analysis of the British Codes and the American Sarbanes-Oxley Act reveals a relevant normative asymmetry. While the British regulations have been historically more prescriptive with the responsibilities of Executive and Non-Executive Directors, the American norms seem to point more clearly at the CEO and CFO as those ultimately responsible for corporate governance liabilities. (British Directors’ Accountability vs. American CEOs’ Primacy by Simon Kinsella, and Giampiero Favato)
- According to SIRAN, almost all S&P 100 companies disclose some sustainability informaon either in reports or on their websites.
- UNI’s principle to “seek appropriate disclosure on ESG issues by the entities in which we invest” has have been endorsed by more than 700 investors represenng approximately $20 trillion in capital.
- Growing evidence suggests a posive relaonship between strong ESG performance and equity returns.
- Increasingly, external auditors verify company reports.
- Comparisons among companies are facilitate by GRI, Corporate Register, Ceres, and Carbon Disclosure Project.
Want to get your company involved? Gladman’s report offers suggestions on your next steps and who to contact.