Investors Hold Corporations Feet to Fire on Political Spending, Fossil Fuels

Each year, public corporations face shareholder resolutions that push them toward greater social and environmental responsibility.

A few weeks ago, we reported that leading U.S. investors filed shareholder resolutions with Exxon-Mobil, Chevron, Chesapeake Energy, ConocoPhillips and 14 other oil and gas companies, pressing them to disclose their plans for managing risks associated with greenhouse gas (GHG) emissions and natural gas fracking.

And last month, institutional investors asked the largest corporations to completely refrain from making political donations.

It turns out those are two of the biggest areas for shareholder activism this year, after a record-breaking 2011, where 109 shareholder resolutions were filed with 81 U.S. and Canadian companies on climate change, unconventional fossil fuel production and related sustainability risks.

One of the other important resolutions last year was with Coca-Cola, where shareholders asked for plans on discontinuing use of bisphenol-A (BPA) in beverage can linings.

Nearly a third of the shareholder resolutions filed for 2012 ask companies for more disclosure about their direct and indirect campaign spending and lobbying, according to Proxy Preview, which summarizes this year’s 350 actions.

"Every year shareholder resolutions reflect a snapshot in time, an indication of what’s critical to civil society today," says Andrew Behar, CEO of As You Sow, publisher of the Proxy Preview since 2005. "In a time when the American public sees a consolidation of corporate influence, people realize that they are owners of these companies and can have a voice through their proxies. Shareholder advocacy amplifies popular sentiment and companies are listening."

Besides political spending, the majority of resolutions are on  climate change, mortgage foreclosures, sexual orientation, and labor and human rights.

The report also describes previous resolutions which have effectively changed corporate behavior. For instance, as a result of shareholder demands, State Street, one of the world’s leading providers of financial services to institutional investors, agreed to prohibit trade associations from using company dues for political purposes, including super PACs. It also agreed to increase disclosure of political contributions.

Investors of all stripes, including pensions, foundations, university endowments, and individual investors, are displaying an increased interest in active stock ownership and aligning investment practices with their values – reflected in the rising votes for shareholder resolutions, as the report points out.

"Support for social and environmental resolutions has become increasingly mainstream," says Michael Passoff, CEO of Proxy Impact and a co-author of the report. "The last three years have seen a huge shift in how large institutional investors view the impact of social and environmental risks on the bottom line."

Highlights of 2012 Environmental and Socially Responsible Shareholder Resolutions:

  • Political Spending: Investors are increasingly concerned about corporate political spending disclosure and have filed twice as many resolutions on this topic for 2012 (109) as they did just three years ago. 

    A large group of proposals focus on spending after elections, through lobbying.

    Another new feature in 2012 is a call for ending any campaign spending at 3M, Target, and Bank of America.

    Contributions through intermediaries are a critical focus of all the proposals, highlighting public concerns about cash and influence in the 2012 election.

  • Environment and Sustainability: Shareholders want companies to address climate change, reduce their impacts on natural resources, and use fewer toxic chemicals (117 resolutions)

    Coal and fracking dominate the 44 natural resource management proposals, with concerns about the financial risks of relying on coal-based energy and the implications of shale gas development.

    A shareholder resolution from the New York City pension fund helped prompt deals with Apple and other big electronics firms to be more open about conditions in their supply chains.

  • Mortgage Foreclosures: Investors at four of the country’s biggest banks will vote on whether they want more information on loan modifications, foreclosures, and securitization – on the heels of the recent $26 billion settlement that benefits homeowners.

This year’s Proxy Preview is a collaboration between As You Sow, a nonprofit organization that promotes corporate responsibility through shareholder advocacy and innovative legal strategies; the Sustainable Investments Institute, which conducts impartial research on social and environmental shareholder proposals; and Proxy Impact, a proxy voting service for foundations, endowments, and socially responsible investors. 

Here’s Proxy Preview 2012:

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