March 06, 2006
Resolution Withdrawals Signal Success in Shareowner Advocacy Early in 2006 Proxy Season
by Bill Baue
Part one of this two-part article examines withdrawal of resolutions on climate change, sexual
orientation nondiscrimination, political contributions, and HIV/AIDS policies.
The 2006 proxy season is just starting to gather steam and has already generated successes. A
number of companies have complied with the terms of shareowner resolutions--which is the primary
goal of resolution-filing--prompting shareowner activists to withdraw their proposals. Of the 256
resolutions filed this year by the Interfaith Center on Corporate Responsibility (ICCR), the leading coordinator of shareowner
activism through its 275 faith-based institutional members, 46 have already been withdrawn,
according to ICCR's EthVest database.
The withdrawn resolutions
span the gamut, from corporate governance issues such as annual board elections and director
compensation to social issues such as labor standards and human rights codes of conduct to
environmental issues such as protecting biodiversity on Native Lands.
More than a
quarter (13) of these withdrawals involve resolutions asking companies to address climate change by
reviewing and reporting on the potential impacts of future regulations on greenhouse gas (GHG)
emissions. These resolutions are part of a campaign coordinated by Ceres, an advocacy group comprised of investors and
environmentalists, and the Investor Network on Climate Risk (INCR), a coalition of US and European institutional investors with
more than $3 trillion in assets.
Four of the climate change resolutions were withdrawn
from mid-western electric power companies that have plans to build new pulverized coal-fired power
plants, namely Great Plains Energy (ticker: GXP), Alliant Energy (LNT), WPS Resources
(WPS), and MGE
"Investors are particularly concerned about the long-term financial viability of
coal-burning power plants if regulations limiting carbon emissions are adopted," said Leslie Lowe,
ICCR's energy and environment program director. "Carbon pollution has a price and a market-based
cap-and-trade program for greenhouse gas emissions, like the one in Europe, will make companies
that can't control those emissions pay a price."
Other companies complying with climate
change resolutions (resulting in their withdrawal) include General Motors (GM), Anadarko Petroleum (APC), Home Depot (HD), Lowes (LOW), Chubb (CB),
Toronto-Dominion (TD), and Simon Properties (SPG). ExxonMobil
(XOM) issued a report
requested in two different climate change resolutions, one asking for information on how the
company intends to comply with Kyoto Protocol GHG emissions limits, the other asking for data
behind the company's skepticism on climate science.
"We decided to withdraw our resolution
with ExxonMobil because its report complied with the request made in the resolution, which was for
the company to explain and defend its position on the science of climate," said John Wilson,
director of socially responsible investing (SRI) at Christian Brothers Investment Services (CBIS). "The report indicates in a clear way
for the first time that the company recognizes the connection between greenhouse gases and the use
of fossil fuels."
"However, we are concerned that the company still questions the extent
to which greenhouse gases contribute to climate change, even as the scientific consensus that human
activity is the primary cause of global warming continues to grow," Mr. Wilson told
Resolution withdrawals represent only the tip of the iceberg of
successful shareowner advocacy.
"Even after companies issue reports requested in our
resolutions, we remain in dialogue with them to promote further progress--we don't just walk away,"
Ms. Lowe told SocialFunds.com.
As well, behind-the-scenes dialogue often averts
"There's more investor action on the climate change issue than ever,
and a lot of it is through the wholesale approach that you wouldn't necessarily see through the
resolutions out there," explained Rachel Harold, investor programs associate at Ceres. "Letters
are going to the largest companies in the insurance and electric power industries asking for the
same thing that the resolutions are, and we've had some progress through that, with five electric
companies agreeing to issue reports."
In addition to the climate change campaign,
several other shareowner campaigns are meeting success. One of the longest-running campaigns,
which since 1995 has convinced more than 50 companies to extend their equal employment opportunity
(EEO) policies to cover sexual orientation, achieved compliance at eight companies so far this
year. These companies include Cooper Tire & Rubber (CTB), CR Bard (BCR), DTE Energy (DTE), Emerson (EMR), General Dynamics (GD), Paccar (PCAR),
Sherwin-Williams (SHW), and Strayer Education (STRA).
The resolution was also withdrawn at Halliburton (HAL)--not because the company
complied, but due to a technical error in the filing. A withdrawal is also imminent at Century Tel
(CTL), which has
agreed in principle to change its EEO policy. This resolution remains on the proxy ballots of ten
companies this season, most notably ExxonMobil, which has notoriously resisted re-instituting such
protection that was afforded to gay, bisexual, lesbian, and transgender (GBLT) Mobil workers before
it merged with Exxon
A more recent campaign coordinated by the Center for Political
Accountability (CPA) with
ICCR asks companies to disclose their soft money political donations. It has resulted in
compliance and withdrawals at Coca-Cola (KO), PepsiCo (PEP), Staples (SPLS), Eli Lilly (LLY), and
Bristol-Myers Squibb (BMY). Shareowner activists can
leverage such agreements to convince other companies to comply.
"If we know we can get a
response from some companies and there are other companies where there's no response, then we ask
those companies, why is it so difficult for you to do this?" said Sister Pat Wolf, executive
director of ICCR. "We find some companies that are willing to take the lead, and their action
becomes a seriously considered benchmark."
The campaign promoting corporate action to
address the HIV/AIDS pandemic also met success.
"Chevron [CVX] agreed to make their AIDS
policy public and strengthen its implementation, and clearly ICCR members are pleased at that
progress," said Dan Rosan, ICCR's program director for health care. "Our dialogues with Chevron
are in-depth and on-going."
Abbot Laboratories (ABT) and Anheuser-Busch (BUD) have made
similar commitments leading to withdrawals.
"However, the SEC no-actions on Marathon [MRO], Pfizer [PFE], and
ConocoPhillips [COP] on HIV/AIDS are highly
disappointing and I think point to a general expansion of the ordinary-business exclusion which is,
in my view, an unwelcome departure from tradition at the SEC," Mr. Rosan told SocialFunds.com.
two of this two-part article examines no-action activity thus far in the 2006 proxy season.
|To the Editor:
I read with
interest the article "Resolution Withdrawals Signal Success in Shareowner Advocacy Early in 2006
Proxy Season" and celebrate the successes detailed.
Unfortunately, the chicken has not
yet hatched at CR Bard; the resolution was withdrawn on a technicality. The company continues to
lack an inclusive nondiscrimination policy. Walden is concerned that, as more than 80 percent of
the Fortune 500 companies now have inclusive policies, CR Bard is losing a competitive advantage in
recruiting and retaining employees from the widest talent pool. We are also particularly concerned
that this company is headquartered in New Jersey, a state that explicitly prohibits discrimination
in private employment.
In addition, although Walden and other investors have also had a
very constructive conversation with Chubb on climate change, the resolution withdrawn was specific
to sustainability reporting. This, however, leads me to mention that this proxy season has seen a
number of successful withdrawals of sustainability report requests--AT&T, Black & Decker, Chubb,
ITW, and Kinder Morgan. We at Walden have been particularly pleased with AT&T's commitment to
develop a report, given the recent (and perhaps future) mergers.
Walden Asset Management
One Beacon Street
Boston, MA 02108