June 28, 2011
Shareowner Support for Environmental Resolutions Continues to Grow
by Robert Kropp
Tracking by Ceres of this year's environmental resolutions reveals that the average support for
hydraulic fracturing proposals increased to 40% in 2011, up from 30% in 2010.
After many of the environmental resolutions submitted by shareowners during last year's proxy
season received record-breaking support, Michael Passoff of As You Sow told SocialFunds.com, "The concerns of investors
reflect those of the people of the country as a whole who are starting to recognize the financial
risks of environmental and social liabilities."
The 2011 proxy season appears to
have solidified the gains in support of 2010, as the 2011 Resolution Tracker published by Ceres indicates. Resolutions received majority and near-majority
votes at Layne Christensen, Energen, Ameren, and Tesoro.
"The momentum from last year has
been maintained," Rob Berridge, Senior Manager of Investor Programs at Ceres, told SocialFunds.com.
"This season provides more evidence that ESG (environmental, social, and corporate governance)
considerations are going mainstream, and investors are considering them more and more as a
Another indicator of the growing concern of mainstream investors is
found in the support for environmental resolutions by ISS, the leading proxy advisory service. In 2011, ISS
supported 70% of environmental resolutions. Yet as recently as last year, Passoff described the
support of proxy advisory services as "a huge shift. They used to automatically advise against
voting in favor of social resolutions."
Referring to "the BP blowout in the Gulf, the
Massey coal mine explosion, and recent examples of extreme weather," Berridge described a number of
the resolutions as "disaster-led." One such resolution addressed coal ash at Ameren. Even after a
dam breach at a Tennessee Valley Authority (TVA) coal ash pond released 1.1 billion gallons of coal
ash sludge over more than 300 acres in eastern Tennessee, Ameren proposed to build a new coal ash
pond in a Missouri floodplain.
The resolution, filed by the Midwest Coalition for Responsible
Investment, stated, "Ameren fails to sufficiently disclose efforts to reduce risks related to coal
ash," and requested that the company report on its efforts to "identify and reduce environmental
and health hazards associated with past and present handling of coal combustion waste."
Resolutions addressing hydraulic fracturing, or fracking, also received significant shareowner
support, receiving an average vote of 40%, up from 30% in 2010. The resolutions were coordinated by
Green Century Capital Management and the
Investor Environmental Health Network (IEHN).
Referring to a fracking resolution that gained 42% of shareowners' votes at Ultra
Petroleum, Larisa Ruoff, Green Century's Director of Shareholder Advocacy, said, "This
extraordinary result is even more remarkable because it represents twice as much support as the
same proposal received last year."
"The focus of the fracking resolutions submitted this
year was, Can you get it out of the ground without damaging water supplies?" Berridge said.
However, he continued, citing a recent study
from Cornell University, future resolutions may address greenhouse gases (GHG) emitted by the
natural gas drilling practice.
According to the Cornell study, "Compared to coal, the
footprint of shale gas is at least 20% greater and perhaps more than twice as great on the 20-year
horizon and is comparable when compared over 100 years," because methane emissions "are at least
30% more than and perhaps more than twice as great as those from conventional gas."
"Investors we work with are generally supportive of the idea of fracking, but it has to be done
in a way that the harm does not outweigh the benefits," Berridge said.
trying to help their companies," he continued, "And the goal is not to get a high vote but to get
the companies to do what the investors are asking them to do, to mitigate risk and disclose
Additional noteworthy accomplishments cited by Berridge include Avon
agreeing to develop a policy for sourcing 100% certified sustainable palm oil by 2015, and Southern
Company agreeing to report on its plans to mitigate water risks.
addressed improved disclosure by requesting that companies issue annual sustainability reports, ten
of which were withdrawn after successful engagement. Most of the resolutions included requests that
companies report on their emissions reduction strategies.
"Sustainability reports are not
just about disclosure," Berridge said. "When a company does a sustainability report using the Global Reporting Initiative (GRI)
guidelines, it frequently has a transformative affect on the company," citing savings through
energy efficiency and emissions reduction as examples.
"Another benefit of sustainability
reporting is employee retention, because employees are often the most enthusiastic readers of
them," Berridge added.
Following the 2010 proxy season, Passoff of As You Sow told
SocialFunds.com, "We'll have to see if this year is the tipping point for mainstream investors now
incorporating ESG risk into their concerns for shareholder value." As Berridge observed, 2011
appears to support the idea that last year did indeed represent a tipping point for environmental