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October 07, 2011
Mainstream Support for Environmental Resolutions Grows
    by Robert Kropp

A resolution calling for a report on social and environmental risks to Smuckers coffee business, filed by sustainable investors, gains wide support from mainstream shareholders as well.


In March, Calvert Investments and Trillium Asset Management filed a shareowner resolution at J.M. Smuckers, requesting that the food conglomerate provide "detailed disclosure…about climate-related risks to the Folgers Coffee and other brands."

The company's sustainability report, published shortly after the resolution was filed, contained only one page devoted to coffee and none to climate change, although it derives 40% of its revenue from its coffee business.

The results of the shareowner vote are in, and, as reported on a Forbes blog post, "The proposal won 30 percent support, or some $1.7 billion in share value - hardly a fringe issue brought forward by activist investors."

"That strong vote reflects broadening investor concern about the bottom line impacts of environmental and social issues," the post, written by Mindy Lubber, president of Ceres, stated. "And it demonstrates that proxy voting is a key means by which investors are voicing those concerns to management."

In June, Ceres published its 2011 Resolution Tracker, which reported that resolutions addressing environmental issues received majority and near-majority votes at a number of companies, including Layne Christensen, Energen, Ameren, and Tesoro. In addition, many resolutions were withdrawn after successful engagement with companies by investors.

Lubber wrote that resolutions filed during this year's proxy season "center on the belief that social and environmental concerns are material to investment outcome and that companies ignore these risks at their peril." As an example, she cited resolutions filed by AFL-CIO addressing safety concerns at Tesoro, whose operations experienced an explosion which killed five workers. The resolutions gained majority support.

"But the case for materiality of environmental, social and governance (ESG) issues isn't just limited to one-off examples," Lubber continued, citing research that "found strong linkages between comprehensive ESG integration by companies and positive investment performance."

"Investors that continue to ignore sustainability-focused resolutions are missing an important opportunity to promote key reforms at large public companies," Lubber warned, "Including reforms that may have helped avert the recent financial crisis."

 

 
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