April 04, 2014
Investors Call for Sustainability Reporting by Small-Cap Companies
by Robert Kropp
A shareowner resolution from Walden Asset Management, part of a sustainable investor initiative,
wins significant support at the annual general meeting of CLARCOR.
Early in 2011, Pax World Management produced
a report detailing the shortcomings in sustainability reporting by small- and mid-cap companies in
the US. Fifty-six of the 364 companies studied in the report published sustainability or corporate
social responsibility (CSR) reports, "Only 39 recognized climate change (10.7 percent) at all,
while only four of 364 companies reported their greenhouse gas emissions," the report found.
"Investors have tended not to ask them to report," Julie Gorte, Senior Vice President for
Sustainable Investing at Pax World, told SocialFunds.com when the report was published. "Most of
the big disclosure initiatives—the CDP, the Global Reporting Initiative (GRI)—have done a lot of
outreach to large companies, but smaller companies have not heard as much from their investors and
the financial analysts who follow them."
Also in 2011, Pax World, along with Walden Asset Management, launched the
Small Cap Project, an initiative promoting reporting on environmental, social, and corporate
governance (ESG) issues by companies listed in the Russell 2000 Index. The Small Cap Project
currently has 14 members with over $37 billion in assets under management.
A victory for
sustainability reporting was recorded at last week's annual general meeting of CLARCOR, when a
shareowner resolution filed by Walden gained 40% support. Sustainability reporting – comprehensive
disclosure of environmental, social, and governance (ESG) policies, metrics and progress toward
goals – continues to be an increasing trend amongst companies of all sizes, including small cap
companies such as CLARCOR,” Walden stated in a press release following the vote. “A recent report
by IW Financial indicated that 22 percent of the Russell 3000 now has ESG disclosures, compared to
15 percent of the companies in 2011.”
In stating its opposition to the resolution,
CLARCOR's management argued, “Our Board of Directors is responsible to the shareholders of the
company as a whole, not for ensuring that the Company conforms its practices to the philosophies of
certain shareholder groups.” But when abstentions are counted in the vote on the resolution, more
than half of the company's shareowners did not agree with management's opposition.
is an increasingly accepted link between ESG performance and operational efficiencies, risk
management, and other material business considerations,” said Carly Greenberg, ESG Analyst at
Walden. “Since CLARCOR manages more than 60 subsidiaries, investors would like assurance that all
pieces of the business are managed synergistically as opposed to being left in silos.”