Delaware judge calls for end to ‘deluge’ of activist investor votes
According to one of the most powerful legal arbiters of US corporate governance disputes, activist hedge funds and institutional investors have never wielded so much influence on company boards. Leo Strine, chief justice in Delaware, says the trend is in danger of getting out of control, and has called for a rollback of shareholder powers to prevent a “deluge” of corporate governance votes that he says are distracting managements and costing companies a small fortune. The chief justice’s proposals include limiting the frequency of say-on-pay votes and charging investors to submit proposals to a company’s annual shareholder meeting. Without such curbs, Mr Strine says, investors could “turn the corporate governance process into a constant ‘Model United Nations’ where managers are repeatedly distracted by referenda on a variety of topics proposed by investors with trifling stakes”. Meanwhile, asset management firm F&C has released its 2013 Responsible Investment Report that highlights a growth in responsible investment globally, driven by investor values, risk management and the introduction of stronger codes and standards. (Financial Times*, Blue and Green Tomorrow)
ExxonMobil releases carbon asset risk report following investor pressure
ExxonMobil has for the first time agreed to publish a Carbon Asset Risk report on its website describing how it assesses the risk of stranded assets from climate change. The report will provide investors with greater transparency into how ExxonMobil plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable. The move came in response to a recent resolution filed by Arjuna Capital, the sustainable wealth management platform of Baldwin Brothers, and As You Sow, a nonprofit shareholder advocacy group promoting environmental corporate responsibility. The two parties have agreed to withdraw their shareholder resolution in exchange for ExxonMobil providing information to shareholders on the risks that stranded assets pose to the company’s business model, how the company is planning for a carbon constrained world, how climate risks affect capital expenditure plans, and other related issues. (Sustainable Brands)
Supply Chain
General Mills, Colgate-Palmolive and Safeway announce sustainable palm oil commitments
General Mills, Colgate-Palmolive and Safeway have become the latest companies to make commitments on sourcing deforestation-free palm oil, following an announcement by Mars earlier this month. General Mills has updated its existing target for 2015 to include a traceability component, while Colgate and Safeway have introduced new commitments, Safeway in response to a shareholder proposal by the New York State Common Retirement Fund. NGOs such as Greenpeace and the Union of Concerned Scientists (UCS) have continued to keep the issue of palm oil sustainability in the spotlight by engaging with companies, consumers and the industry at large. “It’s wonderful to see major brands step up and demand deforestation-free palm oil,” said Sharon Smith, campaign manager with UCS’ Tropical Forest & Climate Initiative. “We’ve seen that when consumers speak out, companies listen, and when the companies demand better palm oil, producers on the ground follow suit.” (Sustainable Brands, Mongobay)
Latin America producing over $1 billion worth of sustainable food each year, but not consuming much of it
Latin America has become a large producer of sustainable foods, but has yet to become a significant consumer, according to recent research from Organic Monitor. The study finds that while countries like Brazil, Argentina, Chile, Colombia and Peru are well-established sources of sustainable and organic produce, regional consumption remains negligible. The region is also a major source of fair trade products, such as cocoa, sugar and coffee, yet there is no domestic market as most Rainforest Alliance and UTZCertified products grown in the region are destined for Europe and North America. As will be discussed at the Sustainable Foods Summit in São Paolo this week, a major challenge for Latin America is to develop local markets for sustainable products. Various studies show consumer awareness of sustainability issues is rising, but awareness has yet to translate into demand as changing consumer behaviour is seen as a large obstacle. Many Latin Americans perceive organic, fair trade and other eco-labelled products as luxuries and so perceptions will have to change if local markets are to take root. (Sustainable Brands)
Strategy
UK businesses identify sustainability as key growth driver
More than two thirds of UK business executives are associating sustainability with their company’s financial performance, according to a new survey commissioned by BSI and carried out by sustainability analystsVerdantix. It found that 70% of business executives identify sustainability as a key growth driver with the majority willing to invest in internal teams to manage and deliver sustainability. Of the 150 executives surveyed, 81% said that they have more than five staff members dedicated to sustainability at a programme management level. However, although businesses are connecting sustainability to performance, the survey found that only 51% believe that sustainability issues will impact their firm’s financial performance over the next two years. BSI head of market development for sustainability David Fatscher said: “Although the results show broad acceptance amongst organisations that sustainability is a relevant issue, British industry still has plenty more to do before sustainability becomes business as usual.“ (Edie)
COMMENTS