Trillium Asset Management, LLC, a Boston-based pioneer in the field of environmental, social and governance (ESG) investing, reported out today on the results of its 2011 proxy season engagements with nearly two dozen major U.S. corporations. (For a full listing of our 2011 Shareholder Proposals, scroll to the end of the page.)
“A good portion of our dialogues and resolutions resulted in agreements with companies to improve policies and provide more transparency,” said Matthew Patsky, CEO of Trillium. “Both are helpful in assessing the environmental, social and governance risks and their financial impact on shareholders.”
Trillium’s ESG program addressed a wide range of concerns in 2011, including climate change and fossil fuel dependency, indigenous peoples’ rights, discrimination in the workplace, community-level impacts of industrial and energy production, and a free and open Internet.
Roughly half of Trillium’s engagements in 2011 focused on the environment or environmental health matters.
Concerned with the risks associated with the controversial practice of hydraulic fracturing, Trillium filed a shareholder proposal at energy company Anadarko Corporation (APC), which has a large interest in the Marcellus Shale. “Following a productive dialogue, we withdrew a shareholder proposal when the company agreed to expand and improve its public reporting on hydraulic fracturing. There’s more to be done and we’ll continue to advocate at Anadarko and other companies for increased transparency and the safest practices,” said Shelley Alpern, Director of ESG Research and Shareholder Advocacy.
Dialogue with Costco (COST), the warehouse-style consumer products retailer, produced another constructive outcome. The company produced and released to Trillium and Green Century Funds a substantially improved seafood sustainability policy. “Costco will discontinue selling twelve wild species identified as ‘at great risk’ by the Marine Stewardship Council, up from seven,” said Susan Baker, Senior Research Analyst at Trillium. “The company is also partnering with reputable nongovernmental organizations to come into compliance with best practice standards for shrimp and salmon aquaculture.”
We were able to withdraw a shareholder proposal that we filed with food distribution company Sysco Corporation (SYY) after the company agreed to participate in the Carbon Disclosure Project, the Carbon Disclosure Project Water Survey, and to fully develop its sustainability strategy to include areas such as water scarcity and sustainable agriculture. “We look forward to the ongoing dialogue with the company as we continue to meet with its senior executives in the months to come,” commented Jonas Kron, Director of ESG Research and Shareholder Advocacy.
Trillium also took steps to help ward off the construction of the proposed Pebble Mine in Bristol Bay Alaska. Proposed by the U.K.-based Anglo-American (AAM.SW), Pebble Mine, if built, will be the largest open pit mineral mine in North America. It would generate billions of tons of mining waste to be held behind a system of dams (equivalent to the Three Gorges dams in China) in a highly earthquake-prone area – and one that serves as the breeding grounds for the largest sockeye salmon run in the world. Currently the Environmental Protecting Agency (EPA) is reviewing the proposed mine to determine whether it should veto the project under its Clean Water Act authority. In April Trillium organized a group of shareholders representing $170 billion of assets under management to publicly issue a joint statement calling for the agency to protect this vitally important national resource. “Within 48 hours of publication, EPA staffers in charge of the review requested a meeting with Trillium. At that meeting we had ample time to express our concerns and were pleased at how seriously they were taken,” Kron said.
Corporate Political Spending
In 2011, shareholders expressed their deep discomfort with corporate political spending more strongly than ever before. In the spring, forty-six percent (46%) of votes cast by Halliburton (HAL) shareholders supported our proposal for greater transparency and oversight at the energy services company, as did 44% of the vote at State Street (STT). And for the first time, a resolution of this type filed at mobile phone company Sprint Nextel (by the New York Employees Retirement System) received a majority vote.
These votes were a fitting cap to a proxy season that started early last August, when Trillium was part of a shareholder group that responded promptly to the revelation that a number of Minnesota-based companies had given substantial contributions, via a business front group, to a gubernatorial candidate with extreme anti-gay views. As protestors demonstrated at its stores, Target Corporation (TGT) became the focus of a nationwide boycott that received generous media attention during a slow news month. Within days of the initial revelations, Trillium filed shareholder resolutions at Target, Pentair (PNR), Best Buy (BBY) and 3M (MMM) calling for a review of existing political donations policies and tighter oversight of the reputation and other risks incurring from them.
“These ill-considered donations represented a betrayal of these companies’ commitment to valuing diversity, and illustrated the widening reach of corporations in the wake of Cititzens United,” said Alpern, referring to the 2010 Supreme Court decision that removed significant barriers to corporate political involvement. With the exception of 3M (where our resolution gained 31% of the vote), the resolutions were eventually withdrawn at all of the companies after they demonstrated that they had reviewed and improved their oversight of political contributions and the procedures in place for vetting potential recipients. A multiyear national shareholder campaign coordinated by the Center for Political Accountability has resulted in the adoption of best practices in politicaldisclosure by 85 companies, of which 50 are in the S&P 100.
Trillium took part in a meeting with the Securities and Exchange Commission (SEC) to discuss proposed rules on conflict minerals mandated by the passage of the Dodd-Frank Financial Reform Act. Conflict minerals are those whose proceeds finance fighting by armed groups in war-torn regions, particularly the Democratic Republic of the Congo (DRC). “We were gratified to see several of our recommendations included in the SEC’s recently proposed new rules,” said Susan Baker. In February, Trillium was part of an investor coalition representing nearly $200 billion assets that released a statement calling on companies to condemn the use of minerals whose trade promotes the conflict in the DRC and take immediate steps to ensure that these minerals are not used in their products.
With other socially responsible and faith-based investors, Trillium also lobbied for the passage of landmark legislation in California (SB 861) that will forbid companies that do not comply with disclosure requirements under the SEC’s conflict mineral rules from bidding on state contracts for goods and services. The legislation passed the Senate on June 1 and is currently pending in committee.
Internet Privacy and Freedom of Expression
CenturyLink (CTL), the nation’s third largest telecommunications company, finally owned up to its responsibilities regarding Internet privacy and freedom of expression. Trillium’s well-supported 2009 and 2010 shareholders proposals (both received about 30% of the vote) had asked the company to report on how it would avoid violating Internet users’ privacy, after it was revealed to be in business with an online advertising company that secretly monitored Internet users’ browsing activities. In exchange for the withdrawal of our resolution this year, CenturyLink agreed to incorporate privacy and freedom of expression responsibilities into its governing documents.
Trillium’s 2011 shareholder proposals on what is called “net neutrality” at AT&T (T), Verizon (VZ) and Comcast (CMCSA) were excluded from the companies’ ballots with permission from at the Securities and Exchange Commission, on the grounds that they focused on a matter of “ordinary business.” We were pleased, however, that the SEC’s decision was roundly criticized by U.S. Senators Al Franken (D-MN) and Ron Wyden (D-OR). In March, they wrote to SEC Chairman Shapiro to object to the decision, asserting “Whether the government will preserve and protect today’s free and open Internet is the telecommunications and free speech issue of our time.”
LGBT Workplace Policies
In 2010, we worked with the Equity Foundation to file a shareholder proposal at Gardner Denver (GDI), asking the manufacturer to recognize sexual orientation and gender identity expression in its nondiscrimination policy; it garnered the support of 49% of shareholder votes. “To our surprise, it was necessary to re-file the proposal in 2011; the resubmission was successful in spurring the company to adopt our policy recommendation and we subsequently withdrew the proposal,” said Jonas Kron. “In contrast, Lowes Corporation (LOW) responded very positively and quickly to our request, and now its 200,000 employees are protected by an up-to-date policy that includes gender expression.”
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About Trillium Asset Management, LLC
Boston-based Trillium Asset Management, LLC is the oldest independent investment advisor devoted exclusively to sustainable and responsible investing. We believe examining environmental, social, and governance factors as an integrated part of the investment process can lower portfolio risk and help identify the best managed companies. With close to $1 billion in assets under management, we have been managing equity and fixed income investments for high net worth individuals, foundations, endowments, religious institutions, and other non-profits since 1982. A leader in shareholder advocacy and public policy work, our goal is to deliver both impact and performance to our investors.
2011 Shareholder Proposals
Bolded items indicate a “lead filing,” where Trillium Asset Management, LLC leads a coalition of shareholder advocates; all others are where we have co-filed in collaboration with other lead filers.
|Climate Change & Fossil Fuels||Anadarko (withdrawn)
Royal Bank of Canada
|Provide comprehensive reporting on environmental impacts of hydrofracking operationsReport on environmental and social impacts of tar sands oil extractionReport on environmental and social impacts of funding tar sands oil extraction
Add environmental expert to Board of Directors
|Reliance on Coal||Dominion Resources (7%), Duke Energy (8%)||Report on economic impacts of continued reliance on coal|
|Sustainability Report||St. Jude (withdrawn), Smuckers*||Issue a sustainability report|
|Environmental Justice||PPG (6%)||Disclose environmental impacts at community level|
|Environmental Health||Coca-Cola (25%), Dentsply (withdrawn)||Report on alternatives to Bisphenol-A|
|Water Risk||Sysco*||Assess water risks in supply chain|
|Environmental Waste||Procter & Gamble*||Responsibility for post-consumer packaging|
|Human Rights||Fed Ex (to be determined)||Review and develop indicators for a human rights policy|
|Equal Employment Opportunity||Home Depot (30%)||Disclose workplace demographic data|
|Inclusive LGBT Workplace Policies||Gardner Denver, Lowes (withdrawn)||Ensure nondiscrimination policies cover lesbian, gay, bisexual and transgendered workers|
|Media Responsibility||AT&T, CenturyLink, Comcast, Verizon (all omitted)||Implement “net neutrality” principles (free and open Internet)|
|Political Contributions||Halliburton (46%), State Street (44%), IBM (31%),
3M (36%), Pentair (withdrawn)
Best Buy, Target (withdrawn)
|Provide comprehensive disclosure of all contributions used for political purposes
Review political contributions spending processes