Outcome: Withdrawn after the company committed to publishing a report covering its policies, practices, and metrics and targets on key ESG issues.
Shareholders request Quanta Services, Inc. (Quanta) issue a report describing the company’s environmental, social, and governance (ESG) policies, quantitative performance metrics, and improvement targets, including a discussion of greenhouse gas (GHG) emissions management strategies and metrics. This report should be updated annually, be prepared at reasonable cost, and omit proprietary information.
Quanta should consider the resources and recommendations made by the widely accepted Global Reporting Initiative, CDP, Sustainability Accounting Standards Board (SASB), and the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD) when identifying ESG topics to be included in this report. Proponents believe significant ESG issue areas for Quanta include operational environmental impacts (air emissions, energy use, water use); environmental impacts of project development; employee health and safety; workforce development; and hazardous materials waste management.
Tracking and reporting on ESG practices strengthens a company’s ability to compete and adapt in today’s global business environment, which is characterized by heightened public expectations for corporate accountability. Transparent, substantive reporting allows companies to better integrate and capture value from existing sustainability efforts, identify gaps and opportunities in policies and practices, strengthen risk management programs, stimulate innovation, enhance company-wide communications, and recruit and retain employees.
Quanta has provided some basic disclosures around safety and corporate governance practices but has not provided comprehensive information on other environmental or social policies, practices, performance metrics, or goals. In contrast, 10 out of the 13 peer companies identified in Quanta’s 2018 Proxy statement have published comprehensive sustainability reports. The Governance & Accountability Institute reports 85% of the S&P 500 published corporate sustainability reports in 2017.
Investors are increasingly calling for improved corporate disclosure around ESG issues.
• The 1,900 signatories of the Principles for Responsible Investment that represent $81.7 trillion in assets, commit to “seek appropriate disclosure on ESG issues by the entities in which [they] invest.”
• The SASB Investor Advisory Group consists of 32 global asset owners and asset managers, including Blackrock, Vanguard, and State Street Global Advisors, with $26 trillion in assets, seeks consistent, comparable, and reliable disclosure of material, decision-useful sustainability-related information from corporate issuers.
• One of the recommendations of the TCFD, whose members include representatives from BlackRock, JPMorgan Chase, and UBS Asset Management is: “Describe the targets used by the organization to manage climate-related risks and opportunities and performance against these targets.”
The link between company performance on material ESG issues and long-term shareholder value is increasingly evident. The University of Oxford and Arabesque Partners recently reviewed 200 studies on sustainability and corporate performance and concluded 90 percent of studies show “sound sustainability standards lower the cost of capital of companies” and 80 percent show “stock price performance of companies is positively influenced by good sustainability practices.”
Furthermore, a study by the Society for Human Resource Management found employee morale was 55% better, loyalty 38% better, and workforce productivity 21% better in firms with strong sustainability programs.