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6 April 2012
SocialFunds: Listen to Investors, Ernst & Young Tells Corporate Boards
Source:
www.socialfunds.com
by Robert Kropp
A white paper from the consulting firm anticipates that shareowner support for environmental and social resolutions will continue to grow, and that boards should take concrete steps to ensure that the perspectives of investors are considered.
SocialFunds.com -- A recently published white paper from Ernst & Young asks corporate boards if they are prepared for a focus by investors on sustainability issues.
The results of the 2011 proxy season have set the stage for what will occur in 2012, the paper, and the paper states that "a confluence of factors…are working to sharpen attention on the 'triple bottom line' of environmental, social and economic performance."
For the third straight year, the paper continues, proposals addressing sustainability issues "will dominate other major proposal categories." Furthermore, voting support for such proposals is likely to continue to increase in 2012. "Investors will challenge boards to further improve oversight on hot-button environmental and social issues and to enhance stakeholder communication around these topics," the paper states.
A clear example of the extent to which the concerns of sustainable investors have gone mainstream can be discerned by vote totals in support of environmental and social resolutions, which reached 21% in 2011. The efforts of investors to pressure companies to focus on the risks and opportunities associated with sustainability issues "reflect the growing belief that a company's environmental and social policies correlate strongly with its risk management approach and financial performance," according to the paper.
The major issues that corporate boards will be pressured to confront this year include corporate expenditures on political spending and lobbying; the sustainability of extractive practices relating to hydraulic fracturing, oil sands development, and coal combustion; and sustainability reporting and greenhouse gas (GHG) reduction strategies.
Warning boards that "institutional investors are likely to continue to push hard on these matters," the paper anticipates that "initiatives could gain greater attention from community groups and other stakeholders, as well as news and social media."
Ernst & Young recommends improved sustainability reporting as a means of enhancing dialogue and bolstering disclosure. Corporate boards should include directors with industry-specific skill sets, and should also consider aligning executive compensation with environmental, social, and corporate governance (ESG) performance.
"Investors derive value from executive summaries that directly and concisely communicate governance-related developments and make clear that the board is considering shareholders' perspectives as a factor in its decision-making process," the paper concludes.
News
12 November 2008
SRI-Adviser: Most Corporations Fail to Address Risks to Long-Term Profitability
12 November 2008
CSR-Asia: Responsible investment - "We can make them beautiful"
11 November 2008
SocialFunds: UK Fund Managers Finds Room for Improvement on ESG Issues
10 November 2008
Professional Pensions: Fund managers ‘neglecting’ ESG issues, warns FairPensions
5 November 2008
SocialFunds: Institutional Investors Call on SEC to Require Climate Change Disclosure
4 November 2008
SRI-Adviser: Corporate Glass Ceiling for Women and Minorities is yet to be Shattered
3 November 2008
Finacial Times: Investors sign up to a better world
30 October 2008
BusinessGreen: 9,000 CEOS urged to sign up to UN Global Compact
28 October 2008
Environmental Leader: Investors Urge CEOs to Join UN Global Compact
24 October 2008
Responsible Investor: Integrating ESG into Mainstream Portfolios
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Sustainable Investment Research Platform
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