This year's Proxy Preview was published by As You Sow Foundation, the Sustainable Investment Institute (Si2) and Proxy Impact today. Authors Heidi Walsh and Michael Passoff provide a detailed picture of the upcoming proxy season, tracing trends in shareholder resolution filing, proxy voting and engagement activities.
Some of the biggest issues that they identify for this coming season are political spending, hydraulic fracturing and coal-related risks.
The report notes that this year nearly a third of socially responsible shareholder resolutions address concerns about corporate political spending, lobbying, and the influence of corporate money on government policy. Key contributing factors to the growing interest in corporate political influence are the 2010 Supreme Court Citizens United case and the Occupy Wall Street protest movement.
Hydraulic fracturing engagement activities led by the Investor Environmental Health Network (IEHN) focused initially on disclosure of fracking fluid chemicals and on impacts on waste generation, water contamination and air quality. This year engagement will draw attention to community impacts. Environmental pollutants from fracking operations are underreported by fracking companies and have a dramatic impact on the quality of life of proximate communities. Eleven fracking resolutions have been filed for the 2012 proxy season of which three have been withdrawn so far.
The report notes a possible reclassification by the EPA of coal combustion waste as hazardous as one of the key contributing factors to the increased shareholder support for coal-risk resolutions in the 2011 proxy season. A 2011 resolution on coal risk at Ameren earned 52.7% support from shareholders. Nine coal-related resolutions have been filed for the 2012 proxy season of which one has been withdrawn so far.
Another issue attracting strong support in 2011 following high-profile disasters in recent years is oil refinery accident risk. Following the Fukushima nuclear disaster nuclear plant safety risk has been taken up by New York State Common Retirement Fund for the 2012 proxy season, with seven resolutions at nuclear energy companies.
The report notes a trend towards increased shareholder resolution activity on environmental issues relative to human rights-related issues over the last few years, continuing into 2012. One possible explanation is that more companies are amenable to dialogue over human rights related issues. In addition, calls for transparency, accountability and risk management resonate with institutional investors and regulators. Large institutional investors, including mutual funds, are increasingly recognizing climate risk and related issues as investment risks and well-crafted resolutions are articulating the business case for sustainability.