Proxy Season 2011: A Tipping Point for Social and Environmental Issues? (Harvard Forum)

The following postin the Harvard Forum on CorporateGovernance and FinancialRegulation,is from Heidi Welsh, Executive Director at the Sustainable Investments Institute (Si2), with input from Tim Smith, Senior Vice President at Walden Asset Management, and was adapted from the executive summary of a longer report on the results of the 2011 proxy season published by Si2.

It doesn’t take a majority to make a revolution, particularly when old paradigms have developed deep fault lines. A significant and growing portion of investors think the companies they own need to take more proactive, transparent action on a broad range of social, environmental and governance issues, to protect long-term shareholder value. One measure of support for this view is the global group of 870 investors who manage more than $25 trillion and have signed on to the UN Principles for Responsible Investment. Another is the Carbon Disclosure Project, which now boasts support from investors with $71 trillion of AUM and presses companies to disclose how they are reducing their carbon footprints. Clearly there is an explosion of involvement by investors—“shareowners,” not just passive shareholders—who work to integrate ESG issues into their investment decisions and engagements with companies.

Additional hard evidence of sentiment favoring reform comes from the recently concluded 2011 proxy season, which arguably marks a new tipping point for social and environmental issues. Active shareowners now are voting their convictions more than ever, sending a strong message to company managements and boards. This analysis focuses on the spring “proxy season“ results as one strong indicator of the expansion of investor interest and support for company evolution to higher levels of corporate responsibility.

The overall average support level cracked 20 percent, an historic first;

Five (nearly six) proposals received majority support from investors; and

Twenty-one resolutions garnered more than 40 percent support, another new record.

The full post is at : http://hvrd.me/mXPj93.

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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