Flash Report: 72% of S&P 500 Companies Now Publishing Sustainability / Responsibility Reports

by Hank Boerner – Chairman G&A Institute

For the past several years the G&A Institute team has been tracking and analyzing the disclosure / reporting trends of the companies included in the S&P 500 (r) Index managed by McGraw Hill Financial.

We’re seeing a dramatic escalation of sustainability reporting by the leading companies in American business (those included in the index/benchmark)..

In year 2013, our analysis shows 72% of the S&P 500 published in some form a sustainability or responsibility (or “citizenship”) report.

In 2012, our analysts reported that just over half (53%) were reporting. In 2011, the first year of our analysis, we found just under 20% of S&P 500 companies were publishing reports.

Stated another way —

– that means that in 2011, 80% of the Index companies were not reporting;
– in 2012, we reported that for the first time more than half of the S&P 500 were reporting…and
– now for 2013, the proportion is reversed from 2011, with only 20% not reporting.

These are dramatic findings, which demonstrate that at least at the top ranks of the American corporate sector, boards and managements are developing sustainability strategies, organizing internally, operationalizing the strategies, creating teams, engaging with third parties, and achieving significant gains in reducing energy use, waste, emissions, etc.

And all of these efforts comprise the content of the structured report that these companies are now publishing.

Trend to watch: As these leading American companies focus on their supply chain, suppliers are increasingly requested to provide information on their operations to the major customer. We believe that over the coming year we will see similar reporting trends beyond the S&P 500 companies, particularly in key industries and sectors where the customers are requesting reporting (auto, electronic, apparel, retail, food, agriculture, mining, others).

We thank our talent corps of interns who worked diligently over the past year on the S&P 500 project:

Qi (Ella) Chen – Columbia University
Siyuan Fang- Columbia
Colleen Gearns – New York University (2013 graduate)
Anna Gunther – Columbia
Selene Lawrence – Hunter College, CUNY
Yekta Karimi – Columbia

Louis Coppola, EVP of G&A, has been the architect and coordinator of the S&P 500 Index analysis projects for 2011, 2012 and 2013.  Well done, team!

There’s more information about the S&P 500 companies and their reporting activities on our corporate web site — www.ga-institute.com

To keep in mind: The S&P 500 is the broadest barometer of US corporate equities and the US economy, and represents about 80% coverage of available market capitalization. From the investor point-of-view, more than US$5 trillion in assets is benchmarked to the index, with indexed assets being $1.6 trillion of the total. The S&P 500 is a very important capital market resource – and, it’s a great event when a US company is included in the S&P 500.

For the record, the S&P 500 is managed by S&P Dow Jones Indices, a unit of McGraw-Hill Financial. The index is a registered trademark.

The Role of Individual Investors in Prompting Governance Reform via the Proxy Process

guest commentary by Tim Smith – Walden Asset Management

We have all read a great deal about the concern that companies, the [US] Chamber of Commerce and SEC Commissioner Gallagher have about the “highjacking” of the proxy process.

Particular anger is aimed at John Chevedden, Bill Steiner  and James McRitchie who file multiple resolutions on governance reforms — like majority vote, annual election of directors, changing different classes of shares with unequal voting rights, right for shareholders to call a special meeting and separate Chair and CEO, among others.

Mr. Chevedden is criticized for some of the language in his resolution texts as well as his seeming unwillingness to change false and misleading statements in the whereas clauses . In fact, 4 companies sued him this year to block resolutions he submitted either for himself as a shareholder or for colleagues like James McRitchie.

But it seems much of the frustration is not aimed at him but at the strong positive votes for such reforms  supporting many of these proposals . On many governance issues he coordinates and files, votes are in the 30 to 40 % range AND as you will see below many get well over 50%. Few are low level vote getters.

So while questions can be raised about the style of Mr. Chevedden’s engagements, few can argue that they don’t touch a nerve and get a positive investor response .

That leaves one questioning why SEC Commissioner Gallagher sees this as an abuse and believes there should be an increase in the value of shares held for a proponent to US$200,000 or “even better $2 million.”  Of course, such a change would virtually wipe out the role of small individual investors in the proxy process.

Another way to view it is that these are valuable governance reforms being tested by individual shareholders who could certainly brush up on the facts in their whereas clauses and open up engagement with companies — but nevertheless add real value to an ongoing debate about best governance practices and actually stimulate numerous reforms by companies .

Why is a resolution filed by a major pension fund or investment firm on the same topic any more meritorious than one by an individual shareholder?

The votes seem to indicate that proxies are voted on the issue — not the proponent.

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–Timothy Smith, Senior Vice President and Director of Environmental Social and Governance Shareowner Engagement Walden Asset Management .

Boston, MA 02108 – Tel: 617-726-7155

tsmith@bostontrust.com

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FYI – Samples of Votes With Over 50% – Companies Receiving Resolutions from John Chevedden:

 

Costco Wholesale Corporation (COST)
Simple Majority Vote
James McRitchie
65%

Brocade Communications Systems, Inc. (BRCD)
Special Meeting Kenneth Steiner 60%

Allergan, Inc. (AGN)
Independent Board Chairman
John Chevedden
50%+

BorgWarner Inc. (BWA)
Simple Majority Vote
John Chevedden
79%

Brink’s Company (BCO)
Annual Election of Each Director
William Steiner
78%

Bristol-Myers Squibb Company (BMY)
Simple Majority Vote
Kenneth Steiner
85%

Chipotle Mexican Grill, Inc. (CMG)
Simple Majority Vote
James McRitchie
75%

Duke Energy Corporation (DUK)
Special Meeting
John Chevedden
60%

iRobot Corporation (IRBT)
Simple Majority Vote
James McRitchie
82%

PPL Corporation (PPL)
Special Meeting
William Steiner
59%

NextEra Energy, Inc. (NEE)
Simple Majority Vote
Myra K. Young
73%

Alexion Pharmaceuticals, Inc. (ALXN)
Pill
John Chevedden
91%

Ferro Corporation (FOE)
Simple Majority Vote
Kenneth Steiner
99%

Neustar Inc (NSR)
A
nnual Election of Each Director
John Chevedden
86%

Staples Inc. (SPLS)
Independent Board Chairman
John Chevedden
50%+