Volume 1:Issue #16
Edited by Francis H.Byrd
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The Way We See It – Commentary from The Altman Group

Francis H. Byrd, Managing Director and Corporate Governance Advisory Practice Co-Leader

Don’t Forget About the Socially Responsible Investors – Part II

As promised, we conducted a quick analysis of the green house gas (GHG) proposals that have come to a vote thus far in 2009.

The 2009 vote results data provide some clues as to how well these proposals will do going forward. But proponents are buoyed by the majority vote at IDACorp (see table below) and some increases in the size of FOR votes. While much of the credit for these increases are the result of greater investor interest and concern on environmental issues,  it is also true that the activist institutional investor community has coalesced around environmental, social and governance issues (ESG) as never before.

 

Green House Gas (GHG) Resolutions Results*^

Company

% Held by Institutions

2009 For/F+A%

2008 For/F+A%

Yr/Yr % Chg

ConocoPhillips

73

27.4

29.4

-2

Exxon Mobil Corp.

48

29

30.9

-1.9

Massey Energy Company

91

45.6

30.8

14.8

Standard Pacific Corp.

71

15.3

33.7

-18.4

The Ryland Group, Inc.

95

29.9

25.4

4.5

IDACORP, Inc.

66

51.2

NA

NA

*Voting results for 2008 and 2009 from RiskMetrics
^Percentage of institutional ownership from Factset

As we mentioned in last week’s column, institutional membership in the CERES coalition, a leading group on environmental and climate issues, has grown dramatically in the last few years, as have their efforts at building a global investor network focused on environmental and social issues.

 

A GHG filled Crystal Ball?

The data from this year is thus far inconclusive on whether CSR proposals generally, and GHG specifically, are trending upward. What can be said, however, is that resolution proponents may within the next few years be in a greater position to pressure companies with potential majority votes on CSR issues--especially environmental concerns. While circumstances will differ from company to company and proponent to proponent, issuers will not want to be in the position of risking a majority vote over a two year period on an issue that appears like motherhood and apple pie to investors and customers, such as the environment does. Issuers and their advisors need to consider, if they have not already, what their CSR risks are, and to be prepared for engagement with activist institutions, foundations, or socially conscious fund managers.

 

 
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