What is "shareholder activism" on behalf of environmental protection?
When the international environmental advocacy group Greenpeace made a decision in 2001 to invest in Shell Oil, it caused gasps in the environmental community, which wondered why the group, known for its daring tactics against polluters, would invest in one of the very companies it criticized. But buying $250,000 in Shell stock made Greenpeace a shareholder and thus enabled the group to file a "shareholder resolution" asking the company to substantially increase its investment in renewable energy technology.
Other recent high-profile environmental shareholder resolutions have challenged the use of genetically modified ingredients in foods, urged more recycled content in packaging, opposed pollution that contributes to climate change, and pushed for computer "take-back programs" by manufacturers that could re-use components in making new ones. According to Tracey Rembert of the Social Investment Forum (SIF), there were more than 30 resolutions relating to climate change alone filed in 2003.
Shareholder activism is not just for advocacy groups like Greenpeace and SIF. Individuals who own stock can get involved, too, by filing resolutions on their own or in partnership with an advocacy organization, by voting their proxies (the ballots mailed to shareholders), and by simply writing letters to the CEO (which have more clout coming from shareholders). Investors can also ask their pension plan or portfolio managers to contact a company on their behalf about an issue.
What fruits, if any, have these efforts yielded? A resolution asking American Electric Power to report on its greenhouse gas emissions received nearly 27 percent of the vote, and a resolution asking ChevronTexaco to report on its plans for developing renewable energy sources received 25 percent of the vote. "If a vote gets about 20 percent it usually pushes the company enough to take some action," says Rembert.
Resolutions sometimes never reach completion, but instead succeed by drawing enough advance attention to start a dialogue with company management. Negotiations with ConocoPhillips following the threat of a resolution led to a pledge from the CEO to produce a climate change plan for the company. And office supplies superstore Staples agreed to set company greenhouse gas emissions reduction targets because of pressure from shareholders.
Filing a shareholder resolution requires legal savvy, and many investing professionals recommend getting guidance. "Start with co-filing a resolution under the direction of an organization like the Interfaith Center on Corporate Responsibility," recommends Carsten Henningsen, chairman of Portfolio 21, an environmentally focused mutual fund. "If you have people filing that don't have political sensitivities, or that aren't aware of others' strategies, it could cause harm to shareholder efforts," he says.
Contacts: Greenpeace, (202) 462-1177, www.greenpeaceusa.org; Social Investment Forum, (202) 872-5313, www.shareholderaction.org; Portfolio 21, 877-351-4115, www.portfolio21.com; Interfaith Center on Corporate Responsibility, (212) 870-2295, www.iccr.org.