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By Yin Wilczek
May 28 — BlackRock and Ceres May 28 issued a release to guide U.S. institutional investors through the process of engaging with companies and policy makers on sustainability matters.
The guidance, “21st Century Engagement,” includes strategies and case studies on topics such as tailoring an engagement program, submitting shareholder proposals, writing to companies and talking to boards.
The publication is authored by representatives from the California Public Employees Retirement System, T. Rowe Price, the Council of Institutional Investors, the New York State Common Retirement Fund and other well-known activists.
In a release, BlackRock and Ceres said the guidance comes as concern increases over global sustainability risks that could materially impact corporate performance, such as climate change and water constraints in Brazil and California, and human rights abuses. The guidance will help “broaden and deepen” the dialogue between investors and companies, they said.
“In our experience, companies that manage all dimensions of the business to the highest standards are more resilient and generate more sustainable financial returns over time,” BlackRock Managing Director Michelle Edkins said in the release. “We’re encouraged by the efforts leading companies are making in reporting material” environmental, social and governance (ESG) “risks and opportunities, which helps shareholders and others understand how effectively risks are being mitigated and opportunities realized to protect and enhance long-term economic returns.”
Ceres President Mindy Lubber also noted that engagement between institutional investors and companies on sustainability issues continues to increase.
“The number of sustainability-focused shareholder resolutions continues to rise,” Lubber said in the release. “We’re also seeing upticks in other engagement strategies, such as investors meeting with boards, negotiating with executive teams and asking hard, pointed questions on earnings calls and at annual meetings.”
Companies this year are facing a record push by investors over ESG concerns. According to Ceres, more than 190 ESG resolutions were proposed this year, up 88 percent since 2011 when the organization began collecting the data.
The targeted companies include Exxon Mobil Corp., Royal Dutch Shell Plc., Total SA, Chevron Corp. and Eni SpA.
James Copland, director and senior fellow at the Manhattan Institute Center for Legal Policy, also told Bloomberg BNA that from 2006 through 2014, a total of 1,150 shareholder proposals introduced on the proxy ballots of Fortune 250 companies involved social or policy concerns, including 47 percent of all shareholder proposals in 2014.
Copland oversees the ProxyMonitor.org website for the conservative think tank. The ProxyMonitor database tracks shareholder proposals.
Copland suggested that the flip side of the ESG movement is that most shareholders have consistently rejected the activists' efforts. Of those 1,150 proposals, not a single received majority shareholder support over board opposition, he said.
“Such consistent shareholder sentiment suggests that, contrary to the thrust of this report, it is time to take social issues and public policy out of corporate governance,” Copland said. “Although it is unsurprising that the division of BlackRock focused on `responsible investment' would issue a report on engaging with companies on sustainability issues, it would be very surprising if the actual asset managers at BlackRock who manage funds without a social-investing orientation were buying or selling corporate securities based upon the environmental or sustainability issues that are the subject of this report.”
In recent annual meetings, shareholder proposals that called on Chevron and ExxonMobil to set greenhouse gas goals, put environmental experts on their boards and report on how they are minimizing hydraulic fracturing impacts received only about 9 percent to 27 percent support, according to preliminary counts.
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The guidance and related release are available at http://www.ceres.org/press/press-releases/blackrock-ceres-launch-investor-guide-on-us-corporate-engagement?utm_content=buffer658a7&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer.
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