A Bumper Crop of Green Proposals

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Tied for third place are proposals calling on companies to expand their equal employment policies, to report on sustainability, and to strengthen their human rights policies.

Were there any new types of environmental proposals?

Two proposals came to votes at Chevron (CVX) and ConocoPhillips (COP) concerning development of oil sands in Canada. This would not only be a greenhouse-gas-intensive method of producing oil; it would also involve going into Canadian forest lands. It would have a huge impact on the land surface, water use, and water pollution. At Conoco, the vote was fairly high, with 39% supporting the proposal or abstaining. It was a very high vote for an issue coming up for the first time.

One other vote that had environmental impact was at Avon Products (AVP). Calvert Group (CSIBX), a socially responsible investing group, asked Avon to review its use of nanomaterials in sunscreens and other personal-care products. This is a lightly regulated area. Regulators are not quite sure how to deal with it. That proposal appears to have gotten 25% support, which is also high for a resolution coming up for the first time.

Did any of these proposals actually pass by 50%?

No, but a vote result of 25% or 30% means proponents can refile the proposal the following year with the blessing of the Securities & Exchange Commission. In that case, the company probably needs to do something to keep the resolution from being refiled. Companies think about their image and reputation. They are interested in reaching out to the proponents of these resolutions and saying: "O.K., let's look at this issue."

So you think these proposals are not just purely symbolic? They're having some practical effect?

Yes, I do.

Can you point to a company that has responded to a proposal, even though the measure did not get 50% support?

Domini Social Investments (DSEFX) withdrew a resolution this year at Home Depot (HD) asking for a report on its purchase of sustainably harvested lumber because Home Depot agreed to publish a progress report on its Web site on its wood-purchasing policy. The company will make this information public. There will be quantitative information, some way to measure the amount of wood sold that meets the standards of the Forest Stewardship Council. (http://www.fscus.org)

Why is Environmental Defense or Greenpeace not taking the initiative on these environmental issues?

The three leading filers are religious investors, maybe Catholic orders or other church groups. The second category is public pension funds, such as ones from New York City or Connecticut, which have been very active on climate change. Then we're also seeing socially responsible investment management firms such as Calvert, Walden Asset Management and Trillium Asset Management.

Sometimes we'll hear from the Sierra Club or Friends of the Earth. But the filers tend to be organizations that are large enough to have one person or two who can organize shareholder advocacy and stay on top of SEC decisions about what is a legitimate topic to bring up in a shareholder resolution.

How do you explain that the environmental cause has largely been taken over by other groups?

It makes a lot of sense in that pension funds are thinking very long term about their beneficiaries. They say they have no choice but to be universal investors. They have to own a broad spectrum of the U.S. and global economies. So they are using shareholder advocacy to encourage companies to think about problems before it's too late—to look down the road at labor, human rights, and environmental issues that, if not managed properly, could hurt the company's reputation and overall value.

Holstein is an independent business journalist and author in New York.