The Fossil Free Divestment Movement

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Today, our article on the fossil fuel divestment movement was published in The Globe and Mail. Founded in 1844, The Globe and Mail is nationally distributed throughout Canada and its most widely read daily newspaper. The article is available below and online: What the Divestment Movement Could Mean for Alberta and Canada. Continue reading

Shareholder Activism, Corporate Boards and Sustainability Accounting

When it comes to the issue of sustainability accounting, corporate responses are all over the map. Some corporations have voluntarily reported on a host of what are now called environmental, social and governance (ESG) factors for more than 20 years (e.g., Kodak), whereas as others have generally tried to avoid doing so (although the empirical evidence suggests that such a position is becoming less and less tenable). And of course, there are a host of intermediate responses, in terms of when companies decide to account for sustainability, and in terms of what they count as sustainability, and how they account for it.

Shareholder activism is one of many factors which might influence if, when and to what extent a corporation chooses to produce a sustainability account. With that idea in mind I was intrigued by a recent press release from Harrington Investments:

Intel corporation has agreed to amend the Charter of the Corporate Governance and Nominating Committee to include “corporate responsibility and sustainability performance” into the committee’s overall policy responsibility. Intel also provided [Harrington Investments] with an outside legal opinion stating that under Delaware Law directors have a fiduciary duty to address corporate responsibility and sustainability performance as specified in the committee charter.

Harrington Investments describes itself as “a 28 year-old Napa, California-based socially responsible investment advisory firm that manages assets of individual and institutional investors requiring social and environmental as well as financial portfolio performance.”

This was the second year in a row that Harrington had introduced a shareholder resolution to amend Intel’s bylaws to create a Board Committee on Sustainability. Although Intel initially opposed the resolution, it later engaged in a dialogue with Harrington. As of March 18, 2010, Intel’s Corporate Governance and Nominating Committee charter now requires its that the committee:

reviews and reports to the Board on a periodic basis with regard to matters of corporate responsibility and sustainability performance, including potential long and short term trends and impacts to our business of environmental, social and governance issues, including the company’s public reporting on these topics.

Currently, Intel’s Corporate Governance and Nominating Committee is chaired by David B. Yoffie.  Other members include Reed E. Hundt, Jane E. Shaw, and John L. Thornton.

College Sustainability Report Cards

One trend I’ve been paying attention to lately is the growing tendency for organizations to provide an account of their sustainability. In fact, thousands of companies now voluntarily report on environmental, social and governance issues (ESG). Of course, some organizations prefer not to be so transparent, either on principle, or because they’d rather keep their dirty laundry private. But in those cases where organizations are unwilling to voluntarily offer their own sustainability accounts, detailed ratings and evaluations are increasingly available through ASSET4, Goldman Sachs SUSTAIN, KLD and others. And in August 2009, Bloomberg’s 250,000 customers gained access to ESG data on more than 3,000 public companies at no extra charge.

Synthesizing these trends has led me to postulate what might be termed the “inevitable sustainability accounts” thesis. Love them or hate them, whether by choice or compulsion, over the past 10 years or so sustainability accounts have become a virtual requirement for large, complex organizations.

With that general thesis in mind, I was intrigued by news of the 2010 College Sustainability Report Card . In much the same way KLD rates some 4,000+ global public companies across more than 200 sustainability indicators, the Sustainability Report Card graded the sustainability efforts of more than 300 public and private colleges and universities with the largest endowments, from Harvard University ($26 billion endowment) to West Los Angeles College ($0 endowment). In other words, my “inevitable sustainability accounts” thesis seems to not only cover the realm of public companies, but also the realm of another sector of large, complex organizations: higher eduction.

Grades were determined by assessing performance across 43 indicators in nine main categories, including:

  1. Administration
  2. Climate Change & Energy
  3. Food & Recycling
  4. Green Building
  5. Student Involvement
  6. Transportation
  7. Endowment Transparency
  8. Investment Priorities
  9. Shareholder Engagement

Among the 332 schools evaluated this year, 8% of schools earned cumulative “A” level grades, 45% earned “B” level grades, 34% earned “C” level grades, and 13% earned “D” level grades.

Of local interest, Penn State received a B grade as announced on the PSIEE website. A detailed summary is available at GreenReportCard.org. As a point of comparison, Cornell University, my undergraduate Alma Mater, also received a B grade. However, while a B grade put Penn State in the top half of the Big 10 conference, a B grade left Cornell in the bottom third of the Ivy League conference.

Given these apparent systematic differences between the two conferences, an interesting exercise might be to think about possible explanations for “grade” variations across the larger sample. In short, can we “predict” the grades these colleges received? And if so, on what basis? Just off the top of my head: location (blue state v. red state, urban v. rural, single campus v. multi-campus), average SAT scores, admission selectivity rates, endowment size, state funding, research grants, governance structure (centralized, decentralized, federated, etc), athletic program revenue, responsiveness to ESG past issues (e.g., recycling, South African investments, sweat shop labor, etc), characteristics of the top management team (“TMT”; e.g., age, gender, educational and functional background, level of discretion, etc), values of the TMT (egoistic, altruistic, biospheric, etc.), participation in the UN Global Compact.

Although this might seem like a relatively undisciplined list, behind each factor are theoretical reasons why variations might play a contributing role in explaining a college’s sustainability grade. No doubt reasonable people could come up with even more possible explanations if they spent more than 5 minutes thinking about it.

What factors would you use to predict grades? Add a comment or send me an email with your ideas.

DuPont Sustainable Growth Awards

2009 DuPont Sustainable Growth Excellence Awards

2009 DuPont Sustainable Growth Excellence Awards

In October 2009 I was pleased to participate as one of five external judges for the 2009 DuPont Sustainable Growth Excellence Awards, which are intended to spotlight Dupont’s economic, safety, health, environmental, and social performance.

My participation involved reading and evaluating approximately two dozen DuPont sustainability innovations that were nominated from around the globe. Each nomination included both a narrative description of the innovation, as well as variety metrics related to its sustainability impact. Each of these nominations were rated, discussed and finally ranked using multiple criteria during a half-day conference call with my fellow judges. This is truly a wonderful program and I would encourage other organizations to consider putting a similar focus on recognizing sustainability innovation.

The results were announced this week. To read about the 6 winners download the 2009 DuPont Sustainable Growth Excellence Awards brochure.