Research & Engagement in Action – Winter 2014

2017-11-09T17:48:26+00:00
By Carly Greenberg and Aaron Ziulkowski
From the Winter 2014 Edition of Values

 

Utilizing the primary tools at our disposal—shareholder dialogue and resolutions, coalition building, and public policy advocacy—Walden is working with our partners to promote solutions to climate change, to address inequality in the workplace, and to shine a light on corporate influence on public policy. We are pleased that our efforts have a positive impact.

Climate Change

This fall, we launched a new initiative to engage companies whose greenhouse gas (GHG) emission goals would be expiring in 2015, including 3M, Nestle, Pepsico, TJX, and Union Pacific. In partnership with Calvert Investments and Pax World, a total of 21 companies received a letter encouraging them to consider setting aggressive emissions reduction goals that align with recommendations by climate scientists (i.e. absolute GHG reduction of 50 percent by 2050); making renewable energy commitments; finding opportunities to mitigate climate change in their value chain; and reexamining the role they can play in influencing climate-related public policy.

In a separate but related effort, Walden is asking companies to be proactive in their support of climate and energy policy or, at a minimum, to cease obstructing policy progress. This is no small ask. Conversations we’ve had with companies have elucidated the challenges and obstacles they face in publicly supporting climate-protecting initiatives. To help them, Walden and Calvert Investments launched a “policy engagement toolkit” that identifies eight actions companies can take to support climate and energy policy.

Walden also joined investors with $300 billion in assets under management in urging the U.S. environmental Protection Agency to move forward with a robust effort to regulate methane emissions from the oil and gas industry. On a positive note, after years of our asking ConocoPhillips to set a voluntary GHG reduction goal, the company set a public goal to reduce absolute emissions 3-5 percent in 2015.

Walden continues to ask companies to respond to CDP’s climate disclosure questionnaire. This year, Walden spoke on a webinar for non-responders to CDP to emphasize the importance of disclosure. Of the 40 non-responders that attended the webinar, 11 responded to CDP in this year’s reporting cycle. Also, as a result of requests from Walden and other stakeholders, Apple resumed responding to the survey. Finally, in September, Walden signed the Climate Disclosure Standards Board statement on fiduciary duty and climate change disclosure calling for increased transparency of climate risks and opportunities.

A leading contributor to global GHG emissions is the production of palm oil, the most widely used cooking oil around the world, used also in products from processed food to fragrances. Creating palm plantations often involves destruction of carbon-absorbing forests or peatlands. As a result of palm oil production, Indonesia is the third largest emitter of GHG emissions globally. Walden co-filed and successfully withdrew a shareholder resolution led by the Sisters of St. Dominic with Sysco on palm oil after the company agreed to review and update its policy and commitment to source responsibly. We have filed a similar resolution at International Flavors & Fragrances for the 2015 annual meeting. This engagement builds on leadership from several NGOs and investors and the tremendous momentum from their efforts. As a result of their work, companies controlling more than 50 percent of palm oil production globally have made commitments to address the climate, biodiversity, and human rights impacts of their palm oil production.

Finally, Walden’s efforts encouraging companies to embark upon broader ESG disclosure are paying off. Calgon Carbon and Wabtec published their first sustainability reports this year, and Darling Ingredients agreed to work on a sustainability report for next year that will address water, safety, energy conservation, and employee diversity.

Workplace Diversity & Equality

In the early 1990s, Walden became one of the first investment firms to ask companies about the inclusion of sexual orientation in their non-discrimination policies. At that time, it was unusual for companies to have a clearly articulated policy of non-discrimination based on sexual orientation. These days, companies without an inclusive equal employment (EEO) policy are a in a steadily waning minority. According to the Human Rights Campaign, approximately 91 percent and 61 percent of companies in the Fortune 500 have EEO policies that include sexual orientation and gender identity, respectively.

Since 2000, Walden has written letters, had dialogues, or filed shareholder proposals with close to 200 companies regarding lesbian, gay, bisexual, and transgender (LGBT) workplace equality, with a substantial number of these companies ultimately improving their policies or becoming more transparent about existing policies. In 2014, Interdigital, MarketAxess, and UMB Financial made their EEO policies more accessible to prospective job seekers, while IDEX and Texas Capital Bancshares updated their policies to be more inclusive. Franklin Electric committed to increasing the transparency of its EEO policy by early 2015 and will also be amending its medical benefits plan to offer spousal and dependent coverage to employees in state-recognized same sex unions.

Walden has also joined investors with $210 billion in assets under management in writing to 70 U.S. multinational companies that have leading employment practices domestically to ask how they apply their EEO policies in other countries to assure the safety and equality of LGBT workers abroad.

With respect to women in leadership roles, a leading proxy research provider, ISS, noted that the proportion of woman board nominees in the United States was at an all-time high in 2014 (29 percent among the S&P 500). Despite this progress, women continue to hold only 13.2 percent of board seats among the Russell 3000. Walden’s proxy voting policy is to vote against directors serving on nominating committees of boards without gender or racial diversity. To continue encouraging progress, Walden informed ten companies that have no women or minority directors on their boards about our voting rationale and inquired about management and workforce diversity overall. Our letter and subsequent conversation with CoreSite Realty prompted a board discussion and commitment to revise its governance documents to explicitly include gender and race as considerations in the nominating process. Similar discussions are underway at several other companies in this group.