Shareholders demand more

In the case of disagreement over the lack of sustainable practices within a business, the common course of action for consumers is to make contact with the company concerned, to put a signature on a petition or to boycott the purchase of the company’s products or services. This action is taken in the hope of change for the better. With an increasing percentage of the population becoming more conscious of environmental issues, it is easy and often second nature for consumers to make such a stand, but is this true of shareholders? How do shareholders ensure that their investments are socially responsible, and what are the companies themselves doing to listen to the concerns of shareholders when it comes to sustainable development?

The directors of Apple Inc., the company which designs and markets the iPhone and the iPad, hit the headlines early in 2010 with their plan to oppose two shareholder resolutions concerning sustainable development. The directors of Apple Inc. were said to have advised shareholders to throw out a call for the company to create a committee on sustainability in addition to a call from As You Sow for Apple Inc. to issue a sustainability report in the year 2010.

In its statement of opposition to these calls, the Board of Directors at Apple Inc. affirmed the company’s commitment to sustainable development and drew attention to the range of recent accomplishments made by the company. Furthermore, the company claimed to have considered the Global Reporting Initiative Guidelines for Sustainability Reporting during production of the environmental information provided on their website. The information published on the website may therefore have led shareholders to conclude that the calls for both a committee on sustainability and a sustainability report adhering to Global Reporting Initiative Guidelines for Sustainability Reporting were unnecessary.

While shareholders can make proposals which demand the implementation of committees to direct sustainability performance, they are unable to implement them. This course of action has been tried and tested by shareholders at Microsoft, Oracle and Cisco yet all three of these companies were removed from the 2009 NASDAQ CRD Sustainability Index due to a lack of standardised sustainability performance disclosure.

Intel Corporation has effectively complied with the Global Reporting Initiative Guidelines for Sustainability Reporting for many years and it is widely believed that shareholders should use their power to demand that the rest of the industry follows suit. In March 2010, Harrington Investments (HII) proved successful in coming to an agreement with Intel Corporation to make changes to Intel Corporation’s Charter of the Corporate Governance and Nominating Committee to ensure that the committee’s policy included “corporate responsibility and sustainability performance.”

The multinational computer technology corporation Oracle, meanwhile, has opposed a proposal from their shareholders which called for the formation of a board-level committee dedicated to environmental sustainability. In a statement explaining their decisions on this matter, the company states that such a committee would be unnecessary and that it would not be any more effective than their present sustainability efforts.

While shareholders have had various levels of success in enforcing changes which relate to sustainable development, it is down to the corporations themselves to address sustainability within their companies and to realise that this aspect of business may be crucial to their future existence.