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More on Researching Sustainability
Friday, January 12, 2018

Not long ago we came across a year-end letter from Trillium Asset Management, one of the largest socially conscious investment funds in the United States. The letter informed Trillium investors of how the fund was nudging companies on various sustainability issues, from environmental policy to gay rights to income inequality.

That got us thinking yet again: how can Calcbench subscribers use our databases to explore sustainability issues? What are some good search terms, and where should you search?

Probably the best place to start is our Interactive Disclosure database. There, you can search specific strings of text — “climate change,” “toxic chemicals,” “workforce diversity” — and get pinpoint results from any number of disclosures that companies make.

For example, we searched for the phrase “LGBT” (lesbian, gay, bisexual, transgender) in corporate filings from 2016. We found more than 40 results scattered across Form 10-Ks, proxy statements, and even the occasional earnings release.

The phrase tended to appear in earnings releases in self-congratulatory ways. Usually, the company had won some award for its LGBT-friendly policies; the Human Rights Campaign’s Corporate Equality Index was mentioned numerous times. In the 10-K, companies often mentioned it in the Business Description section, while touting their commitment to tolerant, diverse workforces.

The good stuff, however (and the majority of results we found), was usually in the proxy statement. That’s where shareholder proposals were included that somehow talked about LGBT issues.

For example, the Fedex proxy on Aug. 14 had a proposal seeking

…that the Company issue a public report to shareholders, employees, customers, and public policy leaders… detailing the known and potential risks and costs to the Company caused by any enacted or proposed state policies supporting discrimination against LGBT people, and detailing strategies above and beyond litigation or legal compliance that the Company may deploy to defend the Company’s LGBT employees and their families against discrimination and harassment that is encouraged or enabled by the policies.

Fedex opposed the proposal, arguing that it already had strong pro-LGBT policies and that the report’s benefits wouldn’t be worth the cost.

That proposal came from North Star Asset Management, which submitted a similar proposal to Western Union.

We also searched “Paris Accord,” for the global environmental treaty that earlier this year President Trump announced the U.S. would withdraw from. We found only five results, although that may not be surprising: we were searching 2016 filings, and Trump didn’t announce the Paris Accord withdrawal until mid-2017. So we may see more mentions this coming spring, as alarmed environmental groups press for more action on climate change.

Entergy, for example, had this shareholder proposal in its proxy statement of March 21:

With board oversight, shareholders request that Entergy prepare a report (at reasonable cost and omitting proprietary information) describing how the Company could adapt its enterprise-wide business model to significantly increase deployment of distributed-scale non-carbon-emitting electricity resources as a means of reducing societal greenhouse gas emissions consistent with limiting global warming to no more than 2 degrees Celsius over pre-industrial levels.

Entergy’s board opposed that resolution, too.

You get the idea; through the Calcbench Interactive Disclosure database, you can search for all manner of sustainability items. Other terms to consider include…

  • Political spending
  • Income inequality
  • Workforce diversity
  • Ethical sourcing
  • Conflict minerals

And probably lots more beyond that, too. The information is in the database somewhere, and Calcbench helps you find it.


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