Thursday, December 21, 2017

Once 2018 rolls around and proxy season begins, we’re likely to see numerous shareholder campaigns over corporate sustainability — which could be anything from climate change, to human rights abuses, to reducing a firm’s environmental footprint.

For example, earlier this year shareholders at ExxonMobil voted in favor of a resolution that the company disclose more information about how climate change might affect its business. That vote carried 62 percent support, a major victory for climate change activists. The proposal was non-binding, but Exxon got the message and announced on Dec. 12 that it will start reporting that information anyway starting spring 2018.

OK, we said, that’s one practical example of corporate sustainability. What else are companies disclosing about the subject?

A quick search of our Interactive Disclosure database shows that filers are disclosing a wide range of information. We kept it simple, searching for the text “corporate sustainability” used in 2016 annual reports (which mostly were filed earlier this spring).

Dozens of companies used the phrase. Mentions generally fell into three categories.

Proxy statement. By far and away, most mentions were in the proxy statement. Numerous companies have a board committee that oversees sustainability; some have a dedicated sustainability committee, while others mention sustainability as something another committee (usually an audit or compliance committee) is responsible for.

PG&E, for example, has compliance committee that oversees sustainability. Its proxy statement explains that in the compliance committee charter. General Dynamics has a corporate responsibility committee that watches sustainability, and oversees production of an annual sustainability report.

PennyMac Mortgage Trust says it supports the idea of corporate sustainability, and then adds this refreshingly candid line: “Although we have not yet established a formal corporate sustainability program, we hold ourselves and our Manager accountable for managing our social, environmental, and economic impact through a number of initiatives.”

Business description. Some manufacturers or similar heavy users of commodities include a description of how they try to be environmentally conscious. Here’s an example from Ball Corp., filed on March 2.

Sustainability is a key part of maximizing value at Ball. In our global operations, we focus our sustainability efforts on employee safety, energy, water, waste and air emissions. In addition to operational excellence, we identified product stewardship, talent management and community ambassadors as priorities for our corporate sustainability efforts. Information about our corporate sustainability management, goals and performance data are available at

That may strike some as rather vague, but it’s more than other companies disclose. Guess Inc. reported this paragraph on March 27.

During fiscal 2016, we published our first corporate sustainability report to mark the formal start of our sustainability program. This report covers important issues such as labor and human rights, employee engagement, respect for the environment, energy use and greenhouse gas emissions. These issues have always been important to the Company and will be of increasing importance as we actively monitor, work to improve upon and publicly report on these areas.

In fairness to Guess, that report, posted on its website, is 43 pages long. But the above 71 words are what the company says about sustainability in its Form 10-K.

Risk factors. Filers get even more vague in this section. Jones Lang Lasalle lists corporate sustainability as one element in its enterprise risk management system; Workhorse Group names it as a criteria that the company uses when trying to tell customers why they should buy its electric vehicles.

Sometimes the phrase cropped up elsewhere, too. At Huntsman Corp., for example, the company listed its head of environmental, health, and safety as one of its principal executives, and noted that the man (Ronald Gerrard) also serves as Huntsman’s “corporate sustainability officer.” Vectren Utility Holdings has a dedicated section for corporate sustainability; it’s small, but it’s there.

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