Posts Tagged ‘Sustainability’

Nanotechnology and the S&P 500

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday November 3, 2014 at 9:16 am
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Editor’s Note: The following post comes to us from Heidi Welsh, Executive Director at the Sustainable Investments Institute (Si2), and is based on a Si2 report.

Corporations globally have been investing $9 billion annually in nanotechnology, yet less than one-tenth of S&P 500 companies report to shareholders and other stakeholders on their involvement in nanotechnology. Although it has the potential to revolutionize industries like healthcare, information technology and energy systems, nanotechnology’s promise is tethered to unique environmental, health and safety (EH&S) issues that are not yet fully understood. Investors eyeing rapid growth and minimal regulation are engaging companies in discussions about nano-related EHS risks and recently forced a vote on the first nano-related shareholder resolution.

…continue reading: Nanotechnology and the S&P 500

Delaware Public Benefit Corporations 90 Days Out: Who’s Opting In?

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday July 23, 2014 at 9:00 am
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Editor’s Note: The following post comes to us from Alicia E. Plerhoples at Georgetown University Law Center. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.

On August 1, 2013, amendments to the Delaware General Corporation Law (DGCL) became effective, allowing entities to incorporate as a public benefit corporation, a new corporate form that requires managers to produce a public benefit and balance shareholders’ financial interests with the best interests of stakeholders materially affected by the corporation’s conduct.

In my paper, Delaware Public Benefit Corporations 90 Days Out: Who’s Opting in?, I present empirical research on the companies that adopted the Delaware public benefit corporation form within the first three months of the effective date of the amended DGCL.

…continue reading: Delaware Public Benefit Corporations 90 Days Out: Who’s Opting In?

Speaking of Corporate Social Responsibility

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday June 26, 2014 at 9:10 am
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Editor’s Note: The following post comes to us from Hao Liang and Luc Renneboog, both of the Department of Finance at Tilburg University, Christopher Marquis of the Organizational Behavior Unit at Harvard Business School, and Sunny Li Sun of the Department of Global Entrepreneurship and Innovation.

Linguists suggest that obligatory future-time-reference (FTR) in a language reduces the psychological importance of the future. Applying this to a corporate context, we theorize in this paper that companies with strong-FTR languages as their official/working language would be less future orientated and hence perform worse in future-oriented activities such as corporate social responsibility (CSR)—firms’ environmental, social, and governance engagement—compared to those in weak-FTR language environments.

…continue reading: Speaking of Corporate Social Responsibility

Board Oversight of Sustainability Issues in the S&P 500

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday May 22, 2014 at 9:27 am
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Editor’s Note: The following post comes to us from Jon Lukomnik of the IRRC Institute and is based on the summary of a report commissioned by the IRRC Institute and authored by Peter DeSimone of the Sustainable Investment Institute; the full report is available here.

Board oversight has long been viewed as an effective mechanism to direct and monitor corporate management. For example, in the wake of accounting scandals last decade, the Sarbanes-Oxley Act of 2002 requires all publicly traded companies in the United States to have an audit committee comprised of independent directors, charged with establishing procedures for handling complaints regarding accounting or auditing matters and for the confidential submission by employees of concerns surrounding alleged fraud.

While sustainability has been a concern of corporations and investors for years, there has been little research focused on how boards oversee a company’s sustainability efforts. Sustainable and responsible investors also have seen board oversight as an effective way to encourage corporations to accelerate such efforts; they began filing shareholder proposals requesting board oversight of various sustainability issues in the 1970s, and both the numbers of resolutions and the support those resolutions have received have grown exponentially since. It is worth noting that one such model proposal, formulated by The Center for Political Accountability (CPA) and requesting board oversight of political spending in addition to key disclosure features, accounts for the vast majority of sustainability shareholder resolutions on board oversight and resulted in political spending being a top subtopic of board oversight duties.

…continue reading: Board Oversight of Sustainability Issues in the S&P 500

What Will Result From the SEC’s Current Disclosure Reform Initiative?

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday May 11, 2014 at 9:00 am
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Editor’s Note: The following post comes to us from Betty Moy Huber, co-head of the Environmental Group in the Corporate Department of Davis Polk & Wardwell LLP, and is based on an article by Ms. Huber that first appeared in the American Bar Association’s Environmental Disclosure Committee newsletter.

The SEC is in the midst of what could be a sweeping reform of its disclosure regime. During the course of this year, the SEC’s Division of Corporation Finance, or Corp Fin, will be seeking broad input from companies and investors on how the SEC can improve its disclosure rules. This initiative follows on Corp Fin’s lengthy December 2013 report on this topic. Arguably, the SEC’s disclosure reform initiative could not have come at a better time for sustainability and environmental groups who have been working for years to achieve better corporate sustainability disclosure. These groups are savvy, dedicated, and have trillions of institutional investor (and other) dollars backing them. With social media, they have become well organized and effective advocates for their cause. In addition, investment banks are taking note and becoming interested in better and more uniform sustainability disclosure in their capacity as underwriters as well as investors themselves. Further, shareholder proponents have submitted a record number of environmental and sustainability shareholder proposals in recent proxy seasons. But will these sustainability groups succeed in finding common ground with the SEC and, if necessary, convince the SEC that sustainability issues are material or otherwise a priority?

…continue reading: What Will Result From the SEC’s Current Disclosure Reform Initiative?

The Foundations of Corporate Social Responsibility

Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday February 19, 2014 at 9:00 am
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Editor’s Note: The following post comes to us from Hao Liang and Luc Renneboog, both of the Department of Finance at Tilburg University.

A fundamental issue in business and economics is the sustainability—and not merely the growth—of economic development, which crucially hinges on the socially responsible operational and investment behavior of modern corporations (Porter, 1991). There is a widespread recognition, as well as growing empirical evidence, that corporate social responsibility (CSR) can substantially contribute to social progress and stakeholder wealth, including the wealth of shareholders (e.g., Dimson, Karakas, and Li, 2012; Deng, Kang, and Low, 2013). In our paper, The Foundations of Corporate Social Responsibility, which was recently made publicly available on SSRN, we examine the forces that fundamentally steer companies to behave as good citizens in society.

…continue reading: The Foundations of Corporate Social Responsibility

Communications Challenges at the New Frontiers of Corporate Governance Activism

Editor’s Note: Charles Nathan is partner and head of the Corporate Governance Practice at RLM Finsbury. This post is based on an RLM Finsbury commentary by Mr. Nathan.

The principal corporate governance campaigns of the past decade have reached a plateau in terms of both investor commitment and implementation. These governance issues (such as majority voting, de-classifying staggered boards, eliminating super-majority votes and executive compensation excesses) are not by any means going away. Indeed, there are concerted investor-led efforts to push favored corporate governance “best practices” down the corporate chain to mid-cap and small-cap companies. However, the activist community has clearly won the policy battles surrounding these governance principles, and their “sizzle” is dissipating.

Policy stasis does not become corporate governance activism, as its very name implies. Corporate governance activists will develop new “green fields” to plow; otherwise they risk becoming irrelevant. The question is not whether corporate governance activists will move on but rather where they will go.

While there are a number of possible new foci, two stand out in particular:

…continue reading: Communications Challenges at the New Frontiers of Corporate Governance Activism

The Corporate Social Responsibility Report and Effective Stakeholder Engagement

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Saturday December 28, 2013 at 9:00 am
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Editor’s Note: The following post comes to us from Bill Libit, partner concentrating in corporate and securities and municipal finance at Chapman and Cutler LLP, and is based on a Chapman publication by Mr. Libit and Todd Freier.

Companies today are being called upon by their shareholders and other stakeholders to not only boost the bottom line, but also to help address some of the country’s most challenging problems, including those concerning economic development and the environment. While opinions differ on how responsibility should be allocated across the public and private sectors, corporate stakeholders (which typically include shareholders, employees, customers, suppliers, communities, governments and regulators) are demanding that companies recognize a broader scope of responsibility in addressing those problems. As a result, companies are increasingly working with stakeholders to understand their views and concerns on various environmental, social, corporate governance and economic issues (such issues often referred to as corporate social responsibility (“CSR”) issues) and to incorporate and address those views and concerns in the company’s strategic decision-making processes.

…continue reading: The Corporate Social Responsibility Report and Effective Stakeholder Engagement

Florida SBA 2013 Corporate Governance Annual Summary

Editor’s Note: Michael McCauley is Senior Officer, Investment Programs & Governance, of the Florida State Board of Administration (the “SBA”). This post is based on an excerpt from the SBA’s 2013 Corporate Governance Report by Mr. McCauley, Jacob Williams and Lucy Reams. Mr. Williams and Ms. Reams are Corporate Governance Manager and Senior Corporate Governance Analyst, respectively, at the SBA.

The Florida State Board of Administration (the “SBA”) takes steps on behalf of its participants, beneficiaries, retirees, and other clients to strengthen shareowner rights and promote leading corporate governance practices among its equity investments in both U.S. and international capital markets. The SBA adopts and reports clearly stated, understandable, and consistent policies to guide its approach to key issues. These policies are disclosed to all clients and beneficiaries.

The SBA supports the adoption of internationally recognized governance practices for well-managed corporations including independent boards, transparent board procedures, performance-based executive compensation, accurate accounting and audit practices, and policies covering issues such as succession planning and meaningful shareowner participation. The SBA also expects companies to adopt rigorous stock ownership and retention guidelines, and implement well designed incentive plans with disclosures that clearly explain board decisions surrounding executive compensation.

…continue reading: Florida SBA 2013 Corporate Governance Annual Summary

CalSTRS Releases First Annual Corporate Governance Report

Posted by Anne Sheehan, California State Teachers' Retirement System, on Thursday October 10, 2013 at 9:37 am
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Editor’s Note: Anne Sheehan is Director of Corporate Governance at the California State Teachers’ Retirement System. The following post relates to the CalSTRS Corporate Governance 2013 Annual Report, available here.

The California State Teachers’ Retirement System (CalSTRS) was established in 1913 for the benefit of California’s public school teachers. This year we celebrate our 100th anniversary serving the retirement needs of our 862,000 members and beneficiaries. The long-term nature of CalSTRS liabilities, and our responsibilities as fiduciaries to the educators of California, makes us keenly interested in governance issues that affect our investment portfolio. We expect the companies in our portfolio to be responsible stewards of our capital and we have an obligation to effectively engage those companies while balancing risks and rewards.

This year, CalSTRS published its inaugural corporate governance report to communicate our governance program priorities to the investment community. While we pursue a variety of initiatives throughout the year, our engagements focused on four main themes:
…continue reading: CalSTRS Releases First Annual Corporate Governance Report

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