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An Insider's View of Shareholder Activism

The number of shareholder resolutions is rising steadily each year, as are the votes in favor of them. This year, about 150 out of the 200 filed will be voted on. 10 percent or so are dropped because companies successfully show the SEC they affect day-to-day business, not policy. Another 25 percent are dropped as a result of a successful negotiation with the company. Resolutions must win 6 percent or more of the vote to be raised again the following year. Most resolutions don’t garner more than 6-12 percent of the vote. No matter how much of the vote they get, resolutions are always advisory. So, why bother? Companies are sensitive to potential bad publicity. Bringing a resolution to the floor often brings company officials to the table. Here’s a sample of some of recent successes: * Mitsubishi decided against a planned salt factory in a gray whale calving site in Baja, California; * Citigroup and other retail lenders ended certain predatory lending practices and the industry is phasing out mandatory credit insurance;* Ames Department Stores is ending all purchases of goods made in Burma;* Coke is increasing its level of recycled content in new plastic beverage containers to 10% […]

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More Proof in Favor of Sustainability Investing

A study published in the August issue of Management Science reports a statistically significant and positive correlation between company adherence to the most rigorous global environmental standards and higher corporate market value. Selecting 89 mining and manufacturing firms from the S&P 500 during the period of 1994-97, authors Dowell, Hart and Yeung compared companies that demonstrated consistently strong environmental practice to those that met different standards at each location, as established by the varying regulations of local governments. The prevailing wisdom argues that operations in less demanding countries enables companies to:1) save costs by avoiding expensive pollution controls and by continuing to use old equipment that would otherwise have been upgraded; and 2) generate revenue by continuing to manufacture products that are no longer acceptable in the more developed world. The authors instead found, using Tobins “q” as a measure (market value/replacement cost of tangible assets), that the companies that applied the same stringent standard throughout their operations had higher market values. Possible explanations include:1) state-of-the-art technology, with the best environmental practices embedded in it, is also the most productive; 2) global standardization provides consistent processes and products worldwide; 3) companies do not have to make incremental investments every time […]

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Sustainable Business Entrepreneurs Take Note: A Niche in Need

According to a survey published by Prepared Foods (January, 2002), sourcing organic food ingredients is the most time intensive part of the entire product development process. Is there an entrepreneur that would like to make the process easier?The survey looks at which ingredients will become more or less important to companies’ products in the next two years – natural and organic ingredients are at the top of the list, along with ethnic flavors, soy protein and antioxidants. “There is not an abundance of organic ingredient manufacturers in the field, which made it a challenge to search for them,” says Jerry Santo, director of corporate purchasing, Eatem Foods, a manufacturer of organic food bases. Santo adds that value-added or further processed organic ingredients are needed in the food industry. “Many of them are simply not available because this is such new territory. The ‘organic whole food’ segment is growing in volume and variety. But to develop organic products, we must complete the circle — starting with fresh organic food, adding basic organic flavor systems/processing aids and ending with organic convenience products. More organic value-added ingredients would make work a lot easier for developers of organic products and also speed up their […]

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Brazil Maps Its Medicinal Plants

To protect the treasure trove of herbal medicines from pirates, Brazil’s environmental agency, IBAMA, is creating a country-wide database and research center to map its medicinal plants. So far, the agency has cataloged 300 species – less than 10 percent – hidden in the vast Amazon jungle or submerged in wetlands. IBAMA estimates the global market for plant medicines is worth many billions of dollars annually so it is no surprise Brazil wants to protect and profit from its home-grown cures. Bio-pirates frequently coerce poor Amazon tribespeople into extracting plant remedies for export. In an area larger than Western Europe that’s easy to do. “They receive a pittance for their work,” says IBAMA President Hamilton Casara. More than 85 percent of the medicines used by over 80 percent of the developed world come from some 250,000 medicinal plant species, according to the World Health Organization. The United States and Germany are among the top importers of Brazilian medicinal plants. IBAMA’s push to protect its plants will include sustainable development projects for far-flung communities to provide them with alternative income, Casara says. The agency is working with 2,000 people to form nationwide networks that will work with police to stop plant […]

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Holding a Green Conference

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Conferences are big money-makers with an equally big environmental footprint. Here's a guide to greening the hospitality industry and what the leaders are doing.

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