February 12, 2013
Shareowners Call for Sustainability Reporting by Emerson Electric
by Robert Kropp
For the fourth year in a row, a resolution filed by Walden Asset Management wins increased support
from shareowners who want the company to improve its reporting on its ESG performance.
Publishing a sustainability report, a laudable first step on a long path to genuinely sustainable
performance by corporations, has become increasingly common in large part due to engagement by
sustainable investors. The percentage of S&P 500 companies producing sustainability reports
increased from just 19% to more than half in the past year alone, according to a recent report from
the Governance & Accountability Institute.
The rapid uptake of the practice by
major corporations might suggest that that the decreasing number of laggards would be eager to join
their peers. And although it is too early in the 2013 proxy season to determine whether this is so,
only two of the 11 resolutions filed by members of the Interfaith Center on Corporate Responsibility (ICCR) has been
withdrawn thus far.
"For the first time the non-reporters are in the minority," the report states.
For the fourth year, Walden Asset Management and a host of co-filers have
requested that Emerson Electric produce a sustainability report. In 2012, Emerson had the lowest Carbon Disclosure Project (CDP) score of all
responding companies in the Industrials Sector.
Also, Walden pointed out, "The company has
not outlined targets and goals on greenhouse gas (GHG) emissions reductions...investors have no
access to evaluative" Emerson's claims to operate in an environmentally responsible manner.
Furthermore, the company "does not provide any specific information about sustainability issues in
its supply chain, especially in relation to GHG emissions."
Emerson's Annual General
Meeting was held on February 5th, and for the fourth year in a row shareowner support for Walden's
resolution increased. Last year, 35% of shareowners voted in favor of the resolution; this year,
38% supported it.
In its recommendation that shareowners vote down the proposal, Emerson's
board of directors stated, "A similar proposal was presented to Emerson stockholders at last year’s
annual meeting and was defeated, receiving only approximately 29% of all votes cast on the
proposal." In an email, Marcela Pinilla of Walden observed, "Emerson elected to count abstentions
to calculate its vote results. According to the SEC the equation takes into account only votes in
favor and against."
And for Emerson to describe such a substantial vote in favor of the
resolution is misleading at best. According to ICCR's 2013 Proxy Resolutions and Voting Guide,
"Votes in the double digits are generally considered very successful in focusing investor and
management attention on issues."
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