WASHINGTON -- Investors concerned about environmental degradation and its long-term impact on corporate profits have launched a raft of proposals seeking to improve the "green" performance of some of America's top brand names.
Investors have asked the cosmetics company Avon to reformulate all its products to meet new European Union toxics regulations designed to phase out chemicals linked to cancer and birth defects.
Shareholders of oil majors ChevronTexaco, ConocoPhillips, and ExxonMobil have asked those firms to improve and account for their efforts to protect key natural and cultural sites.
As the 2005 season of corporate annual shareholder meetings gets under way, Friends of the Earth and four other environmental groups have endorsed some 49 pro-environment shareholder resolutions. For the groups, working with shareholder activists has become an important new front in a decades-long struggle once dominated by consumer boycotts and bad-publicity campaigns designed to shame companies for what critics saw as their environmental sins.
''Friends of the Earth calls on people and institutions to claim their power as shareholders--through retirement plans, mutual funds, or endowments--to demand more environmentally responsible corporate behavior,'' said Michelle Chan-Fishel, coordinator of the organization's green investments program. ''The variety of resolutions that different environmental groups are endorsing shows that we believe challenging and changing corporate behavior is a key to environmental progress.''
Companies also benefit from eco-friendly business practices, environmentalists said. They limit their risk of expensive toxic clean-ups and environmental or consumer litigation, for example. Conversely, consumers often favor firms they regard as being kinder to the planet and its people.
''Many leading companies and their investors are realizing that making safer, greener products is not only better for their customers and the planet, but better for their bottom line,'' said Lisa Archer, coordinator of Friends of the Earth's health and environment program.
Archer cited the example of Avon competitors Revlon and L'Oreal, which she said already had agreed to bring their worldwide product lines in step with EU standards.
Not all investor resolutions make it to a vote at a company's annual meeting. Resolutions must pass muster with the U.S. Securities and Exchange Commission (SEC) before they can be included in the proxy voting materials sent to shareholders in advance of a company's annual meeting.
Proposals seldom garner a majority of proxy votes at the annual meeting and even when they do, companies are not legally obliged to implement them.
Even so, shareholders have filed growing numbers of resolutions in recent years, using the proposals to coax companies at least to discuss, and in some cases to offer major concessions, on issues they otherwise had ignored or kept under wraps.
Shareholder resolutions embody cumbersome administrative procedures and the threat that corporate linen will be scrutinized in public--a threat that has become more potent in the wake of the financial and other scandals that have rocked corporate America in recent years.
Companies typically deal with them in two ways. They can try to block the proposals, either by asking the SEC to strike them down or by opposing them outright and enlisting shareholders to vote them down. This strategy often serves merely to stiffen dissident shareholders' resolve. So instead, a number of firms have sought to get out in front of their critics by engaging activist investors on an array of issues ranging from the environment and labor rights to stock options and boardroom elections.
Last week, for example, Ford Motor Co. said it would write a report about global warming, including details on emissions from Ford vehicles and factories, in response to complaints from some shareholders that the company has not done enough to reduce pollution.
In turn, shareholders agreed to withdraw a resolution asking the second biggest U.S. car maker to spell out its plans to remain competitive as California and other states tighten their environmental laws. The New Jersey-based Tri-State Coalition for Responsible Investment had filed the resolution, with support from the state of Connecticut's pension fund and other investors.
Ford said it planned to complete the report by the end of the year and would consult climate experts as well as shareholders.
The company still faced two other resolutions as it geared up for its annual meeting in May, however.
In the first, Boston-based Green Century Capital Management has demanded an accounting of the money Ford spends to lobby against an increase in federal fuel efficiency standards.
In the second resolution, the San Francisco-based green group Bluewater Network has demanded that Ford senior executives' pay be linked to the company's performance on global warming issues.
Joining Friends of the Earth in endorsing shareholder resolutions this year are Greenpeace, U.S. Public Interest Research Group, Bluewater Network, and the Center for International Environmental Law.
The groups have endorsed resolutions calling for improved environmental policies, performance or disclosure, as well as proposals to eliminate environmentally harmful projects or practices. In addition to toxics and global warming, the proposals address energy, genetically engineered foods, environmentally sensitive areas, and sustainability reporting--which enables companies to incorporate hidden environmental costs and benefits in their accounts and to make long-term financial projections accordingly.
Prominent household names among the dozens of companies targeted by shareholder resolutions this year included Dow Chemical, Dupont, General Electric, General Motors, Kraft, McDonald's, Best Buy, Lowe's, and Wal-Mart Stores.
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