Category: Shareholder actions

Making progress on methane

Making progress on methane

Natalie Wasek

The United Nations Climate Summit (COP28), which took place in Dubai, recently ended with a monumental report that still falls short of necessary progress. World leaders, climate experts, at least 1,300 fossil fuel lobbyists, and one CEO of a large fossil fuel company attended the meetings. ExxonMobil CEO, Robert Woods, attended COP28, marking the first time the CEO of a large fossil fuel company attended the meetings. And sure, while Woods said the conversations  “put way too much emphasis on getting rid of fossil fuels, oil and gas” and not enough on “dealing with the emissions associated with them,” he at least was still part of the discussions. 

The long-awaited and contested COP report recognizes the need for a transition “away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.”

For the first time fossil fuels were explicitly discussed and named as a cause to the climate crisis. While the report’s vague language requires more work to ensure its potential, Mindy Lubber, CEO of Ceres, sums it up nicely: 

The agreement comes at an urgent moment. Extreme weather and other climate-related catastrophes are already causing hundreds of billions of dollars in damage each year. The world is at severe risk of far greater challenges as we are on track to miss the 2030 goals of the Paris Agreement and achieve a zero emissions economy in time to prevent catastrophic climate change. At the same time, governments, businesses, and investors have a monumental opportunity to invest in secure, affordable, and reliable clean energy technology that brings enormous economic benefits and job growth.

In addition to the climate talks at COP, other commitments concerning Methane Emissions recently showed some progress. 

Methane, a highly potent climate pollutant, that is responsible for approximately one-third of current warming resulting from human activities. While ExxonMobil, the world’s second largest oil refiner, reported making great progress on its methane emissions reduction, the company was only doing so with estimated emissions, not direct measurements. Without measured data, studies have shown that companies may misallocate capital to less impactful and less cost-effective mitigation opportunities.

Immediately before COP 28 ExxonMobil, announced that it was joining OGMP 2.0, the Oil & Gas Methane Partnership. This came as shocking and exciting news after last proxy season. The Sisters of St. Francis of Dubuque, along with co-filers Benedictine Sisters of Mount St. Scholastica, Congregation des Soeurs des Saints Noms de Jesus et de Marie, and Dana Investment Advisors filed a resolution at ExxonMobil asking the company to issue a report analyzing the reliability of its methane emission disclosures. While ExxonMobil’s opposition to the resolution highlighted their participation in OGCI, Global Methane Partnership, and legal hurdles, the resolution garnered an impressive 36% vote. 

This announcement of Exxon joining OGMP 2.0 is a huge step forward because under OGMP reporting, better-quality emissions data allows operators to accurately understand and characterize methane emissions from their assets, informing a more effective mitigation strategy. 

In addition to ExxonMobil and others joining OGMP in the past few weeks, the EPA released its new methane standards which should help reduce methane emissions. EDF reported on the new rules and how they will help OGMP members comply. There’s been other methane regulation advancements in the EU, China, Australia, and Canada as well. 

The COP agreement, Methane regulation, and hopefully new SEC climate disclosure rules in 2024, there is a lot of forward momentum in the climate world. What is needed now is continued corporate action and more climate policy nationally and internationally. 

SGI members are continuing engagement on climate crisis issues such as GHG emissions, methane, the Just Transition, science based targets and climate transition action plans, as well as climate lobbying. 

There’s still much more work to be done. Next year’s COP is planned to be held in Azerbaijan, one of the birthplaces of the oil industry.

Patent thickets and a thicket of lawsuits

Patent thickets and a thicket of lawsuits

sgicoalition

By Christina Dorett

Tomorrow, August 16th, marks the one year anniversary since the passing of the Inflation Reduction Act 2022 (IRA). The legislation provides authorization for Medicare to negotiate directly with drug manufacturers to bring down the price of ten high-cost prescription drugs for the benefit of seniors covered by Medicare.

Prescription drugs have assumed an increasingly important role in American health care, a trend likely to continue. One study estimates that “[p]rescription drug spending on retail and non-retail drugs is poised to grow 63% from 2020 to 2030, reaching $917 billion dollars” (p. 2).

Three in 10 Americans on a prescription drug, report not taking their medicine as prescribed due to cost. A poll asking respondents to identify their top priority issue appearing in the Build Back Better bill found that allowing the federal government to negotiate drug prices topped the list.

In the 2023 proxy season, a national coalition of long term, faith and values-based investors, who are members of the Interfaith Center on Corporate Responsibility (ICCR), filed resolutions with five major pharmaceutical companies, with a brand new ask: a report on the process that pharmaceutical companies use to determine whether to apply for a secondary or tertiary patent, intended to qualitatively verify if promoting access for patients, was a relevant factor in this process.

This resolution received 31.1% of investors’ support at the Merck AGM held on May 23rd 2023. The resolution secured 30% of the vote at Pfizer; 16.5% of the vote at Gilead, 14.42% at Johnson & Johnson. Just a few weeks later, on June 6th, 2023, Merck & Co. Inc. filed a lawsuit against the Department of Health & Human services (HHS) and Centers for Medicare and Medicaid Services (CMS), alleging “extortion” and a violation of their 1st and 4th amendment rights, in respect to the proposed negotiations of drug prices, on behalf of seniors covered under Medicare, as legislated under the Inflation Reduction Act 2022. Bristol Myers Squibb (BMY) followed with a similar lawsuit. Both companies are represented by the law firm, Jones Day. Lawsuits have been filed by Astellas and Johnson & Johnson in other jurisdictions. As well, the U.S. Chamber of Commerce and the trade association Pharmaceutical Research and Manufacturers of America (PhRMA) have filed suits with similar claims.

On-going legislative and regulatory concerns

The reality of high drug prices and the ills of the patent system have long been a topic of political debate. In April of this year, Senator Elizabeth Warren (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) wrote to the United States Patent and Trademark Office (USPTO) regarding their concerns about the pharmaceutical industry’s broad use of anti-competitive practices that raise costs for patients and families. Warren and Jayapal wrote to the patent office asking it to take similar action in December 2022 and June 2021.

“Patients continue to suffer as prescription drug manufacturers jack up prices and rake in billions in profits,” the letter said. “We have yet to see the USPTO take substantial steps to exercise its existing administrative authorities to help lower drug prices, encourage competition, and increase innovation.”

A Thicket of Lawsuits

The lawsuits that Merck and the others have opted to file serve to fuel the controversy and fail to address the underlying concerns for equitable business decisions that serve the public who need access to these life saving drugs. Pharmaceutical companies have had a long run of putting their profit above all else, and this unregulated behavior has not served the patient, the taxpayer, seniors or any member of the public who is uninsured, underinsured and/or has an insurance company disallow a claim to secure access to the prohibitively expensive drugs, even though these drugs may save an individual’s life. While innovation was intended to save lives, the profit motive instead has rendered access to life saving drugs a luxury for those who are rich enough to afford them.

Here are the hard truths:

  1. Pharmaceutical companies have benefitted from federal research and development tax credits, on the grounds that they require investment for innovation to develop life saving drugs. Over time and due to the adherence to free market economic theories, buttressed by failures to regulate the business conduct of these pharmaceutical companies, they have business standards and processes that serve their profit motive without due consideration of how patients can secure their access to gain the innovative benefits of these patented drugs.
  2. These same pharmaceutical companies have engaged in lobbying to keep their profits healthy and growing, while they continue to pocket the federal tax credits and “covet” the research of the National Institute of Health (NIH), all paid for by the very same taxpayers they now litigate and have been lobbying against over decades.
  3. The allegation that negotiating drug prices for ten drugs yet to be named, for the benefit of seniors covered under Medicare, is “extortion”, exposes the singular profit motive of the leaders and management teams of these pharmaceutical companies.
  4. Lawsuits are expensive and contentious and they run afoul of the values statement of every pharmaceutical company in respect to their mission of serving the needs of patients, with their innovative medicines and vaccines.
  5. The claims in the lawsuits are explosive and tactically crafted in response to the politics of the day and accusations of profiteering and gaming the patent system levied by both the Republicans and Democrats in oversight committee hearings.
  6. The legal claim seeking an injunction is frivolous, premature and may be an abuse of the legal system, since no loss or damage has been sustained by Merck or BMY, nor is there any continuing loss and/or damage being sustained by these companies or any other party to the litigation, which is the only basis for a claim for an injunction.
  7. The claim that the IRA requirement to negotiate drug prices is a violation of Merck’s and BMY’s 1st and 4th amendment rights, adds insult to injury, since these lucrative and highly profitable pharmaceutical corporations have unfettered rights to unilaterally fix drug prices and to extend their patent exclusive periods, unfairly preserving their monopoly.

Given the news coverage exposing the reality of patent thickets and how the pharmaceutical companies are gaming the patent system, the lawsuit filed by Merck and BMY is tone deaf to public sentiment and dismissive of public wellbeing, and, as investors, we urge pharmaceutical companies to refrain from filing lawsuits that do not address the public right to healthcare, that do not address the underlying concerns over the unaffordable prices of life saving drugs and that do not align with their own Mission and Values statements to serve the benefit, interest, wellbeing and life of the patient.

Investors voice concern over misrepresentations within Valero’s latest SEC filing

Natalie Wasek

Miller-Howard Investments, Inc. filed an exempt solicitation regarding Valero’s misrepresentations within their latest SEC filing concerning a shareholder resolution to be voted at tomorrow’s shareholder meeting. 

The exempt solicitation reads: 

As long-term investors in Valero Energy (“Valero” or “the company”), Miller/Howard Investments, Inc. is concerned that the company’s lack of strong and comprehensive greenhouse gas targets—in contrast to peers like Phillips 66 and Marathon Petroleum Corporation—raises questions about its strategy and preparation for a low-carbon future. Further rationale is outlined by the proponent, Mercy Investment Services, in their exempt solicitation. Accordingly, we urge support for Proposal No. 5: Stockholder proposal to set different GHG emissions reductions targets (Scopes 1, 2, and 3). 

Adding to our concerns are the representations within Valero’s latest SEC filing, as laid out below:

Valero’s position in SEC filingCommentary
“ISS already rates Valero’s existing climate strategy as ‘exemplary.’”This is not true. ISS, in a section of its analysis entitled “Climate Risk Disclosure”, noted that Valero “exemplifie[d] the standard” expectations set by TCFD.  As is stated in the title, footnote, and methodology, the indicator is intended to reflect “the quality of corporate disclosure” (emphasis added). ISS said nothing about the quality of the company’s strategy itself.Fails to acknowledge that ISS recommends voting FOR Proposal No. 5.

We encourage peers to consider this in the context of all governance-related votes. Further considerations have been outlined in Mercy Investment Services’ exempt solicitation, urging votes AGAINST the re-election of director nominees Robert A. Profusek, Deborah Majoras, and Rayford Wilkins.

Beyond this, investors are increasingly concerned about Valero’s ongoing pattern of misleading assertions. 

After over four years of engagement with Valero’s management, Climate Action 100+ signatory investors sent a private letter on January 5th, 2023, to Valero’s Lead Independent Director and members of the Sustainability and Public Policy Committee to continue our good-faith dialogue and engagement on the company’s climate-related risks and opportunities. This request led to a meeting with independent directors and additional private correspondence. Throughout, the investors have consistently supported the company in any efforts to evaluate, improve, and benchmark not only its disclosures but its actions and – vitally – its strategy.

As a participant in the engagement, we were dismayed and disappointed to see the company’s publication of a response to that private correspondence from Valero’s Sustainability and Public Policy Committee chair, Deborah P. Majoras. She claimed: 

We believe the fundamental differences in our perspectives centers around how we determine the best way to reduce GHG emissions. You have expressed your preference for absolute emission reductions, which companies can achieve by closing refineries. You highlighted that several of our peers have closed refineries over the last couple of years and have targets that take advantage of those closures. However, we believe the challenges presented by the ambitions of the Paris Agreement and the energy needs of the world are not met by a narrow strategy for reducing carbon emissions.

This claim is profoundly untrue and blatantly misrepresents the motives of the investors addressed in the letter. We reference and amplify Mercy Investments in its response,

We are concerned that VLO’s Board is failing to properly exercise its risk management and oversight responsibilities of Valero’s low-carbon fuels growth strategy given the critical risks climate change poses to its business operations. Rather than engage in constructive dialogue with Mercy Investment Services or with the Climate Action 100+ engagement cohort, Valero has painted us as an unreasonable actor aiming to shut down the company’s refineries.

We encourage peers to consider these concerns on all governance-related votes. Further considerations have been outlined in Mercy Investment Services’ exempt solicitation.

Valero’s virtual stockholder Meeting will take place, tomorrow, Tuesday, May 9, 2023 at 11:00 AM, Central Time.

Contact: Natalie Wasek, [email protected] 

Find the press release here.

About Seventh Generation Interfaith CRI

Through the lens of faith and the promotion of human rights, Seventh Generation Interfaith Coalition for Responsible Investment builds a more just and sustainable world for those most vulnerable by integrating social and environmental values into corporate and investor actions.

Disclaimer

Seventh Generation Interfaith, Inc. (SGI) may share public information to promote free discussion, debate and learning among investors on socially responsible investing issues. SGI does not seek directly or indirectly the power to act as proxy for a security holder and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent or authorization. SGI does not necessarily endorse or validate the information above and shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with use of or reliance on any information contained herein, including, but not limited to, lost profits or punitive or consequential damages. SGI does not provide investment, financial planning, legal, or tax advice. We are neither licensed nor qualified to provide any such advice. The content of our programming, publications and presentations is provided for informational and educational purposes only, and is neither appropriate nor intended to be used for the purposes of making any decisions on investing, purchases, sales, trades, or any other investment transactions.

Too Many Companies Remain Complicit in Russia’s War

Too Many Companies Remain Complicit in Russia’s War

Chris Cox

One year ago today, Russia launched an invasion of Ukraine. Appropriately, today’s headlines report the devastating consequences in lives lost and displaced persons. There have been somewhere around 300,000 military and civilian deaths, and the conflict has generated an additional 8,087,952 Ukrainian refugees living abroad and millions more displaced within the country. The Ukrainian government database of crimes of aggression and war crimes committed by the Russian military ended the week at 71,321, according to this tweet. The gruesome tally underscores both the severe and systemic nature of Russia’s violations of international law and the severe risks for companies that have operations and relationships in the country.

The war’s devastating impact affects many more countries. As Ukraine is a breadbasket for grains, the war has undermined global food security. The war spiked global energy costs, exacerbating an existing energy crisis.

At the same time, the hostilities prompted new strategies for coordinating and targeting international sanctions that have been swift and significant. Even today, the U.S. and allies introduced new sanctions. As well, on this anniversary, Russia became the first country ever to be expelled from Financial Action Task Force, an intergovernmental body that sets anti-money-laundering law standards

An element that needs more attention is the ongoing collaboration by global companies with the Russian aggressors. Their denials aside, those companies still operating in Russia are materially involved in the Russian war effort as they comply with the terms of Russia’s mobilization law. This article from B4Ukraine offers additional data points and analysis, and it draws a firm conclusion:

“Threats to profits and portfolios, but most importantly to the Ukrainian people, lead to one inevitable conclusion for businesses – to end all operations and business relationships with the Russian government or risk being complicit in its crimes.”

In light of the severe risks endemic to conflict, the UN Business and Human Rights Working Group developed a tool for that due diligence, published last June: Heightened Due Diligence for Business in Conflict-Affected Contexts: A Guide. As mandatory due diligence legislation continues its advance in the European Union, alongside a growing body of international jurisprudence, investors can no longer ignore geopolitical risks associated with autocracy, military aggression, and corruption.

The war confirms that investors need to improve human rights due diligence processes. Given Russia’s human rights history over recent decades, some investors preempted this foreseeable issue. Other investors belatedly found that companies had undue exposure to Russia. At the outset of the war, SGI called for companies to conduct heightened due diligence to ensure that their activities do not support the Russian war effort.  As well, SGI joined a coalition of investors who quickly condemned the act of aggression and called on companies to undertake heightened human rights due diligence. That coalition letter, and other efforts where SGI has participated, have received critical support from our colleagues at the Heartland Initiative. With their support, SGI has joined letters and dialogues with technology and finance firms about risks associated with their operations in Russia.

Sadly, those calls have gone unheeded in many quarters. New data shows that companies’ responses fall far short of what is required under international frameworks, like the UN Guiding Principles on Business and Human Rights. A new report, Unfinished Business, based on data from the Kyiv School of Economics examining 3,078 multinationals found that 56% (1,717 companies) which had ties to Russia at the start of the war continue to do business with the country. The data also showed that: 

“Of the companies that had a local Russian subsidiary at the start of the full-scale invasion of Ukraine, only one in ten has completed the liquidation or sale of its Russian business. 

“The remaining companies paid at least $18 billion in taxes to Russia in 2021 — enough to fund Russia’s war against Ukraine for two months.” 

(Credit: B4Ukraine)

Our keynoter from last fall’s conference, Bennett Freeman wrote about these concerns in a recent article for the Business and Human Rights Resource Centre. He concludes with an observation and a question:

“This tragic anniversary challenges the remaining foreign companies still operating in Russia to leave. At the same time, will a new geopolitical corporate responsibility take shape – and take action – in time to help fortify the battered remnants of the international rules-based order?”

A year ago, CEOs of global companies offered statements against the war. On this sad anniversary, we want to call companies to prioritize actions over words. Companies like Procter & Gamble, Mondelez, Nestle, Baker Hughes, Schlumberger, and Johnson & Johnson would do well to heed the words of Benjamin Franklin: “He that lieth down with dogs shall rise up with fleas.”

SGI hosts a Lobbying Disclosure and Lobbying Alignment Webinar

SGI hosts a Lobbying Disclosure and Lobbying Alignment Webinar

Chris Cox

Companies invest billions of dollars in political influence through lobbying, campaign contributions, and other means. Corporations are societally chartered institutions of enormous importance and value, creating jobs, producing goods and services that consumers rely upon, impact the environment we live in and pay salaries to worker who hope to lead fulfilling lives. At the same time, corporations spend vastly greater sums on lobbying than the funds available to pro-consumer, pro-environment, and pro-worker organizations. Hence, we consider this an important, basic area of corporate governance, and adequate disclosure of corporate lobbying remains a pressing shareholder proposal topic.

SGI members filed or co-filed 12 proposals related to lobbying for the 2023 proxy season. Over the last few years, resolutions have moved from beyond basic disclosure to reporting on alignment and misalignment between a company’s stated position and the lobbying efforts that a company funds indirectly via trade associations,  501(c)(4) social welfare nonprofits, and 527 political organizations, often referred to as “dark money.” Those reports are important as the reveal the risks of lobbying misalignment.

To dig deeper into these themes, we hosted Tim Smith, senior policy advisor at ICCR, and John Keenan, Corporate Governance Analyst for Capital Strategies for the American Federation of State, County and Municipal Employees (AFSCME), for a webinar on Lobbying Disclosure and Lobbying Alignment.

The webinar also points investors to valuable resources concerning lobbying:

We are grateful for Tim Smith and John Keenan joining us. We want to thank all of our members and guests for attending our webinar.

Slides are available here. The video is available here.

Join SGI for a Webinar on Lobbing Disclosure and Alignment

Join SGI for a Webinar on Lobbing Disclosure and Alignment

Chris Cox

Join us for our first webinar of 2023 on Wednesday, February 15th, at 10:00 a.m. Central. We will address efforts for increased lobbying disclosure. Similar to previous years, SGI members filed or co-filed a dozen resolutions that pertain to lobbying disclosure and lobbying alignment. Joining us will be Tim Smith, newly returning to the ICCR staff, and John Keenan, of AFSCME. Register for the webinar here. 

Why is this important? Visit any company’s website. Take a look at the company’s existing disclosures and assess:

  • Do they currently provide you with a clear idea of how and where the company is lobbying, to what end and with what efficacy, and how those activities are aligned with your interests?
  • Could you cite a number that represents how much the company has spent on influencing public policy, directly or indirectly, and with what partners, and on what issues?
  • Beyond its activities in the US, do you have a clear understanding of how the company attempts to impact policies in non-US jurisdictions?

Corporations are societally chartered institutions of enormous importance and value, creating jobs, producing goods and services that consumers rely upon, impact the environment we live in and pay salaries to worker who hope to lead fulfilling lives. At the same time, corporations spend vastly greater sums on lobbying than the funds available to pro-consumer, pro-environment, and pro-worker organizations. Hence, we consider this an important, basic area of corporate governance, and, in this webinar, we are going to dig into these engagements and resolutions.

Again, please, join us!

Do You Consider Yourself To Be An Activist?

Do You Consider Yourself To Be An Activist?

sgicoalition

By Frank Sherman

I was at a sustainability conference last week that was attended mostly by business and academia. After introducing myself and SGI at our table, I was asked “Do you consider yourself to be an activist?”

I hesitated for what felt like an eternity. What a loaded question! Was this a trap? Did he think I was going to the Milwaukee Art Museum after the conference to throw tomato soup on the paintings and glue my hands to the wall?

Given all the buzz about “anti-ESG,” “woke capitalism,” and “socialist political agenda” these days, I didn’t want to play into the culture war narrative. Republicans candidates for financial offices in Arizona, Florida, Illinois, Kansas, and Minnesota have all taken anti-ESG positions. They and other Republicans say big financial firms are abusing their power to advance a liberal agenda on issues like diversity, social justice and, especially, climate change. One Senator even accused Blackrock of breaking antitrust laws by being a member of the Climate Action 100+ coalition (which includes SGI, by the way). 

Most of the general public don’t understand what ESG means. The simplest description is a set of environmental, social, and governance considerations that investors use to try to understand risks and opportunities that aren’t accounted for in traditional financial models. For example, environmental risks like climate change present physical and transition risks that are not reflected in a company’s P&L or balance sheet. Another risk unaccounted for in the company’s financial statements are their impacts on human rights: to their employees, suppliers, customers and society at large. Although not recognized in financial reporting, these risks are very real…to individual companies and to the economy as a whole. They vary by region, industry, and individual company. Most investors and the public are blind to the magnitude of these risks. As society’s awareness of these risks increases, asset managers large and small are taking them into account in their portfolio management and corporate engagements.

Companies like Blackrock are pushing back on state laws which try to protect the fossil fuel industry (e.g. TX, WV) by explaining that ESG strategies are part of their fiduciary duty to manage material risks for their clients. But is that why SGI members use the ESG strategies? Is our sole incentive to manage long-term financial risks?

That’s part of it, no doubt. We are responsible for managing these funds as an obligation to our community members or clients. But SGI’s mission statement states that we also want to “to build a more just and sustainable world for those most vulnerable.” Our fiduciary duty goes beyond getting an adequate return on investment to also promote human dignity, act justly, enhance the common good, and provide care for the environment. The recently updated USCCB SRI guidelines speak to this double objective. The Guidelines are based on two principles: responsible financial stewardship and ethical & social stewardship based on Catholic moral principles. They espouse three strategies: Avoid Doing Harm, Actively Work for Change, and Promote the Common Good.

In addition to managing financial risks, SGI members view shareholder engagement with corporations as a powerful catalyst for social change. ICCR’s tag-line – “inspired by faith, committed to action” – sets forth our pledge to be active owners. Although I wouldn’t label SGI members as “activists,” we have been active owners for nearly 50 years. And I wouldn’t describe our capitalism as “woke” yet, but people are starting to wake up to the fact that the economy is supposed to serve society rather than the other way around.

Back to my conference table… I don’t think I answered the question posed to me very well at the time. With more time to reflect, I would respond that rather than an activist, I would describe SGI members as active owners inspired by faith!

Some helpful resources concerning the pushback on ESG investing:

Both Chair and CEO? Formula for Disaster

Both Chair and CEO? Formula for Disaster

Chris Cox

The Guardian recently revealed new problems from Travis Kalanick’s tenure as WeWorks CEO and chair of the board. Combining the two roles often leads to disaster. It is actually an old storyline:

Boards and investors want CEOs who hunger for improving the company. Boards want to hire winners. But the chair serves a different role, representing the shareholders and other stakeholders. Only an exceptional leader could fill both the role of CEO and chair. Surprisingly, a combined CEO and chair position led over  40% of S&P 500 companies in 2021. Too many boards, like the residents of Lake Wobegon, seem to think their CEOs “are all above average.”

One person holding both titles brings about conflicts of interest. The board guides, evaluates, and compensates the CEO. Legal & General’s Clare Payn describes it this way: “the CEO role is a full-time strategic role; the chair role is to manage the board.” She continues, “It’s like marking your own homework if you hold both roles.”

In our view, the best practice is that the chair should be an independent director. Most well-governed entities have checks and balances in place to ensure accountability and not vest excessive authority in one person or office. Throughout history, we have seen what happens when one person or institution is delegated too much power.

The practice of a combined chair and CEO is uncommon in Europe. In fact, UK Corporate Governance Code recommends that a CEO should not become chair of the same company. Without the formal guidance, investors must make the push in the U.S. Separate chair and CEO resolutions were the second-most voted proposal type in the 2021 proxy season (with 44 voted proposals in the January 1-June 30 period).

For the 2022 proxy season, SGI members co-filed this resolution at Exxon Mobil, Meta (Facebook), and Bristol-Myers Squibb. And the Conference Board suggests that it is making a difference outside of the S&P 500: “The trend toward CEO-board chair separation, previously more pronounced among smaller businesses in the Russell 3000, is extending to the S&P MidCap 400.”

To learn more about SGI’s work in corporate governance, please, visit here.

Photo credit: Mark Zuckerberg F8 2018 Keynote | Anthony Quintano | FLICKR (CC BY 2.0)

Making the Investment Policy Statement Your Own

Making the Investment Policy Statement Your Own

Chris Cox

Building on our webinar about the revised USCCB Socially Responsible Investing Guidelines, SGI’s subsequent member webinar invites us to evaluate our investment practices and policies as expressed in an Investment Policy Statement (IPS). For some this may seem a dry document about asset allocation and expected returns. In fact, the Investment Policy Statement sets forth a set of goals for your institution. It can and should speak to what your institution stands for.

We were joined by:

We want to thank all of our members and guests for attending our webinar. We would greatly appreciate if you would take a quick minute to fill out our questionnaire, here, regarding your experience.

Slides are available here.