Frank Sherman to receive SGI’s 2022 Fr. Mike Crosby Award

The Board of Seventh Generation Interfaith coalition is pleased to announce that Frank Sherman, the executive director of SGI, has been selected to receive the 2022 Fr. Mike Crosby Award. The award will be presented in a reception at the SGI conference on October 11. The Fr. Mike Crosby Award recognizes a person who has promoted a more just and sustainable world and exemplifies the passion and commitment of our founder, Michael Crosby, O.F.M., Cap.

“We are so happy to honor Frank Sherman,” said SGI Board Chair Cindy Bohlen. “Several board members came forward to nominate Frank to receive this year’s award; once Dan Tretow’s final nomination was shared, Frank’s selection was unanimous. All who have had the privilege of working with Frank understand that he has been the person who has shepherded SGI toward fulfilling Fr. Mike Crosby’s vision. The award is the perfect way to cap off Frank’s role as the Executive Director.”

“I have had the privilege of working with Frank on multiple corporate engagements over the years, said Dan Tretow. “Everyone knows they are working with a wise, educated, pragmatic and sincere individual. And he does not work alone. In each engagement, he partners with experts from partner coalitions, ICCR program directors, Ceres and NGO’s that add credibility and strength to the conversation. He challenges the companies to do better, not for his own sake or for our coalition, but for all of society and the world.”

Frank’s background is unlike many others in our ministry; he sat on the other side of the table for 35 years. Before retiring from the corporate world at the end of 2012, Frank worked in the chemical industry, rising to serve as President of the American affiliate of AkzoNobel, a multinational paint and performance coating company. As part of his duties at AkzoNobel, he acted as a board member and, later, chair of a trade association.

While others in retirement might have hesitated, Frank made a wholehearted commitment to Fr. Mike when he was asked to help with some engagements focused on the risk of transport by rail and engagements concerning deforestation. Frank’s agreement to help resulted in his leadership in the process of creating a board of directors, re-naming SGI, and incorporating the organization. When Fr. Mike was diagnosed with cancer, Frank led the strategic planning process to envision how SGI might move from a founder-led organization to a member-led organization and was named executive director in July 2017. From the beginning, Frank has given his time freely to SGI, seeking no remuneration for his work.

Amid questions about the future of SGI following Fr. Mike’s untimely death, in his actions, Frank guaranteed growth from seeds that Fr. Mike planted.

During his tenure as the Executive Director of SGI, Frank has worked to fulfill SGI’s mission to build a more just and sustainable world for those most vulnerable by integrating social and environmental values into corporate and investor actions. Father Mike Crosby’s vision to use the shareholder voice toward a more just and sustainable world for those most vulnerable has been realized and continues to grow thanks in large part to the dedication of Frank Sherman.

Please join us in congratulating Frank.

SGI’s 2022 Conference: Corporate Human Rights Due Diligence in Conflict-Affected and High-Risk Areas

Good stewardship requires posing and answering difficult questions, especially concerning business activities in conflict-affected and high-risk areas where the risks are highest to people, the planet, and portfolios. The World Bank estimates that two-thirds of the world’s poor will live in such areas by 2030. Russia’s invasion of Ukraine, the military coup in Myanmar, and forced labor in XUAR, China make this an urgent and compelling topic now. It is up to investors and companies to respond to these risks with systemic solutions, putting conflict-sensitive policies and practices into place.

SGI’s 2022 Conference: Corporate Human Rights Due Diligence in Conflict-Affected and High-Risk Areas will take place on October 11th at 4:30PM CT. We are delighted to announce that our keynoter will be Bennett Freeman, Associate Fellow in the International Law at Chatham House.

Following our keynote, our associate director, Chris Cox, will moderate a panel with leading experts:

In the conference, we hope to explore these questions:

  • Do socially responsible investors need to respond to human rights issues in their portfolio? Can they just write a screen?
  • What human rights issues should a responsible investor respond to and how?
  • How would a responsible investor ask one of their money managers to do this?
  • What is heightened human rights due diligence for investors and companies? How does an investor or a company go about doing it?
  • How do investors and companies assess human rights and geopolitical risks of emerging markets, informed by the UN Guiding Principles on Business and Human Rights (UNGPs)?
  • How can investors and companies respond to state-sponsored actions that undermine the rules-based order necessary to safeguard the international community and the global economy?
  • With 500 companies withdrawing operations from Russia, has a new standard been set for corporate responsibility and a stakeholder economy?

Conducting heightened due diligence helps companies and investors to identify and mitigate human rights risks, while simultaneously addressing the potential material risks – legal, operational, and financial – associated with areas impacted by conflict. Join us for a conversation on the difficult questions investors must ask of their portfolio companies and themselves when seeking to be rights-respecting stewards in an increasingly conflicted world.

Individual tickets for in-person attendance are $75 per person, and individual tickets for virtual participations are available at $50 per person. You can purchase individual tickets for the Conference here. The conference will be hosted at Fox Point Lutheran Church, located at 7510 N Santa Monica Blvd. in Fox Point, WI, 53217.

More information about the Conference can be found here.

SEC Finalizes Pay Versus Performance Disclosure Rules

Last Friday (August 25), the Securities and Exchange Commission (SEC) adopted final rules implementing the “pay versus performance” disclosure requirement, completing a 12-year journey to fulfill a provision of the 2010 Dodd-Frank Act.

Under the rule, U.S. public companies must provide a new table in their annual proxy filings that contains executive compensation and financial performance measures covering a period of up to five years. While this new rule does not mandate any action that will narrow the pay disparity between executives and workers or reduce wealth inequality in the U.S., the rule requires companies to provide data comparing executive pay to financial performance. This table and the new figures will provide investors some clearer information for the mandatory (advisory) “Say on Pay” votes in every company’s proxy.

As a result, I hope that this makes Rosanna Landis Weaver’s work for As You Sow a little easier as she annually prepares a report on “The 100 Most Overpaid CEOs.” Previously, she had to dig through the not-so-transparent data in the “Compensation Discussion and Analysis” (CD&A), a required part of a company’s annual proxy statement, to generate her figures. Theoretically, the new rule will allow for a more straightforward means of comparison. (Worth noting: Year after year, the report uncovers overpaid CEOs who underperform on “Total Shareholder Return.”)

As You Sow, The 100 Most Overpaid CEOs, 2022

Some will take issue with the new disclosure rule as it is all about financial performance. Rightfully, socially responsible investors may be concerned because these new required charts do not include non-financial disclosure (i.e., human rights performance or emissions reduction). However, the rule does not preclude a company from including that information.

The new rule may draw companies to better tell their story, rather than bury shareholders in legalese. At the end of the day, the rule is not just about filling out the table, but that companies devote time to develop a narrative that helps investors understand how pay and performance align.

Even after this rulemaking, the SEC has yet to finish the implementation of Dodd-Frank. Perhaps we may see the SEC finalize the long-delayed provision for a clawback rule for accounting missteps mandated by Dodd-Frank. And we may be light years from reducing pay disparity and acting on wealth inequality, but better disclosure is a small step in the right direction.

What Happened on Tuesday?

By Frank Sherman

The busy news cycle didn’t give enough attention to the signing of the Inflation Reduction Act (IRA) by President Biden this past Tuesday, representing the single largest action ever taken by Congress and the U.S. government to combat climate change. It has been a long time coming since the first Congressional hearings on the topic in 1988. Not that Congress hasn’t tried. There have been plenty of false starts on legislation to tackle GHG emissions; however, various forces profiting or otherwise benefiting from the fossil fuel economy have prevailed…..until Tuesday.

While the size of the package is a fraction of the Build Back Better Act passed by the House in November, the emissions reduction components are nonetheless robust and effective. The climate solutions and environmental justice provisions in the $369-billion package will impact nearly every corner of the US economy. Given the unanimous opposition to the bill by Republicans and the slimmest of margins in the Senate, the Democratic reconciliation bill also contains some financial support for the fossil fuel sector, but, as a whole, it represents a major step forward in the fight to preserve a livable planet.

What does $369 billion buy you (EarthJustice)?

  • Accelerates the clean energy transition and lowers energy costs by…
    • Expanding access to clean energy by making clean energy tax credits more accessible and extending them by 10 years.
    • Creating jobs and increases our country’s energy security by investing $60 billion in manufacturing solar panels, batteries, and other clean energy technologies in the U.S.
    • Providing funding for low-income families to electrify their homes, including $9 billion in home energy rebate programs.
    • Removing barriers to community solar.
  • Helps transition the transportation sector away from fossil fuels by…
    • Proving tax credits for electric vehicles;
    • $3 billion for the U.S. Postal Service to electrify its fleet;
    • $1 billion for clean school and transit buses, garbage trucks, and other heavy-duty vehicles, prioritizing communities overburdened by air pollution; and
    • $3 billion to clean up air pollution at ports by installing zero emissions equipment and technology.
  • Supports communities of color and low-income who face disproportionate harms from pollution and the climate crisis with…
    • $3 billion for community-led projects;
    • $315 million for air monitoring; and
    • Reinstatement of the Superfund Tax.
  • Advance practices that make farming climate-friendly with…
    • $20 billion to help farmers and ranchers shift to sustainable practices like crop rotation and cover crops; and
    • $300 million for research into the climate impact of agricultural practices.
  • Support natural climate solutions with…
    • $2.6 billion in coastal resilience grants to fund projects;
    • $1 billion to ensure federal agencies can conduct robust environmental and NEPA (National Environmental Policy Act) reviews;
    • $250 million to implement endangered species recovery plans; and
    • $50 million to advance protections for mature and old-growth forests.

Individuals will see these benefits with a 30% tax credit for installing residential solar panels; up to $7,500 tax credit for purchasing an electric vehicle; up to $14,000 credits for home energy efficiency upgrades, including up to $8,000 to install a heat pump; and an average savings $1,800 per year on energy bills and make their costs more stable and predictable compared with volatile fossil fuel prices.

The IRA represents major progress by Congress, but more action will be needed for the US to meet its 2030 target of reducing emissions by 50-52% below 2005 levels (Rhodium Group). This restores some credibility to the US to maintain global leadership on climate change. The effort is by no means over. Eve with the IRA enshrined as law, we must advocate, and ask our portfolio companies to do the same, with federal agencies and states, as well as Congress, to pursue additional actions to close the emissions gap.

You may have missed it, but Tuesday was a great day for people and planet.

Both Chair and CEO? Formula for Disaster

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)