Saputo Inc. processed six billion litres of raw milk last year. But the Montreal-based dairy giant won’t say how much greenhouse gas it emitted to process that milk. And that’s made one institutional investor, Vancouver-based Ethical Funds Co., file a shareholder resolution to force Saputo to disclose that data. Investors could vote on the resolution at Saputo’s AGM on Aug. 4. Similar proposals were filed with Sherritt International and E-L Financial earlier this year, but both agreed to disclose emissions before a vote occurred — which may prove to be the wiser strategy.
The Carbon Disclosure Project, which encourages companies to publish emissions data, says 101 Canadian businesses did so last year. But 74 companies either refused or simply didn’t respond to the non-profit organization’s requests. And that has others taking action. There were 69 global-warming-related shareholder resolutions tabled in Canada and the United States during the 2009 proxy season — the highest number so far, according to Ceres, a Boston-based network of investors and green organizations.
Dirk Matten, the Hewlett-Packard chair in Corporate Social Responsibility at the Schulich School of Business in Toronto, says businesses should inform investors about emissions now, because securities regulators could soon simply require them to anyway. The U.S. is well on its way to implementing a cap-and-trade system, which puts a price on carbon dioxide, and Canada will likely follow suit. Once a price is associated with polluting, a company’s emissions will then affect the bottom line. “It makes perfect sense to move toward the inevitable,” Matten says, adding the more work companies do voluntarily, the less likely governments and regulators will be heavy-handed when creating new rules.
Some companies may be put off by the costs of carbon accounting, as well as the risk of public criticism, which might happen anyway if they stay quiet. For instance, a group of shareholders in May withdrew a resolution to force Chevron to disclose its emissions after the company agreed to do so, while ExxonMobil’s board advised its shareholders to vote against a similar proposal. The U.S.-based Interfaith Center on Corporate Responsibility, a coalition of faith-based institutional investors, issued a press release mildly praising Chevron while chastising ExxonMobil.
Adine Mees, CEO and president of Canadian Business for Social Responsibility, a non-profit adviser, says shareholder resolutions are often a good indicator of public opinion, and it pays to treat each one seriously. “If you fail in the court of public opinion,” she says, “you’re going to be dealing with reputation damage for years.”