Google – Sustainability Reporting
WHEREAS
Investors increasingly seek disclosure of companies’ social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to be accepted in their communities and to prosper in the long-term.
Sustainability refers to development that meets present needs without impairing the ability of future generations to meet their own needs. It includes “encouraging long lasting social well being in communities where [companies] operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities, and non-governmental organizations) and responding to their specific and evolving needs, thereby securing a long-term ‘license to operate,’ superior customer and employee loyalty, and ultimately superior financial returns.” (Dow Jones Sustainability Group)
Globally, approximately 1,500 companies produce reports on sustainability issues (Association of Chartered Certified Accountants, www.corporateregister.com), including more than half of the global Fortune 500 (KPMG International Survey of Corporate Responsibility Reporting 2005).
Many large institutional investors have made sustainability reporting a key priority and regularly vote in favor of requests for sustainability reporting. According to a Risk Metrics 2008 ESG Background Report, the average level of support for sustainability reporting resolutions has been increasing each year, up to 28.1% in 2008.
American Electric Power has stated, “management and the Board have a fiduciary duty to carefully assess and disclose to shareholders appropriate information on the company’s environmental risk exposure.”
A June 2009 letter from the Investor Network for Climate Risk representing $1.4 trillion in assets called on the Securities and Exchange Commission to require companies to disclose material environmental and social risks using the Global Reporting Initiative as a framework.
A 2009 report from the Boston College Carroll School of Management entitled “The Value of Social Reporting” highlighted the important role sustainability reporting can play in both communication and performance management.
Global expectations regarding sustainability reporting are changing rapidly. The European Commission recommends corporate sustainability reporting, and listed companies in Australia, South Africa and France must now provide investors with information on their social and environmental performance.
RESOLVED
Shareholders request the company issue a sustainability report, at reasonable cost and omitting proprietary information, by April 1, 2011.
SUPPORTING STATEMENT
We believe the report should include the company’s definition of sustainability, as well as a company-wide review of company policies and practices related to long-term social and environmental sustainability. We recommend that the company look to the Global Reporting Initiative’s Sustainability Reporting Guidelines (“The Guidelines”) in preparing the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance in six categories (direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility). The Guidelines provide a flexible reporting system that permits the omission of content that is not relevant to company operations. Over 700 companies use or consult the Guidelines for sustainability reporting.
The Importance of Being Google’s Sustainability Report
by Jonas Kron
Google is a company that we often point to when asked to name companies that address environmental and social issues constructively. The company’s RE<C (Renewable Energy Cheaper Than Coal) is a groundbreaking initiative that will help change the power landscape, creating opportunities to advance solar thermal power, wind power technologies, and enhanced geothermal systems. We also are pleased to recognize Google’s efforts to cut or offset all of its greenhouse gas emissions at company data centers. Google is on the vanguard of efforts to maximize the efficiency of computers and minimize the environmental impact of the Internet infrastructure we have come to depend on.
Google’s taken progressive positions on social issues, such as the unusual step of publicly opposing California’s Proposition 8, which eliminated the right of same-sex couples to marry. The company has also taken an important step towards addressing human rights issues in a transparent fashion, by taking a leadership position in the Global Network Initiative. The GNI requires significant new commitments from participating companies, including: establishing greater transparency; assessing human rights risk; training employees; challenging human rights violations; and providing whistle-blowing mechanisms through which violations of its 5 principles can be reported (freedom of expression; privacy; responsible company decision making; multi-stakeholder collaboration; and governance, accountability and transparency.
Of course, no company is perfect. Google’s new server farm on the banks of the Columbia River in The Dalles, Oregon has entwined the company in the very high profile issue of salmon recovery in the Columbia and Snake River Basin. The attempt to save long-dwindling wild salmon populations in the Northwest is an issue critical to Native American tribes, Northwest citizens, and the region’s ecosystem. Salmon restoration science has linked the decline in this once abundant population of fish to the existence of the four Lower Snake River dams – dams whose power could be replaced with more sustainable and less damaging alternatives.
We believe the issue around the four Lower Snake River dams presents substantial reputational and financial risks to the company. Thus far, the company has not taken any tangible or meaningful steps to address these issues and position the company to be an active part of a solution.
On the social side, too often Google has been a laggard in efforts to improve privacy protections for its users. Compared to its peers, Microsoft and Yahoo!, Google retains user data for a much longer time and does not, we believe, take the steps necessary to secure that data from misuse. Google has also resisted calls for it to adopt an “opt-in” versus and “opt-out” model for collecting user data. This puts users in the default position of making more information about their online activities available than they realize or wish.
In light of this history we have raised the issue of corporate responsibility reporting and disclosures with the company in a group letter sent to Google’s CEO and co-founders. Surprisingly, Google is out of step with best practices by not publishing a sustainability or corporate responsibility report. Investors increasingly seek disclosure of companies’ social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to generate stronger financial returns, better respond to emerging issues, and enjoy long-term business success. A growing number of sell-side research houses and other mainstream investment institutions increasingly concur with this view and seek out environmental, social, and governance information from publicly traded companies.
Globally over 2,600 companies issued reports on sustainability issues in 2007 (www.corporateregister.com). Eighty percent of the Global Fortune 250 release corporate responsibility data, up from 64% in 2005, and 73% of the 100 top U.S. companies produce sustainability reports. Microsoft has been providing a sustainability report since 2004, IBM for at least five years, and Time Warner and AT&T since 2006.
A corporate responsibility report would provide an important – and obvious – venue for Google to share many of its successes. It would also demonstrate a level of transparency and engagement with stakeholders that is indicative of a healthy corporate culture. The best reports are honest assessments of where companies stand on important social and environmental issues confronting the company.
We sincerely hope Google takes our letter seriously and begins publishing a meaningful corporate responsibility report. Trillium Asset Management Corporation plans to follow up with Google and work hard to keep the issue high on the company’s list of priorities.
Sources: www.corporateregister.com, KPMG International Survey of Corporate Responsibility Reporting 2008.
