Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal
Click here to read the press release.
Boston, MA (April 27, 2009) Trillium Asset Management Corporation (“Trillium”) is joining two nonprofit advocacy organizations, the International Labor Rights Forum and the International Rivers Network, in calling on fellow Berkshire Hathaway investors to back a proposal on the agenda for the company’s upcoming May 2, 2009 annual meeting which requests that Berkshire prepare a Sustainability Report on its performance on environmental and social issues. Boston-based Trillium today released a letter filed last week with the Securities and Exchange Commission and sent to Berkshire’s nearly 2,000 institutional shareholders, who own more than $26 billion in its preferred and common stock. The letter urges a vote in favor of the proposal, which was submitted by Berkshire shareholder Joseph G. Petrofsky. The letter comes in the wake of a report recently issued by leading shareholder advisory firm PROXY Governance that recommends a vote in favor of the resolution, calling Berkshires disclosure of environmental and social issues affecting its portfolio relatively poor, and concluding that additional disclosure in this area would help shareholders. Read more.
Putting China on the Spot for Sudan
Sustainable Returns
How High Are Sustainable Financial Returns?
The investment ecosystem has reached a tipping point and the interest in responsible, sustainable investing is surging. Asset owners with over $10 trillion have signed up to the UN Principles for Responsible Investment. The Investor Network on Climate Risk now has over $5 trillion behind it. The leading investment consultant to Foundations will now provide Mission Related Investing services. More corporations are institutionalizing sustainability concepts into their organizations and business education is inching away from the blinkered study of money making toward imagining socially positive enterprises with multiple bottom lines. A recent online survey by Cone Inc. found that 79 percent of full-time workers under the age of 25 want to work for a company that cares about how it affects or contributes to society.
As the new players under this growing sustainability tent get to work, they will eventually pose the most fundamental of questions: what is the objective of investing? By custom, and at times by regulation, the answer has been: maximize risk-adjusted financial returns. With this narrow, short-term view, environmental and social considerations have been deemed in conflict with maximizing wealth. Yet, can we really thrive while ignoring the explicit bottom lines of environmental sustainability and social justice?
The easy-to-grab, low-hanging fruit in sustainable investing is being harvested with a single-bottom-line approach. Activities that reduce the use of fossil fuels enhance the financial bottom line. With $100 oil, the obvious win-win activity is energy efficiency. Wal-Mart has gone all-in for a definition of sustainability focused primarily on reducing energy use by the company, its suppliers and its customers. This is a wonderful development, but only the first of many toward a truly sustainable economy and financial system.
Here at Trillium Asset Management Corporation we are improving our own sustainability performance through an inspiring grassroots effort initiated by our newly formed Green Team. The Greens recently sat us down, vegetarian pizza in hand, as we watched the clever, concise and internet-delivered Story of Stuff. In 20 minutes the narrator, Annie Leonard, illustrates the social and environmental damage our current straight-line production system generates, from extraction to production, distribution to consumption and, finally, disposal to landfill. She ends with a vision of an alternative production system that is circular as opposed to linear, that recycles as opposed to exploits and that is cognizant at every juncture of the human impact of the material economy.
This kind of deep sustainability thinking prompts a recasting of the most fundamental investment questions. As investors and capitalists, we embrace investing for financial return. The evolved fiduciary question becomes: what is the best risk-adjusted, long-term financial return we can generate that is sustainable and restorative from both a human and planetary perspective? Going down this essential path means acknowledging that many legal investments are neither moral nor sustainable, damaging the soul as well as the environment and risky in the long run. Truly sustainable investing expands the definition of wealth generation, risk and return, illuminating the complex tradeoffs we all face as individuals and institutions.
Royal Philips Electronics
Royal Philips Electronics (PHG – NYSE) is a European conglomerate based in the Netherlands and is one of the world’s largest electronics companies with sales of E27.0 billion in 2006. The company holds over 80,000 registered patents, illustrating its innovative nature. Philips’ main operating divisions are medical imaging (25 percent of sales), lighting (20 percent), domestic appliances and personal care (9 percent) and consumer electronics (39 percent).
Philips is using the cash from the divestment of non-core businesses on (1) a large share repurchase program, (2) raising its dividend 30 percent+ at the end of 2006 and (3) acquisitions that strengthen its four core divisions. Acquisitions over the past two years include three companies on Trillium Asset Management Corporation’s approved list – Color Kinetics (LED lighting), Intermagnetics General (MRI magnet systems and superconducting technology), and Lifeline Systems (elderly alert systems) – all good little companies we are sorry to see gobbled up. But the fact that Philips bought them indicates the company’s focus on emerging growth businesses.
Philips has a strong sustainability profile. The company is the world’s largest lighting manufacturer and promoting energy efficient lighting is among its top priorities. This spring the CEO of Philips’ lighting division supported the Dutch government’s effort to phase out incandescent light bulbs. Philips is a leading producer of compact fluorescent bulbs and with its acquisition of Color Kinetics is now the leader in even more efficient LED lighting systems. According to KLD, Philips emphasizes energy efficiency as a fundamental consideration for non-lighting products as well as internal operations. In 1994, the company launched its EcoDesign program to minimize product weight, reduce packaging, increase recyclability and lifespan, and optimize energy efficiency. Products that meet these criteria are part of the Green Flagship line, which accounted 6.6 percent of 2005 revenues. Product examples include cadmium/lead and mercury-free phones, flat screen TVs that use 39 percent less energy and residential solar systems.
www.philips.com/global
Announcing the Joan Bavaria Awards
I am a battered boss. One of our employees, who will remain nameless, has cajoled, flattered, and even threatened me to write on a certain topic in this quarterly newsletter. The threatening person in question reports directly to me, so the fact that she gets away with it is a function of something in my childhood I’d rather not examine. To give you a sense of what I’ve experienced, here’s a direct quote:
“If one of us writes about it, it will be in that overly serious, honorific tone that you seem uncomfortable with (although of course, who isn’t secretly honored & uplifted by public acclaim?) and that you’ll get enough of during the Ceres conference when the award winners are announced. Only YOU can write about this with the perfect mix of humility and gratitude befitting such an honor.”
So as directed, I am announcing the first annual Joan Bavaria Awards for Building Sustainability into the Capital Markets. The awards will be presented at the Ceres 2008 Conference to be held April 29-30, 2008 in Boston. Failure to covet “honorific tones” does not dim my enthusiasm for these awards, the topics are so important to me. The awards were invented by a group of employees led at Trillium by Blaine Townsend and an equally great group of Ceres staff members.
Two awards may be given each year. The Impact Award will go to an investor, company, or nonprofit group that has contributed a specific achievement resulting in lasting movement of the capital markets from a system focused on short-term profits toward one that balances financial prosperity with social and environmental health. The Innovation Award will go to an investor, company, or nonprofit group whose recent work has the distinct potential to be a catalyst for long-term change of the same kind.
The point is to encourage people to think about how to make our economic system more sustainable. Many awards focus on corporate or individual specific achievements. In contrast, these awards will be given to those visionaries have examined how capital markets are working and found a way to change expectations, outcomes, rules or customs beyond their own company or organization that encourage collaboration, far-sighted planning, compassion and fairness. The panel of judges is brilliant, thoughtful and dedicated.
This year we have watched yet another “bubble” burst on Wall Street. When the dust has settled, we will again know that much of the bubble was driven by greed – greed that awards the accumulation of money with no thought about the impact the process is having on ordinary people, the larger system long term, or even their own organizations. Smart people are afraid to jump off the train until everyone crashes at once.
Yet there are some great things happening, too, and it’s on the great things that the awards are designed to focus. You can find out all about them at http://www.ceres.org/bavaria_awards. And, of course, if you have someone you would like to nominate, the instructions are on the web sites.
