Social and environmental issues have traction, says ISS head

Social and environmental issues have “real traction” with institutional investors, says the head of Institutional Shareholder Services, the world’s largest provider of proxy voting and corporate governance services.  “We see more and more of our mainstream clients – regular investment managers -- willing to look at sustainability issues seriously as having real economic consequence,” James E. Heard, CEO of ISS, told the Canadian Social Investment Conference in Vancouver June 3.

Heard was one of a number of keynote speakers at the conference who concluded that there is a growing convergence between issues of sustainability and social responsibility and corporate governance. Heard mentioned several examples of social responsibility and sustainability proposals that garnered relatively high levels of support during the corporate annual meeting season that has just concluded. These include: Dover Corp. (sexual orientation), 43% support; Cooper Industries (sustainability report), 44%; and American Electric Power and Texas Utilities (both greenhouse gas emissions), both 24%.

He also cited Canadian steel manufacturer IPSCO, which received 49 per cent support on a proposal calling for a report on toxic and greenhouse gas emissions.  “If you look back a couple of years ago most would say, ‘That’s social, that’s environmental, we’re not interested in that and that has nothing to do with long term shareholder value.’ Now there is a willingness to look more carefully at these issues.”He also pointed to a recent proposal at Exxon Mobil calling for a report on greenhouse gas emissions. “The real story here is that Exxon was caught off balance last year,” adding that the company conducted a “a full court press” to increase management support in 2003.  “If the issues are well presented, well argued and supported by good reasoning and good evidence, there will be greater willingness to support them than in the past.”

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