January 26, 2006

First Survey of Mutual Fund Investors on Global Warming Finds Heat on Funds Rising; 2005 Proxy Vote Report Shows Top Funds Give Resolutions Cold Shoulder - BOSTON, Jan. 26 -- Seven out of 10 U.S. mutual fund investors now want their mutual funds to support global warming shareholder resolutions, but not one of the nation's largest mutual funds voted in favor of any climate change proxy measures during 2005, according to a major new public opinion survey from the Civil Society Institute (CSI) and a report prepared for the Ceres investor coalition. (PRNewswire)

Eroding Support for Shareowner Resolutions on Climate Change Revealed by Unpublished Data - In part three of this multi-part article, SocialFunds.com examines unpublished data associated with a recent report on mutual fund proxy voting from The Corporate Library, and finds decreasing support for climate change resolutions. (SocialFunds.com)

Stick to the Knitting - In the 1982 business classic, “In Search of Excellence”, Tom Peters deduced that “Stick to the knitting” (stay with the business you know) was a key management concept for success in business. Unfortunately, it never became a management standard in the multilateral NGO sector. “Paddle in other peoples’ ponds” has been their mantra. And we have seen the cost.

UN officials are not commodity traders, but they decided to trade oil and the Oil for Food fiasco was the result. The core business of WTO officials is to manage trade rules. Yet Trade Ministers have now decided the WTO should get into the business of economic management. This is cause for real concern. (Alan Oxley, TCS Daily)

January 25, 2006

Awards cast critical eye on companies - The Public Eye Awards, which run parallel to the World Economic Forum (WEF) in Davos, honour companies for "outstanding social and ecological irresponsibility". (swissinfo)

Fairtrade doing wonders for Nestlé's reputation with the anti-corporates?

Keeping up with Mr. Jones, CEO - A recently announced proposal by the SEC to curtail runaway CEO compensation by forcing increased corporate disclosure of total annual compensation is certainly well-intentioned. After all, the average large firm CEO now takes home $11.8 million in annual compensation -- a staggering 430 times what the average worker makes ($27,460). Instead of attempting to place direct limits on compensation, the SEC is hoping that greater transparency about CEO compensation practices will enable the market to punish and discipline companies, thereby giving corporate boards a greater incentive to prevent their CEOs from siphoning off shareholder value.

However, by attempting to quantify CEO compensation (including hard-to-value items like retirement benefits, severance packages, deferred compensation, perquisites and stock option grants) with a single number, the SEC may be unleashing the Law of Unintended Consequences. In other words, by focusing on a single number for annual executive compensation, the SEC may actually inflate future executive pay packages. (Dominic Basulto, TCS Daily)

January 24, 2006

Nestlé and fair trade – not so fast - It will take more than the blue-and-green-wash of just one product if Nestlé wants to be seen as responsible by many, argues Shilpa Shah. The controversy over Nestlé’s association with the Fairtrade label has continued to brew into the new year, following the introduction of Nestlé’s first Fairtrade brand, “Partner’s Blend” coffee. (EthicalCorp.com)

No More Heroes - Scarred by scandal, leaders in such fields as politics, business and science are viewed with mounting suspicion. How are they being undermined and what can they do to shore up public trust? (Time)

Snowy Davos goes back to business - The annual meeting of the World Economic Forum (WEF) starts on Wednesday, to be for five days the centre of attention, fascination and wrath. (BBC)

January 20, 2006

Still Morning in America: Reaganomics, 25 years later - Twenty-five years ago today, Ronald Reagan was inaugurated as the 40th President of the United States promising less intrusive government, lower tax rates and victory over communism. On that same day, the American hostages in Iran were freed after 444 days of captivity. If the story of history is one long and arduous march toward freedom, this was a momentous day well worth commemorating.

All the more so because over this 25-year period prosperity has been the rule, not the exception, for America--in stark contrast to the stagflationary 1970s. Perhaps the greatest tribute to the success of Reaganomics is that, over the course of the past 276 months, the U.S. economy has been in recession for only 15. That is to say, 94% of the time the U.S. economy has been creating jobs (43 million in all) and wealth ($30 trillion). More wealth has been created in the U.S. in the last quarter-century than in the previous 200 years. The policy lessons of this supply-side prosperity need to be constantly relearned, lest we return to the errors that produced the 1970s. (Opinion Journal)

January 19, 2006

Business ‘sees gain in binding standards on human rights’ - International companies have responded favourably to calls for binding human rights standards in the corporate sector as evidence mounts that voluntary guidelines are unfair and bad for business, Human Rights Watch said on Wednesday.

The global watchdog, launching its annual report in Washington, said multinational executives were privately starting to question the conventional wisdom that self-regulation and codes of conduct were sufficient.

Kenneth Roth, Human Rights Watch’s executive director, told the FT that companies had responded positively to the campaign, launched last year, for a level playing-field of enforceable global standards. (Financial Times)

Ecologists unmoved by 'green' wave in advertising - SEATTLE William Clay Ford Jr., chairman of Ford Motor, stares out from the television screen and pledges that the automaker is "dramatically ramping up its commitment" to environmentally safer cars like gasoline-electric hybrids.

Left unstated in Ford's recent ads: In 2003, the No. 2 U.S. automaker after General Motors, dropped its promise to increase average fuel efficiency on its sport utility fleet. In 2004, the company joined other automakers in suing to block a California law that would limit emissions of gases linked to global warming. And even if Ford meets its goals, low-emission hybrids by 2010 would make up less than 4 percent of the company's fleet.

The "green" advertising wave is on, as companies from Ford to General Electric to BP blitz the airwaves with concern for a clean planet. (Bloomberg News)

Unpublished Data Clarifies SRI Proxy Voting on CSR Resolutions - In part two in this multi-part series, SocialFunds.com examines unpublished data associated with a recent report from The Corporate Library, and finds that statistics are not always what they seem at first glance. (SocialFunds.com)

January 18, 2006

Interview - Free enterprise takes on corporate responsibility - Steven Milloy respects the accomplishments of corporate responsibility activists – but he is ideologically pitched against them. Steven Milloy of the Free Enterprise Action Fund, a mutual fund that promotes American free enterprise, does not mince his words when it comes to the corporate responsibility movement. He says business has been getting a “one-sided view” for “a whole generation” of what their social responsibilities are. Like his socially responsible investor counterparts – though coming from a very different stance – Milloy has strong feelings about the purview of business. “Businesses need to remain focused on business,” he says. (EthicalCorp.com)

Not rocket science - Suppose you were appointed global economic czar, and your task was to bring the world's per capita income up to the level of Ireland's (almost that of the U.S.). Would you:

1. Insist the world's rich nations transfer substantial wealth though massive foreign aid to the poor nations?
2. Insist all nations adopt policies that would make them as economically free as the top 10 freest economies today?

If you answered "B," go to the head of the class. This shows you have a good understanding of both history and economic reality about what works and what doesn't.

If you answered "A," welcome to the Kofi Annan, Jacques Chirac, Gerhard Schroeder school of willful economic ignorance. Graduates of this school are well represented among international institutions, such as the World Bank, and the Organization for Economic Cooperation and Development; the political left; and the media elites in such places as the New York Times editorial pages, the BBC and National Public Radio.

Fortunately, in their effort to roll back economic ignorance, the Heritage Foundation and the Wall Street Journal produce an annual "Index of Economic Freedom." Their 2006 Index, the 12th edition, has just been released, and again it shows in stark and unambiguous terms that income, economic growth and opportunity are highly correlated with economic freedom. The economically freest societies are the most prosperous, and the most economically repressive societies are the poorest. (Richard W. Rahn, The Washington Times)

The Corporate Library Report on Mutual Fund Proxy Voting Finds Stagnation and Even Retreat - Part one of this multi-part series discusses the report findings on decreasing mainstream fund support for CSR resolutions; subsequent articles examine unpublished data from the research. (SocialFunds.com)

Sarbanes-Oxley vs. the Free Press - What isn’t widely understood is the role that may have been played by a law that most people don’t associate with free press issues, the Sarbanes-Oxley Act, passed in the wake of the Enron scandal, along with related crackdowns on corporations. (CEI)

The state of corporate citizenship - Words ahead of the substance - Public faith in the integrity of big business remains extremely low. The recently published 2005 State of Corporate Citizenship in the US report, from the Center for Corporate Citizenship (CCC) at Boston College shows that although companies are active in public life and are participating on a wide range of social issues, their actions often lag behind their expressed attitudes. (EthicalCorp.com)

January 17, 2006

The end of the OFR - and corporate responsibility? - The end of the OFR doesn't make a black day for the Greens, says Timothy Copnell. But the business review fails to go far enough, argues Julian Oram (Accountancy Age)

The purpose of the corporation - Mark Goyder delves once more into what companies are for (EthicalCorp.com)

Mining faces the cost of repairing its image problem - Mining has an image problem. In developing and developed countries alike, the public tends to regard the industry as dirty, dangerous and disruptive – and those who stand to profit from it as greedy despoilers.

But as gold, copper and other metals hit their highest prices for many years, and the power generation industry is poised for a big shift from gas to coal, the imperative to challenge that caricature is becoming more urgent.

While mine companies are making record profits, and mining stocks are attracting swaths of new investors, the risk of reputational damage is also rising as easy-to-reach deposits of metals, coal and diamonds in locations such as Australia and Canada are exhausted, forcing mining companies to expand into more remote areas of Africa, Asia and Latin America.

The critical voices are loud and well organised. But the industry is fighting back – admitting to past failings but trumpeting the message that, at a time when many fund managers use corporate social responsibility as an important criterion for investment, it has cleaned up its act. (Financial Times)

January 12, 2006

The Church of GDP - What's the dominant religion of the past 100 years? The answer isn't Christianity with its 2.1 billion followers, or Islam with its 1.3 billion. It's the idea of economic growth, the Church of GDP. Countless countries have embraced rapid growth as a cure to their ills. Getting richer is now an almost universal craving. And yet the worship of growth inspires enormous ambivalence. It is widely seen -- especially in already wealthy societies -- as morally corrupting: the mindless pursuit of empty materialism (do flat-panel TVs really make us better off?) that drains life of spiritual meaning and also wrecks the environment.

Exactly wrong, says Benjamin Friedman. (Robert J. Samuelson, The Washington Post)

January 11, 2006

Fruitless? Activist shareholders could be losing their ability to shake managements - Could 2006 prove to be the year that exposes the limits of hedge-fund activism as a strategy for gingering up company performance? The proposition sounds almost heretical: 2005 saw corporate America under pressure from shareholder groups to shake up their operations. (Financial Times)

Memo to Activists: Mind CEO Pay - Now that the Securities and Exchange Commission is finally getting around to improving the disclosure of executive pay, it will be up to investors to do something about it.

The shareholder activists with the most clout these days are hedge-fund managers, but given how much they pay themselves, they don't make great poster children for the outrageous compensation issue. And many think there isn't enough value being destroyed by top-executive compensation to really make a difference. (The Wall Street Journal)

They Say Jump: SEC Plans Tougher Pay Rules - The new rules on executive-compensation disclosure expected to be proposed by federal regulators are so sweeping that even publicly traded companies already telling investors more than is required would have to disclose more.

As soon as Tuesday, the Securities and Exchange Commission plans to propose its biggest overhaul of pay-disclosure standards since 1992. Experts estimate that roughly 25% of the 500 biggest public companies in the U.S. now disclose more about executive pay than current rules require.

But "there is no one company that has done everything" on the list currently circulating among SEC commissioners, said Jesse Brill, a San Francisco securities and compensation lawyer who runs CompensationStandards.com, an advisory Web site. "It will take real preparation." (The Wall Street Journal)

January 10, 2006

Ministers 'failing to enforce rules on business' - British multinationals are being allowed to operate with impunity in developing countries because of the government's failure to enforce international guidelines on corporate social responsibility, a report will today allege.

Gordon Brown and other ministers are accused of citing the guidelines as evidence of the government's commitment to responsible business practices but "lacking the political will to enforce them".

The failure to enforce the international rules, allied to the chancellor's "spectacular and irrational U-turn" in dropping the proposed operating and financial review reporting requirements for UK quoted companies, leaves the government's CSR agenda "looking more wanting than ever", according to Friends of the Earth.

The environmental lobby group, which co-wrote today's report with Amnesty International and Christian Aid, is this week expected to seek a judicial review of the government's decision to drop the OFR. (Financial Times)

The joys of price controls and socialist economics: Venezuela's coffee industry in chaos as price of beans doubles - An attempt by Venezuela's leftwing president, Hugo Chávez, to double the price that coffee producers pay farmers for a sack of beans has led to empty shelves in supermarkets throughout the country and fears of shortages of other basic foodstuffs.

President Chávez, who maintains price controls on basic foodstuffs, raised the price of coffee beans by 100% last month after weeks of protests by coffee farmers.

But most of the country's coffee producers, who buy, roast and grind the beans, refused to sell on the coffee yesterday, claiming their margins had been cut, and began hoarding thousands of sacks of unprocessed beans. (The Guardian)

January 9, 2006

Class-Action Sarbox - Should Congress ever take a break from congratulating itself on passing Sarbanes-Oxley, it might take a look at a new study released this week about the number of companies sued in securities class actions last year. The Members might then want to think about moving their money into bonds. (The Wall Street Journal)

In Norway, a woman's place is in the boardroom - The 500 companies listed on Norway's stock exchange face being shut down unless they install women on their boards over the next two years in a radical initiative imposed by a government determined to help women break through the "glass ceiling". (The Guardian)

January 4, 2006

Activist Shareholder Proposals, Totally Unfit - A group of Bally Total Fitness shareholders is pressing a proposal to amend Bally’s corporate bylaws. The action would:

• Allow shareholders the right to remove the company’s Chief Executive Officer and President by the affirmative vote of a majority of the company’s outstanding stock,
• Prevent the board of directors from acting unilaterally to amend the new bylaw provision,
• Remove the incumbent CEO Paul Toback from office.

Activist shareholders are making similar efforts at a number of other companies. In the last proxy season, for example, shareholders at over 60 companies offered bylaw amendments that would require directors to be elected by a majority of shareholder votes rather than the present plurality system. At a host of companies, shareholders have tried to amend the bylaws to prevent the corporation’s board of directors from adopting a poison pill takeover defense. And so on.

Are these shareholder efforts legally valid? Probably not. Are they good public policy? Definitely not. (Stephen Bainbridge, TCS Daily)

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