Update: Emerson Electric Resolution Receives Significant Shareholder Support
At the annual general meeting (AGM) of Emerson Electric, held on February 3, 2015, nearly 40% of shareholders voted in favor of a resolution co-sponsored by Wespath Investment Management asking the company to prepare a sustainability report with specific greenhouse gas reduction goals. This relatively high level of support is evidence that growing numbers of investors believe companies derive strategic benefits from sustainability reporting. As the resolution noted, sustainability reports are an important tool for companies to “better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities in products and processes, develop company-wide communications, publicize innovative practices, and receive feedback.”
The resolution recognizes that “climate change is one of the most financially significant environmental issues currently facing Emerson’s investors and customers.” Though Emerson Electric produces many products that help reduce energy use, such as the E2 Facility Management System, it has not published performance metrics relating to its own environmental and climate change management. Quantitative or time-based goals enable companies to manage natural resources more effectively, improve operational efficiencies, identify and manage risks and direct future actions more responsibly. Shareholders benefit from better cash flows, higher return on assets, increased shareholder value and all-around improved company performance.
Resolutions asking Emerson Electric to prepare a sustainability report have been filed since 2010. Because the company continues to ignore the widespread shareholder support for these resolutions (average shareholder support has been well over 30%), Wespath joined Walden Asset Management in filing the 2014 and 2015 resolutions. Despite the company’s claim that “additional disclosure…will not provide measureable benefits to the environment, our shareholders, employees, or the communities we serve,” Wespath is concerned that Emerson Electric may be falling behind its peers. In the future, Wespath may consider voting against director nominees to inform the company of our dissatisfaction with its lack of response to shareholder concerns.