Sustainability Shareholder Proposal Turned Down at Microsoft Meeting

On a typical cold and rainy morning in Seattle this week, Microsoft shareholders, board members and executives gathered for the annual shareholders meeting to discuss the trials of the previous year, along with prospects of the future.

This is the shareholders’ only time to speak their minds directly to Bill Gates, and only one shareholder resolution was on the ballot, introduced by shareholder activist John Harrington (full disclosure, he’s my boss), addressing Microsoft’s commitment to sustainability.

In response to the news that Microsoft had been removed from the voluntary Global Reporting Initiative Nasdaq Sustainability Index in October of 2009, Harrington Investments, Inc., a socially responsible investment advisory firm, introduced a shareholder resolution to Microsoft requesting that the company create a separate board committee focused on sustainability practices. Microsoft’s board recommended a “no” vote to shareholders, who complied.Microsoft was removed from the NASDAQs Sustainability Index QCRD because it did not disclose the minimum 40% of core GRI metrics needed to qualify.  These core metrics include issues such as water use and waste production.

Since 1999, GRI has grown to become the global standard for sustainability reporting that covers the environmental, social, governance and economic performance of companies.  In 2009 over 1,360 companies issued a report based upon the third version of GRI’s Sustainability Reporting Guidelines, G3.

Harrington has placed pressure on other large companies to create these Board Committees on Sustainability.  In March, the investment firm was successful in getting Intel to include “corporate responsibility and sustainability performance” in the committee’s overall policy responsibility.

R. Paul Herman, CEO of investment adviser HIP (Human Impact + Profit) Investor Inc, sees Microsoft’s behaviors and results as improving over time.  “Microsoft, a fairly decentralized operation, seeks to tie compensation and performance reviews to sustainability goals including energy efficiency, because they can add value to the bottom line.”  Shareholder proxies like this one, Herman says, seek to increase accountability at the Board level, which is positive; however, there are many examples of where better policy does not translate into higher performance – say BP’s safety and environmental policies.  “While strong accountability increased the likelihood of positive eco-impacts, the best measure is the actual metrics of eco-performance,” which is likely why the QCRD index dropped MSFT, for its lack of reporting.   “We need more investors to demand the actual metrics and eco-results, like greenhouse gas intensity and water usage, so sustainability investors can make smart decisions about their portfolio,” Herman says.  HIP also manages the HIP 100 Index portfolio, which shows that sustainability can lead to financial outperformance.

Over 95 shareholder resolutions based around climate change have been filed so far this year, representing a 40% increase over last year.

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.

One response

  1. This is disappointing. The electronics industry is toxic – See Annie Leonard’s latest “Story of Electronics” and think about how the design of computers and gadgets is designed for constant upgrading and unsustainable waste. Let’s ramp up the CSR not stomp on sustainability!

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