Could disclosure from extractive industries help taxpayers?

Last week, SocialFunds.com reported that the Office of Natural Resource Revenue (ONRR) wrote to the Securities and Exchange Commission (SEC) in favor of rules requiring disclosure of payments to governments, stating that this could help ensure energy companies are reimbursing US taxpayers.

This is one of the rules that was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act. When it was first proposed, Ian Gary, senior policy manager for extractive industries at Oxfam America, told SocialFunds.com: “We believe this provision has a dual purpose. One is to inform investors about the types of risks these companies are exposed to. But an important second purpose is to support good governance, transparency, and accountability for payments.”

After the letter was written, Gary observed that the ONRR was trying to turn a new page after replacing the Minerals Management Service, and has recently penalized Chevron, Anadarko and other companies for improper deductions and knowingly underpaying royalties to taxpayers and the government.

Regardless, the SEC has yet to implement the new rules despite an April 2011 deadline. Because of this, trade associations such as American Petroleum Institute (API) want to undermine the implementation. However, Gary pointed out that: “Interior has told the SEC that, if feasible, payment data should be reported at the lease level, mirroring our project-level definition recommendation.”

The ONRR’s letter to the SEC concluded that the disclosure of payments would be a valuable cross-check for data, and it would help ensure that the government and taxpayers are receiving the correct payment in exchange for extraction of natural resources.

To read the full article please click here.

What do you think about this? Do you think requiring companies in the extraction industry to disclose their payments to the government is a good idea? Do you think it will adhered to? Discuss!

Women directors improve performance, but remain underrepresented

SocialFunds.com reported in late December that women are underrepresented on corporate boards in 51 countries, as surveyed by Corporate Women Directors International (CWDI).

“Very simply,” the report states, “Studies all echo the same principle: the greater the percentage of women on boards and in senior management, the better the company’s financial performance.”

The report, entitled “Accelerating Board Diversity Globally”, cites several reports published in the last decade that find a correlation between female directors and improved corporate profitability (more notably reports by McKinsey & Co. and Goldman Sachs).

A recently published study of the diversity practices of the US S&P 100  by Calvert found that more than half of these companies have no female or minority representation in the highest paid executive positions.

CWDI’s report analyzes a number of strategies to increase women representation on boards and in senior management, and found that quota legislation is effective. Many European countries, as well as Israel and South Africa, have passed legislation that requires a certain percentage of director positions be allocated to women. Recently Italy has come on board with similar legislation.

Because passage of quota legislation would be unlikely in the US, investors and other shareholder activists are issuing resolutions to pressure companies to improve board diversity.

To read the full article please click here.

What do you think of this issue? Do you think the statistics for corporate performance under female leadership are true? Do you think shareholders should continue to lobby for board diversity? Discuss!

Sustainability Reporting Initiatives announce Partnership

SocialFunds.com reported on December 31, 2010 that the Global Reporting Initiative (GRI) and the Organization for Cooperation and Development (OECD) will partner to improve sustainability reporting by multinational companies.

A Memo of Understanding (MoU) signed by both organizations establishes a three-year partnership to encourage the use of OECD’s Guidelines for Multinational Enterprises and GRI’s Sustainability Reporting Framework in their reporting processes.

The GRI process is the most widely used sustainability reporting framework in the world, and OECD’s Guidelines consists of recommendations by the organization’s 42 members countries and covers all major aspects of business ethics. GRI is in the process of updating its reporting framework to include industry-specific Sector Supplements for 15 industries.

Do you think this is a worthwhile partnership, and will it increase the use of their respective reporting frameworks globally? Discuss!

To read the full article please click here.

EPA Regulations take effect

SocialFunds.com reported today that the EPA regulations on GHG emissions took effect yesterday, requiring new and upgraded power plants to install technology to reduce GHGs. Further, these plants have to obtain permits demonstrating that they’re best practices to minimize GHG emissions.

A 2007 Supreme Court decision relating to the Clean Air Act gives the EPA the authority to establish rules requiring facilities emitting over 25,000 tons of GHGs/year to install this new technology and have a permit stating such. The EPA estimates over 400 new sources/modifications would be subject to review, and 14,000 large sources would need to obtain permits.

Despite the 2007 Supreme Court decision, the US Chamber of Commerce filed a lawsuit challenging the authority of the EPA to regulate GHG emissions. In response to the lawsuit, Tim Smith, Senior Vice President of Walden Asset Management, sent letters in August 2010 to 35 companies that sit on the Chamber’s Board, noting that “the Chamber is obstructing progress as it speaks out and lobbies against positive policy solutions addressing climate change” (SocialFunds.com).

Following the November election, a coalition of 259 investors with more than $15 trillion in assets under management issued a statement calling for “clear, credible, and long-term policy frameworks that shift the risk-reward balance in favor of less carbon-intensive investment” (SocialFunds.com).

The EPA also announced last week its plan for GHG pollution standards for fossil fuel power plants and petroleum refineries. These standards will be proposed in July 2011 (power plants) and December 2011 (refineries). Final standards will be issued in 2012.

To read the full article please click here.

What do you think about the regulations imposed by the EPA? Do you think they’re adequate, and do they have the authority to impose them? Do you think the investors have more power than the government on these issues? Discuss!

Mainstream CSR reporting needs standardized approach

The United Nations Conference on Trade and Development (UNCTAD) issued a report last month that examined the CSR practices of the world’s 100 largest transnational corporations (TNCs), as well as the sustainable investment practices of the world’s 100 largest institutional investors, according to an article published by SocialFunds.com today.

The report states that historically, CSR has been downplayed as an activity that is not core to a business’ operations. Although most of the largest TNCs issue CSR reports, the quality continues to vary widely. Though 86 of these companies report information on climate change, direct comparison of performance on climate change is difficult or impossible, as companies don’t report the same information or to the same extent, according to SocialFunds.com.

This lack of direct comparison has made it difficult for investors and other stakeholders to use the information to make key business decisions. Despite this fact, the widespread reporting of CSR gives policy makers the opportunity to address key development challenges. Further, the integrated reporting of ESG factors has given regulatory bodies the opportunity “to strengthen the mechanisms through which institutional shareholders are able to influence the ESG practices of the companies in which they invest” (SocialFunds.com).

However, only 13 of the 100 institutional investors publish an annual report on their sustainable investment policies and practices. “If institutional investors provided more comprehensive reporting” on their own sustainable investment policies and practices, as well as on the ESG practices of companies, “this could encourage improvements in TNC practices,” the report states.

Does GRI have a solution to the inconsistencies of the definitions of CSR, ESG  and SRI? Will integrated reporting ever be mandatory? Will the work of the IIRC solve these issues? Discuss!

To read the full article, please click here.

Six Thousand US Companies Support Climate Change Legislation

Last week, SocialFunds.com ran an article stating that six thousand US companies are in support of climate change legislation. This number came from an analysis conducted by American Businesses for Clean Energy (ABCE) where they tallied up membership in seven coalitions and initiatives, including We Can Lead and the US Climate Action Partnership.

These companies employ an estimated 3.5 million people, represent more than $2.6 trillion in market cap and totaled $3.5 trillion in estimated revenue in 2009. Of these companies, 21 were Fortune 100 companies and 49 were Fortune 500 companies, including Target, Boeing, General Electric, Ford, IBM and United Technologies.

Christopher Van Atten of ABCE said “This unprecedented outpouring of business support for real leadership from the White House and US Senate on clean energy and climate should be a wake up call for elected officials in Washington” (SocialFunds.com).

To read the full article please click here.

What do you think? Is this analysis enough to make the government stand up and take notice? What does it really say about the corporate world’s stance on energy and climate change? Let’s hear your thoughts!