Emerson Electric Sustainability Report 2012
|Company||Emerson Electric Co.|
|Filer||Walden Asset Management|
|Subject(s)||Greenhouse Gas Emissions; Sustainability Reporting|
|Resolved Clause Summary||Sustainability report including greenhouse gas reduction goals|
We believe tracking and reporting on environmental, social and governance (ESG) business practices makes a company more responsive to a global business environment which is characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies 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.
Today, companies such as Bloomberg provide information on ESG performance that investors including Goldman Sachs and Morgan Stanley utilize in investment decisions. Carbon Disclosure Project (CDP), representing 551 institutional investors globally with $71 trillion in assets, has for years requested greater disclosure from companies on their climate change management programs. The 2010 company response rate to CDP for the S&P 500 and the FTSE Global Equity Index Series 500 was 70% and 82%, respectively. Emerson Electric’s (Emerson) low disclosure score of 22/100 reflects its lack of greenhouse gas (GHG) emissions abatement targets and goals. Investors are increasingly concerned about a lack of active leadership such as this by companies in which they invest
Corporate reporting on sustainability is on the rise. An increasing number of corporations worldwide produce sustainability reports. In 2009, there was a 25% increase in the number of organizations worldwide using the Global Reporting Initiative’s (GRI) Guidelines (G3) for their ESG reporting. Almost 20% of all Fortune 500 companies are now reporting according to the GRI Framework, up from 5% 4 years ago.
In contrast, Emerson does not report on its sustainability efforts nor greenhouse gas management plans. Climate change is one of the most financially significant environmental issues currently facing investors. Occupational safety and health, vendor and labor standards, waste and water reduction targets and product-related environmental impacts are particularly important ESG considerations in Emerson’s sector and may have the potential to pose significant regulatory, legal, reputational and financial risks.
Emerson acknowledges that it views its supply base as a direct extension of the company. However, investors do not know whether Emerson audits suppliers or asks them to abide by a vendor code of conduct.
While Emerson delivers products that reduce energy use, evaluative data on how the company itself is meeting goals to manage and reduce environmental impact is currently not accessible.
Last year’s resolution requesting this report received a 34% vote in favor.
Shareholders request that Emerson Electric issue a sustainability report describing the company’s ESG performance including GHG reduction targets and goals. The report should be available by September 1, 2012, prepared at reasonable cost, omitting proprietary information.
We recommend that the report include a company-wide review of policies, practices and metrics related to ESG performance and that Emerson commit to continuous improvement in reporting. We encourage the use of the GRI Guidelines (G3). The GRI (www.globalreporting.org) is a globally accepted reporting framework considered the gold standard of reporting. The GRI also provides a flexible reporting system that allows companies to report incrementally over time.