Starwood Sustainability Report 2013
|Company||Starwood Hotels & Resorts Worldwide Inc.|
|Filer||Trillium Asset Management|
|Subject(s)||Climate Change; Greenhouse Gas Emissions; Sustainability Reporting; Water Scarcity|
|Resolved Clause Summary||Sustainability report|
|Status||Withdrawn; Ongoing dialogue|
RESOLVED: Shareholders request that the Board of Directors begin issuing an annual sustainability report (at reasonable cost and omitting proprietary information) by October 2013.
Investors increasingly seek disclosure of companies’ social, environmental and governance (ESG) practices in the belief that they impact shareholder value. Many investors have concluded that companies which are good employers, environmental stewards, and corporate citizens, are more likely to generate stronger financial returns, better respond to emerging issues, and enjoy long-term business success.
The United Nations’ Principles for Responsible Investment is an initiative whose members seek the integration of ESG factors into investment decision making. Members collectively hold over $30 trillion in assets under management and request information on ESG factors when analyzing the risks and opportunities associated with existing and potential investments.
Sustainability reporting is on the rise globally. In 2011, 5,800 sustainability reports were published, representing a 200% increase over the number of reports published in 2006.
According to Newsweek’s 2012 Green Rankings, water use, greenhouse-gas emissions and waste generation and disposal together account for more than 87% of the total environmental footprint for Hotel & Restaurant companies.
Starwood has begun disclosing emission and water reduction programs and targets through its participation in the Carbon Disclosure Project. However, the company does not, for example, disclose how it is addressing these risks in its food and beverage supply chain.
Farming accounts for approximately 70% of water used in the world. According to OECD projections, 47% of the world’s population could be living under sever water stress by 2050. Further, agriculture contributes to water pollution from excess nutrients and pesticides.
Companies in Starwood’s peer group are developing programs to source sustainable food products. MGM Resorts discloses offering organic and local food selections to its customers. In 2010, Marriott Hotels adopted a sustainable seafood policy. Marriott reports sourcing approximately 65% of its seafood from certified sustainable fisheries and aquaculture farms in FY2010.
Further, companies in the tourism industry are increasingly susceptible to physical risks resulting from climate change. Sea level rise and coastal erosion may lead to conflicts over coastal development plans. As extreme weather events are expected to become more frequent and intense, companies will need to make robust physical risk disclosure if investors are to make informed decisions.
We recommend that the report include Starwood’s definition of sustainability and a company-wide review of company policies, and metrics related to long-term social and environmental sustainability and consider using the Global Reporting Initiative (GRI) index and checklist as reference. We believe information regarding strategies to reduce emissions, water and waste; increase sustainable sourcing in its global food supply chain, and build climate change resiliency into its operational goals would be useful to include. Information on how climate risks and adaptation is incorporated into existing strategic business plans for property expansion and development, food procurement, and protections of community infrastructure for which Starwood’s workforce depends, would also be beneficial for investors.