Larry Dignan blogged earlier today HP has finally wrestled control over Autonomy having bought 87% of shares despite analysts second guessing that it had paid too much for the company. This comes after news came last week that HP had hired in the top guns from Goldman Sachs to develop a strategy to fend off potential hostile shareholder activist moves on management given the sharp decline in shareholder value now trading at 54% below the 12 month peak.
Yet, none of the drama surrounding HP has dampened the spirits of minority sustainability investors, many of whom are into HP for the long haul vested in public pension funds which often carry stringent ethical investment criteria. And according to HP, it's shares are among the fifteen most widely held by ethical investors with 100 separate ethical funds holding shared. Michael Muyot, President of CRD Analytics - the firm behind the NASDAQ OMX CRD Global Sustainability Index ratings - said in an email recently:
HP's ESG performance declined significantly from 2009 to 2010. It had one of the largest across the board annual declines for large cap tech firms, 9%, based on SmartView 360 measurement of 175 ESG performance metrics. They now have multiple red flags indicating critical areas for improvement within Board Structure, Compensation and Vision & Strategy for the Governance dimension. HP's environmental footprint also went in the wrong direction, UP, while its global tech peers were predominately reducing their total GHGs, electricity purchased and waste generated. An important lesson is the undeniable connection between strong ESG performing companies and sustainable shareholder value. Savvy long term investors will most likely return to HP when they've raised the bar both internally and amongst their global peers.
Andrea Moffatt, Vice President at Ceres, an influential sustainability investment think tank, weighed in also:
Sustainability issues are critical to business success and board members have a responsibility to understand the risks, opportunities and ask management the tough questions. HP's board of Director's Nominating and Governance Committee is responsible for identifying, evaluating and monitoring social, political and environmental issues that could impact the business. I hope the board continues to take this mandate seriously amid all of the upheaval at the company. ......Additionally, the board should ensure that sustainability performance results are a core component of compensation packages and incentive plans. In the end, we all are responsive to our pay checks.
Interestingly, CERES is home to the BICEP, the business lobby pressuring for US government regulatory intervention on climate change with members including Nike, Starbucks, Symantec, Timerbland, Gap Inc and Whitman's alma mater, eBay. No doubt CERES will be watching with interest to see how HP’s previously progressive policy on climate change consolidates and reconciles under the new board’s leadership. Because at least on California’s own controversial climate change regulation, AB32, HP’s Executive Chairman Ray Lane & CEO Meg Whitman are on the record with near polar opposite viewpoints. Compare and contrast Meg Whitman with Ray Lane in these two short videos.
Its often said that corporate social responsibility is part of the DNA at HP, part of the HP way. The next weeks and months will reveal just how the new top management will chose to take on this mantle & make it their own or use their leadership mandate to chart a new direction.