Oracle bats away pesky shareholder resolution on sustainability

Oracle is opposing a minority shareholder resolution to be tabled at its upcoming AGM calling on its board to institute a formal sustainability oversight committee. The resolution was prompted by elimination of Oracle, Microsoft and Cisco from a suatainability investment index due to insufficient disclosure.
Written by James Farrar, Contributor

John Harrington, a card carrying sustainability awkward squad member, has been stirring things up again with the filing of nuisance shareholder resolutions at Microsoft, Oracle and Cisco. Through his vessel, Harrington  Investments Inc. (HII), Harrington is stretching the process of shareholder democracy to demand the institution of board level committees to oversee sustainability performance at the trio. Harrington takes umbrage with management over the elimination of each from the Nasdaq CRD Sustainability index this year due to insufficient disclosure of sustainability performance in accordance with Global Reporting Initiative guidelines.

The fact that these companies were removed from the Sustainability Index last year for lack of reporting, proves that they never had any intention to pursue true sustainability........ Amazingly enough, three of the largest and most successful technology firms in the world fail to comply with these guidelines and is cause for concern.

Of late, he has been emboldened by his success in convincing the mighty Intel to bend to his will and thinks the rest of the industry should follow suit. According to Harrington's website:

In March of this year, Harrington Investments (HII) was successful in reaching an agreement with Intel Corporation to amend the company's Charter of the Corporate Governance and Nominating Committee to include "corporate responsibility and sustainability performance" into the committee's overall policy responsibly. Intel also provided HII with a legal opinion stating that under Delaware law Intel directors have a fiduciary duty to address these issues. .......Hopefully Microsoft, Cisco and Oracle can look at the steps taken by Intel and use them as a guide in realizing that addressing sustainability and transparency are key to the long-term success and existence of their businesses.

But perhaps Oracle and Apple are made of sterner stuff. Two years ago, Apple saw off Harrington's resolution demanding more sustainability transparency despite the presence of Al Gore on the board. This year its Oracle's turn and the hackles are up ahead of the October 6 AGM where this minority resolution is likely to be quickly despatched to the bin. From the resolution:

In the proponent’s opinion, issues related to environmental sustainability might include, but are not limited to: global climate change, emerging concerns regarding toxicity of materials, resource shortages, and biodiversity loss. Adoption of this resolution would help to restore our company’s position in this area of increasing concern to investors and policy makers. Beginning October 2009, the company was removed from the NASDAQ Global Sustainability Index due to inadequate disclosure of quantitative environmental metrics. Although our company has expressed support for “green” and “sustainability” initiatives, the Proponent believes establishing a separate board committee on sustainability is necessary to ensure that our company will “walk its talk” by elevating the priority given to these issues, and thereby restoring the company’s leadership position.

And Oracle's response:

While the Board takes environmental sustainability very seriously, we oppose the adoption of this policy because we do not believe that a Board committee dedicated to this issue is necessary, nor would it be more effective than our current and ongoing sustainability efforts. Our management considers environmental matters and has developed and actively promotes practices that both minimize resource utilization and emphasize sustainable resources. For example, management sponsors an executive-level Environmental Steering Committee, which oversees and guides our company-wide environmental sustainability efforts. The Environmental Steering Committee is comprised of senior employees from various business units, including supply chain management, information technology, marketing, public policy, product development, real estate and facilities. The Environmental Steering Committee meets regularly to review our progress and status on environmental issues and makes recommendations related to the adoption of corporate sustainability policies and initiatives. Representatives of the Environmental Steering Committee provide updates and reports to a management Director who, when warranted, reports to the full Board regarding these matters. The Board believes that the Environmental Steering Committee is in the best position to manage these matters on a day-to-day basis with oversight by the Boar. Our commitment to protecting the environment is expressed in both our Code of Conduct (available at www.oracle.com/corporate/investor_relations/CorpGov.html) and the Oracle Environmental Policy (available at www.oracle.com/us/corporate/citizenship/environment/index.html). We intend to continue to develop practices and products that adhere to the principles set forth in the Environmental Policy.

Even Harrington understands that these no hoper resolutions will not succeed but they do serve to draw public attention to perceived deficiencies which, activists hope, may actually end up being quietly addressed later after the din has died down a bit. Watch to see how or if Microsoft, Oracle and Cisco develop their sustainability reporting going forward on the back of tough criticism this year.

But should any of these tech companies take seriously pressure to adapt their corporate governance to encompass sustainability performance oversight? Chris Mines, Forrester's sustainability apparatchik thinks the tech industry is already way too concerned with attending to domestic corporate sustainability performance and this comes at the risk of serving as a management distraction from the real prize - the sustainability solutions market.

When I meet with strategists at tech suppliers large and small, we talk sustainability both in terms of how the companies are cleaning up their own practices and processes, and what they are doing to help their customers do the same. SAP’s “exemplar and enabler” language captures these parallel efforts nicely. But it’s still a limited perspective, one that I characterize as the IT industry playing defense. “We are improving our energy efficiency!” says the collective industry voice, as if trying to deflect public criticism of energy-hog data centers, or mountains of e-waste, or PCs left running 7 x 24. And yes, absolutely, the IT industry and its customers have more work to do to make IT infrastructure and processes less wasteful and more responsible. But what about going on the offensive? There are bigger opportunities out there for IT suppliers; new markets in sustainability that will require more, not less, IT infrastructure. Opportunities that will cause IT’s share of global energy use to rise, not fall. If big IT suppliers are in a defensive crouch regarding sustainability, they risk missing these new markets.

Mines is right to point out that the big picture is IT enabling sustainability not sustainability constraining IT. However, pressure from NGO's, regulators and investors is of late mounting not waning. This is especially so for issues such as privacy protection in social computing, data centre & device energy efficiency, the acceptance of the inevitability of  'forced labour, killings and rape' in manufacturing supply chains, e-waste, toxins, provision of communications intercept technology to enable tyrannical regimes to repress human rights and the occassional incidence of foreign bribery - all of which making news recently. 

Rather than choose between sustainability offence and defence I suspect the industry is going to have to learn to walk, talk and chew gum at the same time.

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