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Corporate Social Responsibility

Norway’s Sovereign Wealth Arm Takes Aim at Ocean Sustainability

Norges Bank Inv. Mgmt., Norway’s sovereign wealth fund, has announced its interest in curbing the pollution of oceans through its investment decisions. Addressing an issue near and dear to Norway’s Prime Minister and historical economy, the $676 B fund is alerting portfolio companies, primarily in ocean-based industries (shipping, offshore oil and gas, offshore wind, wild-catch fisheries, aquaculture and marine tourism among others) to follow stricter guidelines on polluting the ocean (acknowledging the UN Convention on the Law of the Sea) and incorporating sustainability efforts into their businesses (cue the UN Sustainable Development Goal #14: Life Below Water). Therein, the asset manager seeks to engage with the boards of relevant companies to usher in integration of strategic policies, goals and enhanced disclosure surrounding ocean sustainability.

Miners Feel Green Pressure Too

Mining giants Alcoa Corp and Rio Tinto plan to fine-tune a technology that could turn aluminum smelters carbon-free for the first time. Another initiative under way in Sweden could see hydrogen replace coking coal in manufacturing steel. Like many other companies experiencing this, the key driver is to turn green stems from a primary stakeholder group—customers. It comes as no surprise, as the next generation Millennials want to ensure that their products are cleaner and greener than before. More and more companies are producing stand-alone sustainability and corporate citizenship reports to show their constituents exactly the harmonization of business strategy and sustainability, while also setting intermittent shorter term and longer-term goals across the Environmental and Social spectrums to reduce greenhouse gas emissions, injury rates, and boost diversity and inclusion. Sarah Chandler, Apple’s senior director of operations and environmental initiatives, said, “We wholeheartedly reject the notion that you can’t protect the environment while protecting your bottom line.”

Big Oil Collaborates on Reducing Methane Emissions

Exxon Mobil, Chevron, Cheniere Energy, Inc., Equinor ASA and Pioneer Natural Resources Co., among others, have recently formed a methane emissions consortium focused on reducing greenhouse gas pollution and advancing technology to more adeptly fight and manage global emissions from their value chains.

The Collaboratory to Advance Methane Science (CAMS) will pursue focus on scientific research and solutions to reduce methane emissions, one of the most potent GHGs from oil and gas drilling through the refining and petrochemical processes. In partnership with the Gas Technology Institute (GTI), CAMS plans to branch out and enlist companies across the natural gas value chain and aggregate diverse expertise “to deliver factual data that can be used to inform regulations and policy development.”

Exxon Mobil has pledged to stem its methane emissions from its U.S. onshore activities and, two months ago, committed an effort to reduce methane emissions (CH4) by 15% worldwide by 2020.

UK Gender Pay Gap Figures

As we commented on previously, companies in the UK have now filed information on their gender pay gaps.

The Equality and Human Rights Commission (EHRC) is reporting more than 10,000 companies have complied, with over 1,000 firms reporting figures at the deadline.

They cite a median gender pay gap of reporting companies of 9.7%; 78% of companies pay men more that women on average, with 14% paying women more.  Only 8% reported no gender pay gap.

A pay gap is not the same as unequal pay, which is illegal under UK law, but typically a result of having more highly paid men than women in an organization.

The five sectors reporting the greatest pay gap were:

  • Construction
  • Finance and Insurance
  • Education
  • Mining
  • Communication

The five lowest, all below the median, were:

  • Household Employers
  • Accommodation and Food
  • Health
  • Arts and Entertainment
  • Retail

Two of the companies reporting what has been dubbed a “negative” pay gap, where women are paid on average more than men, are Tesla Motors and Mamas & Papas.

As of this post, the EHRC reports approximately 1,500 companies have failed to comply.

The EHRC has stated it intends to pursue enforcement action against companies that have failed to file.  This will start with a letter to be sent Monday, April 9, advising companies that they have 28 days to comply or face further action. This action will ultimately result in summary conviction and unlimited fines to be set by the court. The EHRC intends to make this a public process, which is likely to prove very problematic for companies and individuals at those firms. They will also be investigating companies with irregular or implausible figures.

With the heightened scrutiny on this issue in both the public and corporate domains, combined with board diversity concerns, increased shareholder resolutions on gender pay equity and other related matters such as EEO-1, the question is how long until we see a push for universal disclosure of this nature in the US?  CEO pay-ratio disclosure could prove to be an insignificant concern if this becomes a mandate of investors and/or regulatory bodies.

BlackRock Targets Gun Manufacturers

BlackRock has publicly stated that it intends to engage gun manufacturers and sellers in its portfolio “to understand their response” to the Florida school shooting last week.

BlackRock was clear to state that their investment in these companies is due to index listings, that these positions are held in ETFs under the iShares umbrella, thus indicating potential pressure that could be applied to index providers to remove gun manufacturers from their listings.

BlackRock intends to engage with these companies via its Investor Stewardship team.  This would mesh with BlackRock CEO Larry Fink’s letter to corporate executives in January calling for companies to show how they make “a positive contribution to society” in addition to delivering financial performance.

This adds to mounting pressure on gun manufacturers as some are already facing shareholder resolutions related to company action on gun safety.