Monday, April 26, 2010

Power urged to improve board independence

Northwest & Ethical Investments has filed a shareholder proposal with Power Corporation, asking the financial services conglomerate to ensure the independence of at least two-thirds of its board of directors.

NEI – the parent company of Ethical Funds – notes that only five of Power’s 17 directors are completely independent, well short of best practices. Power has argued that as a holding company, best practices do not apply to them. NEI responds that Power has not addressed the underlying reasons why independence is important, and preferred.

“Firstly, independence is intended to avoid group think and provide a diversity of viewpoints and opinions,” NEI said in a proxy alert e-mail. “In addition to the time shareholders expect directors to devote to overseeing their company – time directors on too many boards cannot devote – oversight of the company is best accomplished with independent, unbiased directors. The best practice that a majority of directors be independent is well-founded and established into several listing requirements.

“Secondly, independence is necessary to make impartial business decisions with regards to the value of subsidiaries and holdings. Fundamentally, and by law, directors are tasked with acting in the best interests of the corporation and directors that sit on related boards (or manage related companies) have conflicted interests. Regardless of company structure, independent directors are necessary for good governance.”

In addition, NEI has asked Power to limit the number of board and committee “interlocks” among related companies. Twelve of Power Corporation’s directors also sit on the board of Power Financial and ten sit on at least two boards of related companies (Power subsidiaries include IGM Financial and Great West Life).

“In essence, Power Corporation wants the privilege of access to the capital markets without the responsibility of complying with best practices,” NEI says.

Power has also been asked to produce a report outlining how it evaluates investments according to its corporate social responsibility statement and its commitment to the Universal Declaration of Human Rights.

Power has investments in countries where human rights violations are of international concern, including Burma and Sudan, NEI noted in a separate proxy alert. “Power fails to disclose to shareholders procedures for determining how these investments comply with its CSR statement.”

The proposals will be voted on at Power’s annual general meeting on May 13.

Tuesday, April 20, 2010

Social investment group announces lifetime achievement award

The Social Investment Organization will present the first Canadian SRI Lifetime Achievement Award at this summer’s Canadian Responsible Investment Conference.

“The winner will have made an outstanding contribution to the Canadian SRI industry in terms of leadership, commitment, initiative, innovation, collaboration and/or impact in advancing industry growth and recognition,” the SIO said in a news release. “The winner will also be recognized as exemplifying high standards of professional and ethical conduct.”

Following a public nomination process, the SIO will narrow the field to four nominations based on the results of the public vote. SIO members will then be able vote online in early June and ballots will be distributed at the Toronto conference. The winner will be announced at the June 15 conference dinner.

"The award provides us with an opportunity to recognize and celebrate the leading lights in the Canadian SRI industry,"said Eugene Ellmen, executive director of the Social Investment Organization. "As well, we will build a narrative of the growth of socially responsible investing in Canada around the accomplishments and contributions of our award finalists and recipients."

Can you think of a deserving nominee for this new award? Please share your comments.

Thursday, April 8, 2010

Shareholders seeking oil sands disclosure

Shell and BP are being urged to take action to satisfy shareholder concerns over the energy companies’ involvement in Alberta’s oil sands.

In an investor webcast today, Sustainalytics oil and gas analyst Dayna Linley noted that although the social and environmental impacts of the oil sands are quite severe, it’s largely the result of cumulative development.

“The exposure is not specific to Shell and BP,” she said. “We put Shell in the top quartile in terms of performance on overall ESG issues and BP in the top half. So these companies are not laggards on ESG issues.”

Still, both companies have performance areas in which operational practices are lagging best practices and both are lacking in oil sands specific disclosure and cumulative impact awareness planning, Linley added. “There is a risk to Shell and BP in terms of environmental performance. The company is not satisfying shareholders.”

“It would be prudent for the companies to take action to mitigate risk and close the gap with best practices. They should acknowledge the risks and disclose to shareholders how they are mitigating them.”

On issues related to greenhouse gas and other emissions, Shell and BP have no more exposure than other oil sands players, and have strong past carbon management, Linley said.

“Is there risk on this issue? We don’t think so. Has the company satisfied shareholders? We would say no. It would be prudent for Shell and BP to publicly comment on these issues and disclose further detail around management systems and planning that would satisfy shareholder concerns.”

“The most important thing is that Shell and BP shareholders are asking for information on carbon and other risks. And we know there are a lot of misconceptions about the oil industry. So increasing company disclosure may help alleveiate this and seems to be a win-win for everyone.”

So-called unconventional oil development, such as tar sands, is becoming “the new normal,” Linley pointed out, and both Shell and BP “need to be in that game” to remain competitive. By the same token, the companies cannot afford to ignore environmental and social risk, she added.

“ESG factors are becoming more important to investors. Oil sands development needs to be done right.”

Tuesday, April 6, 2010

QTrade closes Meritas deal

QTrade Fund Management has finalized its merger agreement with socially responsible mutual fund company Meritas Financial. The combined firm will be part of the QTrade Financial Group, which has $4.5 billion in assets under administration and $365 million in assets under management.

“Qtrade will continue to provide managed portfolio and mutual fund solutions to retail investors, institutional clients, advisors and the customers of Qtrade's financial institution partners across Canada,” the company stated in a news release.

"Not only are we excited about the addition of Meritas' industry leading SRI investment solutions to our managed portfolio and mutual fund offering, but we are extremely pleased to have Gary Hawton, CEO of Meritas, the rest of the Meritas staff and the Meritas shareholders, who will become important Qtrade shareholders, join the Qtrade team,” said QTrade CEO Scott Gibner. “In one transaction we expanded our wealth management offering, added significant depth to our fund management team and gained tremendous new shareholder strength."

Under the terms of the friendly takeover, first announced in December of last year, Meritas will continue to operate as an independent entity. Meritas’ head office is located in Kitchener, Ontario while QTrade is based in Vancouver. However, QTrade will set up an office in Kitchener to serve its client base in eastern Canada.

Thursday, April 1, 2010

Drink beer, move the market

At a restaurant in New York City opening today, you can do exactly that. The Exchange Bar and Grill has a ticker tape reflecting prices that will go up and down based on demand. There is, however, a floor and a ceiling, so your food and beverages can never get too cheap, or too expensive.

As Socially Responsible Investors, we can do our best to keep the price high and profit coming in for local microbrewery Keegan Ales in Kingston, New York, by ordering up Mother’s Milk, a robust full bodied stout.