Environmental Inaction

Burgeoning greenhouse gas emissions, generated by industry across the globe, are a serious threat to the environment. And while staunch legislative protection of the environment seems unlikely under the current Bush administration, shareholder pressure on corporations that contribute to the pollution can help encourage industrial producers to clean up their acts.

Harvard, as a shareholder in many companies, frequently participates in proxy votes, which act as shareholder referenda on corporate policy. But recently, Harvard has failed to do its part in protecting the earth’s future. Earlier this year, the Corporation Committee on Shareholder Responsibility (CCSR), a Harvard body that votes in the referenda of the companies in which Harvard owns stock, abstained from six proxy votes to commission reports on curbing corporate greenhouse emissions.

The CCSR makes the final decision on Harvard’s vote but is advised by another Harvard group, the 12-member Advisory Committee on Shareholder Responsibility (ACSR)—which has four student members, including one undergraduate. In five of its six proxy vote abstentions on global warming, the CCSR rejected the recommendations of the ACSR—wasting Harvard’s potential to send a forceful message about environmental responsibility.

By contradicting the advice of the ACSR, the Corporation Committee has essentially ignored the carefully-researched affirmative-vote determination reached by the ACSR. The Advisory Committee devotes enormous amounts of time and attention to the issues on which Harvard will vote, and the CCSR members ought to give great weight to its judgment on these important environmental votes.

In a proxy vote for Plum Creek Timber shareholders on whether to adopt a code of environmental conduct called the Ceres Principles—a set of voluntary, environmentally-friendly guidelines, stressing accurate reporting as well as environmental protection—the CCSR did not follow the Advisory Committee’s recommendation and abstained. The Ceres Principles are a worthy code of conduct for corporations. Companies that follow the Principles must report annually on their environmental performance, information that is essential for policy makers to better maintain our global climate. Voting for one company to adopt the Ceres Principles is admittedly a small step, but it is one that the CCSR—which, in a letter explaining a similar abstention last spring, told Plum Creek Timber that it agreed with the “underlying goals” of the Principles—should have taken. Harvard has an additional imperative to lead by example and should have stood by the Principles when it came time to vote.

Opponents of the Ceres Principles may cite the additional cost of providing the information dictated by the code of conduct, which could potentially lead to smaller shareholder profits. Certainly there are benefits to maximizing the return on Harvard’s endowment, but there need not be a stark choice between profitability and environmental consciousness. The KLD Domini 400, an index of socially responsible companies, has outperformed the S&P 500 for 1-year, 3-year, 5-year and 10-year returns. Concern for the environment does not invite imminent financial collapse.

While the CCSR’s public explanation of its decision in the Plum Creek case last year was laudable—and should be repeated for all of these recent abstentions—the CCSR should back up this stance with its voting record.