Transcript spoke - Nautilus Institute for Security and Sustainability

California & Global Corporate
Accountability:
Responsibilities & opportunities for California’s
citizens and investors
by
Sandy Buffett
The Nautilus Institute for Security & Sustainable Development
Californians need to demand greater levels of
environmental, social, and ethical disclosure from
multinational corporations.
As the fifth largest economy in the world, California's
citizens, public pension funds, and legislators have
special opportunities and obligations to influence the
terms of globalization.
The Sustainable & Responsible Corporate Governance
Initiative explores opportunities for California's
institutional investors to exert leadership and leverage
in the global economy.
th
5
California is the
largest
economy in the world
2000: Gross Product (billions of dollars)
1 United States 9,882.8
2 Japan 4,677.1
3 Germany 1,870.1
4 United Kingdom 1,413.4
5 CALIFORNIA 1,357.8
Globalization:
Regulatory Gaps,
Ethical Dilemmas
Economies are global, norms
are not
Accountable to shareholders
rather than stakeholders
Differences in national
environmental and labor
standards
Differences in basic societal
frameworks of norms and
governance
Intense competition for
investment keeps national
standards ‘stuck in the mud’
Global corporations need
global rules
Two possible approaches:
Markets—Pressure companies to adopt
accountability standards and require greater
disclosure through shareholder/investor
power, consumers, and labor/NGO action.
Government—Work for legal/regulatory
reforms at state, national, international level
to set common rules and standards.
What can Californians do?
Raising the bar in California on global
corporate disclosure is a way to increase
corporate accountability
California’s public $$ should be invested in
alignment, not at odds with CA policies
toward sustainability, I.e. renewable energy
targets
California’s public $$ is a powerful force on
Wall Street that could serve the public good
State-level ‘entry points’ can create
precedents for new global standards
Leveraging California’s
investors to demand better
corporate governance
CalPERS: $151 billion in assets
Largest public pension fund in US, 3rd
largest in world
Holds stock in over 1,600 corporations
$21 billion invested in California companies
When CalPERS acts, Wall Street Notices
Public pension funds and
Fiduciary Responsibility
The duty of loyalty– they must act
solely in the interest of beneficiaries
Toxic releases, polluted bays and deltas,
superfund sites, human rights abuses,
cancer clusters, neglect of renewable
energy options, sprawl, and poor labor
conditions are NOT in the interest of
California beneficiaries.
“CalPERS adopts new human
rights screen”
Feb, 2002, new screen adopted for emerging
market investments
Applies to overseas investments only, approx.
$1 billion
Does NOT apply to MNCs
Country-based rather than Company-based
Adopted after pressure from labor groups
What about the other $150
billion?
Corresponding push from California
citizens, students, and pension
beneficiaries could prompt CalPERS and
other investors to adopt far-reaching
environmental and social criteria for
entire corporate portfolio
What is CalPERS already
doing?
CalPERS adopted Global Sullivan
Principles
Disclose proxy votes
Have supported some environmental
shareholder resolutions
State Treasurer Philip
Angelides stated:
“There is a correlation between good
corporate practices and good
investment results. People in the
investment industry often want to put
up a wall between the two things, but
they are related.”
Leveraging the CalPERS effect
Push for CalPERS to adopt policies on
engaging corporate management on the
following:





Require International Right to Know type disclosure of overseas
operations
Companies adhere to standardized disclosure & reporting– GRI?
Broaden the language of “corporate governance” to embrace
environment and human rights
Target egregious corporate performers through shareholder
activism
Develop communication mechanism between CalPERS
investment committee & stakeholders
Enron debacle provides
window of opportunity
CalPERS lost $62 million
It has formed a task force to reexamine
corporate governance & disclosure
Kathleen Connell, State Controller & Board
Member stated:
“We have huge leverage in our portfolios. I
would really like to see us emerge with some
new forceful ideas and get them
implemented…It’s time to tighten the screws”
For questions or comments, please contact:
Sandy Buffett, Senior Program Officer
The Nautilus Institute for Security & Sustainable
Development
Berkeley, CA USA
510.295.6116
Email: [email protected]
Web: www.nautilus.org