No matter the industry, business stakeholders care about lists – who’s on them and who’s on top. Consider this small sampling: Fast Company’s “50 Most Innovative Companies” list, Fortune’s “Change the World” list, Forbes’ “The World’s Most Reputable Companies” list, or Glassdoor’s “Best Places to Work.
Companies spend countless hours every year applying to appear on these lists, vying for the top spot and the ability to market that recognition to customers, investors, and employees. Just think, how many email signatures have you seen that end with “voted the best/most [fill in the blank] company for three years in a row”?
There are myriad psychological reasons why lists are so effective, popular and valuable. In the sustainability field, numerous rankings have emerged to help stakeholders assess corporate environmental performance and identify leaders from among the hundreds that have made environmental commitments.
Beyond bragging rights, sustainability rankings can also provide an essential service to companies by helping them define internal performance measures, attract top talent and link executive compensation to corporate sustainability.
Unfortunately, there’s a significant problem with these sustainability lists.
Earlier this year, we had the opportunity to sit down with Michael Cappucci, Senior Vice President of Compliance and Sustainable Investing at Harvard Management Company (HMC). In a recent blog post, Michael shared his outlook on the methane opportunity for oil and gas companies, along with his opinion on the pace of change within the industry.
Below is the second part of our conversation, where Michael offers new insights on investor ESG engagement and its correlation to portfolio performance. He also talks about private equity’s somewhat quiet stance on methane, and the sector’s potential to bring about change among mid-size operators who have yet to tackle methane emissions.
Oil and gas investor pressure is building, with 20 climate shareholder resolutions up for review at annual meetings held by publicly-traded energy companies this month. While the climate filings cover a range of issues, improved methane management is in the mix.
Last year was a breakout year for methane investor activism. ExxonMobil’s XTO Energy subsidiary business announced a reduction plan in response to a 2017 methane disclosure resolution, with onlookers expecting more change to follow this year from others. Meanwhile, a growing global network representing 36 investors and $4.2 trillion in managed assets continue to call on companies for methane reductions.
In the second-part of our interview series with Jamie Bonham, Manager of Corporate Engagement at NEI, we talk about how influential Environment, Social and Governance (ESG) shareholder resolutions, such as methane, have been in the past. We also discuss what prompts investors to file resolutions, and the potential impact on companies.