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Accountability Through Transparency

During the third quarter of 2012, we worked on several initiatives to improve the quantity and quality of information corporations publish about their impact on society and the environment.

In 2002, we withdrew a shareholder proposal in exchange for an agreement by Gap to issue its first sustainability report – a report focused on its efforts to improve working conditions at factories around the world that manufacture Gap apparel. It was a groundbreaking report that set a new standard of transparency for the industry. Since then, we have participated as a member of the Public Reporting Working Group (PRWG), a group of five investor organizations that has advised Gap on the development of each of its subsequent sustainability reports. The group serves as a sounding board, providing the company with independent advice on the direction and content of its public reporting. Each report also contains an unedited statement from the PRWG. In September, we had a full-day meeting with Gap executives to begin the planning process for Gap’s next report, to be issued in 2013.

In 2010, Domini reached agreement with Nucor on a landmark set of human rights policies to address slavery and deforestation in the production of Brazilian pig-iron, a key ingredient in the manufacture of steel. During the quarter, we provided the company with our suggestions for its next public “progress report,” discussing implementation of these policies. We also signed on to the Forest Footprint Disclosure Project’s annual request for information on corporate impact on deforestation.

Last year, more than 6,000 companies around the world produced some form of sustainability report, up from only a handful in the early ‘90s. This is a significant development, but provides only a glimpse of where we need to be – mandatory, consistent reporting from all publicly traded companies. While we continue to work with companies like Gap that produce sustainability reports on a voluntary basis, we also remain strong advocates for a more systemic approach. For example, stock exchanges impose “listing standards” on companies that trade on their exchange, setting basic financial and corporate governance standards. Some exchanges, such as the Johannesburg Stock Exchange, require listed companies to produce sustainability reports. We are encouraging other stock exchanges to do the same. In 2011, we met with Deutsche Borse, and during the third quarter of 2012 we met with the Vice Chairman of the Nasdaq OMX exchange to discuss this concept, as part of a large coalition of investors that are members of the Investor Network on Climate Risk.