According to a new study, the boards of directors of Fortune 100 companies, such as Tyson Foods* and ExxonMobil,* are unprepared to address environmental challenges and unsuited to help the companies they lead realize their climate change mitigation ambitions.
The study – U.S. Corporate Boards Suffer From Inadequate Expertise in Financially Material ESG Matters – determined that only 6% of Fortune 100 directors have credentials relevant to the “E” in environmental, social, and governance (ESG).
Even more troubling, the researchers found that only five individuals out of all 1,188 Fortune 100 board members had relevant experience addressing climate risks.
Unfortunately, this lack of expertise does not only plague Fortune 100 companies. A 2018 study by the corporate sustainability nonprofit Ceres found that just 17% of board members from the top 475 largest companies had even loosely-defined “experience in sustainability issues.”
As corporations increasingly recognize that climate risk is a business risk that must be addressed, they clearly will need leaders who can help guide their companies to improved sustainability.
Green Century° has long recognized this imperative, which is why sustainability credentials are a key component to our approach to proxy voting.
Every year, the boards of directors of some (or all) of the companies held in the Green Century Funds are up for election at the companies’ annual meetings. All of the shareholders of a company are able to cast their proxy votes in support or opposition to the nominated slate of directors.
Green Century only votes in support of slates of boards of directors if at least one nominee has experience relevant to managing environmental risks. If all of the board nominees lack relevant sustainability credentials, Green Century votes against the whole slate.
The science is clear. We must limit global warming to 1.5 degrees Celsius, as laid out in the Paris Climate Accord. To achieve this, corporations must take decisive action, and they need leadership that understands the material risks posed by the climate crisis and how to address them.
To ensure the successful transition to a zero-carbon economy and protect shareholder value, responsible investors have an obligation to hold companies to a high standard of climate leadership – and corporations have a duty to identify and proffer candidates for their boards of directors with relevant sustainability experience.
About Green Century Capital Management
°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are the first family of fossil fuel free, responsible, and diversified mutual funds in the United States. Green Century Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
*As of December 31, 2020, no securities mentioned were held in the portfolios of any of the Green Century Funds. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email email@example.com, or call 1-800-934-7336. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
This information has been prepared from sources believed reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 2/21