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Page 2 - ESG USA keynote: Thomas Di Napoli, New York State Comptroller, Trustee, New York State Common fund
the health of the global economy and global markets. Ultimately, our goal is simple: we want long term sustainable economic growth. And we have found from experience that comprehensively integrating environmental, social and governance considerations into the investment process is essential to achieving that goal. As the trustee of a large fund, my approach may be somewhat different from others who are concerned with this issue. We have a lot of money that needs to be invested and a lot of investments to manage, so we must be efficient. The majority of the New York State Common Retirement Fund’s equity assets are public equities held in index funds.
As long-term buy-and-hold shareholders, the fund must align its interests to the long term success of the companies. To do that, we need a clear picture of risks and liabilities at the company that may negatively impact the environment, our economy and ultimately our shareholders.
And we are obligated to take action when, either through negligent or irresponsible management practices, that investment is threatened. To that end, we employ an active, sometimes aggressive, corporate governance program. Last year, dramatic accidents and natural disasters like the Massey mine explosion and the BP oil spill have helped bring into focus the environmental and human toll that can result from poor management practices. And in both cases, we aggressively pressed the companies as large investors. In the case of the BP oil spill, the economic fallout was not only acutely felt throughout the states and nations bordering on the Gulf of Mexico, but also around the world through the accident’s effect on the global energy market.
The fund held an estimated 19 million shares in BP at the time of the event, which led to a significant decline in shareholder value. We are now a co-lead plaintiff in the class action lawsuit against BP, along with the Ohio Attorney General, that alleges that BP distorted its safety procedures and its level of preparedness to respond to a catastrophe and misled investors in its ability to clean up the spill in a timely manner. Similarly, the Massey mine disaster put in clear focus the devastating human toll that can result from failing to protect worker health and safety. As many of you know, Massey Energy’s former Chairman and CEO was a coal industry leader known for fighting regulations designed to address climate change and as an opponent of regulations to protect worker health and safety. As an investor with more than 300,000 shares in Massey, we had been pressing the company to improve its management practices long before last year’s disaster took the lives of 29 miners. At the end of 2009, after pressuring Massey for the previous three years to address climate change concerns related to the combustion of coal, I filed a shareholder resolution calling on the company to restructure its board to require all board members stand for election on an annual basis. After the proposal received the extraordinary support of 97% of votes cast, Massey agreed to my restructuring proposal and adopted rules requiring all board members to stand for election every year. In the wake of the Upper Big Branch mine disaster in April of last year, I was the first major investor who demanded the resignation of Massey’s Chairman and CEO Don Blankenship from all his roles at the Company. In December 2010, Blankenship resigned, removing what had been coined by some investors the “Blankenship discount.”
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