

A proposal calling for US steel firm Commercial Metals Company (CMC) to issue a sweeping sustainability report got a massive 46% shareholder backing at the firm’s annual meeting earlier this month.
Leading institutional investors like Norges Bank Investment Management, the manager of Norway’s NOK6trn (€686bn) Global Pension Fund, CalSTRS and Florida’s $178bn (€155bn) State Board of Administration (SBA) all voted in favour.
The proposal at CMC’s annual meeting on January 14 originated from Walden Asset Management, the Boston-based SRI investor with $2.8bn in assets. It was co-sponsored by the Christopher Reynolds Foundation and three other CMC shareholders.
Given the close result, Walden said it would approach CMC outside of the proxy process to encourage it to compile such a report. If CMC, however, did not enter into a dialogue about the matter, Walden said it would seriously consider refilling the proposal next year.
In the proposal, the five shareholders claim that while CMC published reports on environmental responsibility and safety, the disclosure did not address all the ESG (environmental, social and governance) issues that metal firms like CMC face. Along with carbon emissions, these included labour management, waste and water reduction targets and toxic emissions. “The company notably does not provide evaluative metrics or public goals to measure performance (on these issues) over time,” the investors said in their proposal, adding that, hence, ESG risk to the company and its shareholders were not being managed properly.The shareholders also recommended that the company use Global Reporting Initiative (GRI) standards. In recommending that CMC shareholders reject the proposal, the firm said it had a “long history of good corporate citizenship as well as social and environmental responsibility.” As a result, many of the issues that Walden mentioned were already being addressed, for example reducing carbon emissions and energy consumption by at least 50% through reliance on recycled scrap metal.
“An excellent vote in support of our shareholder proposal”
Furthermore, “Our Board believes that any minor benefits created by a sustainability proposal do not justify the related expenses and diversion of resources from our business,” CMC said, adding that using the GRI standards would be particularly costly as this would entail hiring consultants “with specialised expertise.”
Based in Irving, Texas, Fortune 500 company CMC is one of the US’ biggest listed companies with more than 10,000 employees. It was founded in 1915 and in the first quarter of its 2015 business year, it reported profits of $38.3m on revenues of $1.7bn.
Said Carly Greenberg, ESG Analyst at Walden: “More and more investors care about transparency on companies’ environmental and social policies, programs, performance and goals. This excellent vote in support of our shareholder proposal helps us continue to make this case.”