Last week I received a must read article from Michael Muyot, Founder and President of CRDAnalytics, about Microsoft’s proxy vote coming up on 11/16/2010. He prefaced the article by saying it’s a “very real and tangible result of the integration of social media with quantitative measurement of sustainable investment performance.”

Shareholder resolutions filed with Microsoft, Oracle and Cisco by Harrington Investments are now in a digestable format and have been delivered to the country’s major university endowments and TIAA-CREF for participation. The point is that ignoring investor concerns is bad for business and can have negative impacts on the market.

Peter DeSimone and Heidi Walsh established Sustainable Investments Institute SI2 in January 2010, providing impartial analysis of CR issues raised in shareholder-sponsored proxy proposals. SI2 recently issued an Active Report on Sustainability Reporting, focusing on Microsoft. The Report looks at the proposal of activist investor John Harrington, who wants the company to amend its bylaws to establish a board committee on environmental sustainability. He’s quoted as saying: “to assess and make recommendations to enhance, the Company’s policy responses to changing conditions and knowledge of the natural environment…” 

Microsoft’s response: the proposal is unnecessary because it already has a board committee that oversees its corporate responsibility issues, including environmental matters. CRDAnalytics removed Microsoft from the NASDAQ Global Sustainability Index because of “inadequate disclosure of environmental metrics”. Harrington believes this damaged Microsoft’s reputation, but thinks it can recover by adopting this proxy.

Ultimately, asset owners/managers and investors have been increasing the pressure on corporate boards and managers through the proxy/election process to encourage change in corporate behavior. These investors are focused on environmental performance data and sustainability reporting.

Many experts predicted that investors would demand non-financial reporting – why do you think large companies like Microsoft are still hesistant to report substantial and tangible data, hence listening to their investors? Do you think government-mandated non-financial reporting will soon follow? Discuss!

For the full SI2 action report, please click here.