On July 19, Allianz SE, a Germany-based financial services provider and holding company that offers insurance and investment products, issued a press release announcing that it was set to be the first company in the world” to establish an executive board-level committee that would be tasked with “ensuring that ecological and social issues are taken into account in decisions made throughout the organization.” Allianz states that this enhanced oversight of sustainability issues will help the firm “use
Allianz will not alone in ensuring top-level oversight of sustainability issues. For example, in Glass Lewis’ Greening the Green 2011: Linking Compensation to Sustainability, we found that 44% of S&P 100 companies in our review had a board-level committee with explicit oversight responsibilities for issues related to sustainability. These companies have various types of board committees that are charged with oversight of sustainability issues. While we found a large portion of these board-level committees were for companies operating in extractive or more environmentally-intensive industries (for example, Occidental Petroleum has an Environmental, Health and Safety Committee and Halliburton Co. maintains a Health, Safety and Environment Committee). We also found that there were various companies in the financial sector that maintained board-level oversight of ESG issues. Examples include:
- American Express Co. maintain a Public Responsibility Committee;
- Wells Fargo & Co maintains a Corporate Responsibility Committee;
- US Bancorp maintains a Community Reinvestment and Public Policy Committee; and
- JPMorgan Chase & Co. maintains a Public Responsibility Committee.
We view board-level oversight of sustainability issues as a key indicator that a company has placed appropriate attention toward its sustainability issues and as a mechanism by which investors can hold the board accountable for its environmental and social performance. We believe that creation of such a committee may indicate that a company has placed sustainability as an important corporate priority. Particularly given Allianz’s line of business (financial services, including insurance), a long-term focus on broad sustainability issues is of the utmost importance. We commend Allianz for taking this step and believe that shareholders will see other companies, in a variety of markets, following this lead and establishing similarly-focused committees.
Article by Glass Lewis Senior ESG Analyst Courteney Keatinge