managing sustainable impacts: an investor … sustainable impacts: an investor perspective reed...

Inova Intersections Sustainability SymposiumBrainPower Presentation Series

Managing Managing Sustainable Impacts: An Investor PerspectivePerspectiveReed MontagueSustainability Analyst

Sustainable and Responsible Investing

Calvert Investments has been providing sustainable andCalvert Investments has been providing sustainable and responsible investments through a variety of investment strategies. As of last year, all our funds are now tobacco‐free, although many have been since 1982.

Sustainable and responsible investing includes issues such as the environment, product safety, workplace labor, human rights, governance and community.

Intersections Sustainability Symposium 2013

Financial and ESG Impacts

As active investors with over $12 4 billion inAs active investors with over $12.4 billion in assets under management, we look at both financial and the environmental social andfinancial and the environmental, social and governance (ESG) aspects of a company when making an investment including how it handlesmaking an investment, including how it handles risks.


Why Does Risk Matter?

When a company effectively manages its risksWhen a company effectively manages its risks through sound policies, programs and performance it is better able to handle andperformance, it is better able to handle and address any problems or issues that may arise.

It is important to disclose such initiatives for i d k h ld h h hinvestors and stakeholders through venues such as a sustainability report.


Highest Risks for Hospitals

• For the hospital industry, we typically see the yp yhighest risks as:– Patient Care and Safety– Workplace Labor and Safetyp y– Environment

• Reviewing their• Reviewing their sustainability allows hospitals to manage areas of strength and weaknessof strength and weakness and offers an educational and informative process.


Patient Safety Considerations

In engaging with hospital chains, we ask about the steps pthe hospital is taking to protect patients.

– Are staff trained regularly onregularly on patient safety?

– How is the quality of care?

– How are patients handled in times of natural disaster?

– Is there a patient bill of rights?


Worker Safety Considerations

• Worker SafetyWorker Safety– How is the hospital protecting workers from overwork and burnout?

– Can workers speak up to make improvements?– How are suggestions handled and implemented?– How are workers protected from aggressive patients?

k f d f• Worker safety and satisfaction can impact patient care.


Environmental Considerations

• Environmental issues i l dcan include:

– Water (Risk M S lManagement, Supply Chain, and Water as a Human Right)Human Right)

– Energy Use

Waste Disposal– Waste Disposal

– Climate Change Adaptation/MitigationAdaptation/Mitigation


Waste Considerations

• Hospitals have the second largest wasteHospitals have the second largest waste streams, after the food industry.– What is being done to reduce and eliminate– What is being done to reduce and eliminate waste?

• Recycling?Recycling?

• Medical Waste?

• Disposable Waste?

• Is there a way to reduce consumption or one time usage versus multiple use equipment in emergency rooms?rooms?


Hazardous Waste Considerations

• Is hazardous waste beingIs hazardous waste being properly handled and disposed of?

• Many hospitals are not managing this part of their waste effectively and thus can be at risk f fi f dfor fines from state and federal governments.


Energy Considerations

• Energy Usee gy Use– Are there sustainable energy systems that increase ffi i ?efficiency?

– How can the hospital’s carbon footprint be reduced?p

• Through travel, energy use, commuting?

Are renewable energy– Are renewable energy resources being used?

• What about wind, solar, biofuels?


Building Health Considerations

• Building Health:Building Health:– What about chemical management and limiting exposure?p

– Are there “green” cleaning options?

– Are there air filters or purifiers? Should there be to help those with compromised immune systems?

– Are there chemicals that off gas that can be reduced?

– Is green design and construction considered before a new addition?


Greening the Supply Chain

• Hospitals can influence their supply chains

• Sometimes just by asking for greener options….– Place emphasis on purchasing

to reduce exposure to harmful chemicalsA k f i bl– Ask for sustainable substitutes

– Ask if package use be reducedAsk how recycling and/or re– Ask how recycling and/or re‐use can be increased


Resources

• Creating sustainability programs and reportsCreating sustainability programs and reports allow companies the opportunity to assess where they are and where they want to bewhere they are, and where they want to be.

• Helpful Resources:H lth H it l I iti ti b P ti– Healthy Hospital Initiatives by Practice Greenhealth

Global Reporting Initiative (GRI)– Global Reporting Initiative (GRI)

– ACCA/CERES awards for Sustainability Reports


Company Engagement

• In order to encourage change we regularlyIn order to encourage change, we regularly engage with companies with whom we invest.

• If they are interested in what we have to say• If they are interested in what we have to say –great!

If d fili h h ld• If not, we may end up filing a shareholder resolution.


What is a Shareholder Resolution?

• A shareholder resolution is a tool used byA shareholder resolution is a tool used by investors to encourage management to listen to their concernsto their concerns.

• Once a resolution is filed, the company must include the proposal at its own expense in theinclude the proposal at its own expense in the proxy statement that is sent to all investors.

I i h d h ’ l• It is then voted on at the company’s annual meeting by all shareholders.


How Does the Process Work?

• If the company is responsive and interested,If the company is responsive and interested, we will typically withdraw the resolution in return for a particular commitment.

• If not, the proposal will go to a vote at the annual meeting, and significant vote percentages by shareholders to management demonstrate concern over the issue, sending h h h h ld bthe message that change should be considered.


Hospital Engagement

• We engaged with two mid‐size hospital chainsWe engaged with two mid size hospital chains of similar sizes last year by filing shareholder resolutions asking each to create and discloseresolutions asking each to create and disclose a sustainability report.

• But we got very different responses• But we got very different responses…..


Engagement – A Happy Ending

• Hospital Chain A had already been taking p y gsignificant steps to address its sustainability. They had already made major progress on many of the areas we touched on aboveof the areas we touched on above.

• They recognized that investors and other stakeholders would be interested in learning more about the advances and leadership they are making and that this was an opportunity to showcase their leadershipshowcase their leadership.

• They chose to produce a sustainability report, scheduled for release later this year.


Engagement -- An Unhappy Ending

• Hospital Chain B – Made fewer advances on their osp ta C a ade e e ad a ces o t eown sustainability. Its Board determined that it did not want to dedicate staff time or resources

d d lto produce a report or increase disclosure.• It chose to fight the resolution and needed to

l i t h h ld h th h ld texplain to shareholders why they should vote against the resolution in the proxy.

• The resolution was presented at the annual• The resolution was presented at the annual meeting, where it went to a shareholder vote. It earned a 31% vote in favor of the resolution.


The End Result

• The hospital chain producing the report isThe hospital chain producing the report is likely to create the most comprehensive report in the industry upon its release, setting a new standard and benchmark for others.

• It discloses the policies and programs in place and will be prepared to address complications when they arise, forestalling reputational risk.

• Meanwhile, the other hospital lost an opportunity to excel.


C t t Contact Information Information

Reed Montague gSustainability AnalystCalvert [email protected]@calvert.comwww.calvert.com

BrainPower presentations may be downloaded at BrainPower presentations may be downloaded at www.inova.org/intersections after the event.

managing sustainable impacts: an investor … sustainable impacts: an investor perspective reed...

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