For the past two years, shareholder activist John Harrington, of the socially responsible investment firm Harrington Investments, has submitted shareholder proposals asking for a board-level committee on environmentally sustainability. Both years, Microsoft's board recommended a "no" vote to shareholders. The board explains that it is already the responsibility of Microsoft's Governance and Nominating Committee to "review Microsoft's policies and programs that relate to corporate responsibility, which specifically includes environmental sustainability," according to statements included in the annual proxy statement. Ergo, a separate board-level committee isn't needed. Microsoft pointed to accomplishments like its "Generation 4" data centers, which drastically cut power consumption.
Last year's shareholder resolution did not pass. With today's news, it is unlikely that shareholders will ignore the board's "no" recommendation and vote in favor. Microsoft's shareholder meeting will be held next month.
Note that Greenpeace gave Microsoft a "C" on its Clean Cloud Report Card in April [PDF]. While Harrell is encouraged by Microsoft's new efforts, she's not convinced.
"In general, more data is good -- especially if this is cross-referenced with other audits. This reporting work becomes much more useful if Microsoft is to actually require its suppliers to adhere to more stringent standards than the law allows," she says adding that specific, high standards are necessary "if Microsoft wants to be game changing." As an example, she points to an announcement by Sprint on Wednesday in which it, too, is now requiring better reporting from hardware suppliers, and also wants them to set goals for reducing emissions.
The rules that Microsoft will push at its supply chain go far beyond environmental standards. Microsoft also wants ethical business practices and regulatory compliance. For instance, in the section of legal and regulatory compliance, Microsoft insists that its companies follow trade laws, do not engage in antitrust behavior (has Microsoft learned its lesson there?) and "Do not participate in bribes or kickbacks of any kind." This is interesting coming from a company that caused worldwide scandal in 2007 for allegedly bullying and bribing members of the International Standards Organization to fast-track acceptance of Office OpenXML.
The company goes on to list unacceptable business practices such as insider trading, and offers a commendable list of no-no's in labor practices, including forbidding vendors to engage in discrimination in its hiring practices, child labor or abuse.