The resolution, which only asked that Home Depot assess its energy use policies, was among five shareholder proposals killed at the company’s general meeting. Proxy advisory group RiskMetrics had thrown its support behind the proposal, as had investors in the Investor Network on Climate Risk, which represents $7 trillion in investor funds.

Proponents of the proposal were disappointed in its failure. Said Mindy Lubber of Ceres: “By failing to address energy use in a systematic and high-level manner, Home Depot is putting itself at a competitive and operational disadvantage.”

“We are cautiously optimistic that Home Depot will work with shareholders to address critical energy concerns and improve its competitive positioning,” said another Ceres representative, “but we have been down this road before with no results.”

The resolution, which only asked that Home Depot assess its energy use policies, was among five shareholder proposals killed at the company’s general meeting. Proxy advisory group RiskMetrics had thrown its support behind the proposal, as had investors in the Investor Network on Climate Risk, which represents $7 trillion in investor funds.

Proponents of the proposal were disappointed in its failure. Said Mindy Lubber of Ceres: “By failing to address energy use in a systematic and high-level manner, Home Depot is putting itself at a competitive and operational disadvantage.”

“We are cautiously optimistic that Home Depot will work with shareholders to address critical energy concerns and improve its competitive positioning,” said another Ceres representative, “but we have been down this road before with no results.”

The Charlotte, N.C.-based company said Thompson is retiring at the request of its board of directors.

Lanty Smith, who replaced Thompson as chairman last month, was named interim chief executive.

Ben Jenkins, the vice chairman and head of Wachovia’s retail and business bank, was named interim chief operating officer.

In the statement, Smith said “a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance. The board believes new leadership will help to revitalize and reenergize Wachovia, and enable it to realize its potential.”

None of the executives was immediately available for further comment, according to a Reuters news report.Thompson joins a growing list of top banking chief executives to lose their jobs since the global credit crisis began last summer, including Citigroup’s Charles Prince and Stanley O’Neal, formerly of Merrill Lynch.

Increasing loan losses pushed Wachovia in April to raise $8.05 billion in capital. It cut its dividend, posted a first-quarter loss that it later nearly doubled to $708 million, and disclosed up to $1.14 billion of costs for legal and regulatory problems.

Some of the resolutions are attributed to shareholder concerns that companies are not doing enough to disclose product toxicity risks that are well known internally.

Activist victories were the subject of CERES, a coalition of investors lobbying for environmental causes. Bennett Freeman, head of social research and policy at the Calvert Group, said the investment firm had filed resolutions on climate change disclosure at 10 companies this proxy season; six of them—Big Lots, Lowes, Kirby, Ryder, Continental Airlines, and Harley-Davidson—subsequently agreed to produce climate change reports rather than face a proxy fight.

Each of these companies has agreed for the first time to disclose “specific steps that they’re prepared to take to address climate change risks, as well as opportunities,” Freeman told Compliance Week in a story published earlier this week. “This is all taking us closer toward our goal, which is comprehensive disclosure of climate change risk across the whole S&P 500.”

In addition, Calvert has filed resolutions with the airline industry that call for corporate strategy focused on greenhouse gas emissions.

“We’ve been frankly disturbed by the lack of quality in reporting by U.S. domestic airlines, so we want to try a different approach and see if it will pass muster by senior management,” he said.

Chevron was among the big oil companies taken to task by shareholders at its annual meeting this week where activists urged company officials to take responsibility for the environment and the human costs of oil production.

The California State Teachers Retirement System (CalSTRS) also pledged for the first time this year to file proposals on climate risk, “which is important to us,” CalSTRS spokesman Brian Rice told CW. The fund recently negotiated with Dynegy Corp. to prepare a report on the feasibility of reducing greenhouse gas emissions from existing and proposed power plants, Rice says.

The agreement comes as Dynegy is proposing to build as many as six new coal-fired power plants in the United States, which will be especially vulnerable to emerging carbon-reducing regulations.

After the vote, Tillerson told reporters, “It just reemphasizes to me the importance of our continuing efforts to communicate better with shareholders and with the public and with policymakers,” he said, according to the AP report.

None of the other 17 shareholder proposals received enough votes to pass, including a number of environmental proposals such as an initiative to reduce greenhouse gases and one to report on the effects of climate change. Another proposals that failed called for more shareholder input on executive compensation. Exxon’s board had opposed all of the proposals.

During the meeting, some shareholder expressed frustration with Exxon’s policies to reduce greenhouse gases and global warming. According the AP, Peter O’Neill, great-great grandson of John D. Rockefeller said that he was pleased with the performance of the company. However, he added, “It’s crucial for every company to ask, ‘Is it doing all it can to prepare for the future?’”

READ DIRECTORSHIP’S BLOG POST ON THE EXXON PROXY VOTES

Renewable energy is the focus of the Rockefeller’s conflict with Exxon. The family wants the roles of chairman and CEO to be held by separate people to better accomplish the goal of cleaner energy sources. The concern is that with oil prices at record highs, the resulting short-term gains are offsetting what they believe the company should be investing in: renewable energy.

The family stands behind four proxy resolutions that address concern about the company’s leadership under chairman and CEO Rex Tillerson. The resolutions also call for more extensive investment in alternative fuels, cuts in greenhouse-gas emissions at Exxon’s, plants and a reduction in waste created by the fuel it produces. The family also believes a study on the consequences of global warming and its influence on developing nations would be beneficial to Exxon’s long-term bottom line. Separating the job of chairman and CEO would allow for more focus on these long-term goals.

“They are fighting the last war and they’re not seeing they’re facing a new war,” said Peter O’Neill, the great-great-grandson of John D. Rockefeller. O’Neill believes that renewable sources of energy are the future and Exxon should take measures to explore the benefits of cleaner fuels and bi-products.

Carbon dioxide from burning fossil fuels is the leading componentof greenhouse gasses, according to AP, which scientists have said are playing alarge role in global warming. Gore’s comments were made with the intent tounleash a financial ripple effect that could force the world to put a price oncarbon emissions at some point.

“You need to really scrub your investment portfolios,because I guarantee you – as my longtime good redneck friends in Tennessee say,I guarandamntee you – that if you really take a fine-tooth comb and go throughyour portfolios, man of you are going to find them chock-full of subprimecarbon assets,” Gore said before a high-profile business crowd Thursday,according to AP.

Leading the DirectorshipRoundtable titled “DrivingEnterprise Innovation &Growth” at New York’sLotos Club in Decemberwas Gap International VicePresident Dr. Eric Jackson.On a personal level, Jacksonis the quintessential innovator.Prior to joining GapInternational as a consultantspecializing in enterpriseperformance management,he worked as both a psychologistand a dentist, and at one time was an internationalaward-winning choral director. This unusualblend of skills and experience made him a perfectmatch for Gap International, which has a 30-yearhistory of partnering with boards and chief executivesto help them develop more effective ways to growtheir enterprises.

Gap International makes a distinction betweeninnovative ideas, which must be collected and harvested,and the environment or culture in which theinnovative ideas either languish or flourish. “Doesthe CEO create an environment in which innovativeseeds, or ideas, are being planted and nurtured?That is the most important role the board can playwith regard to driving innovation,” Jackson said.“The innovative seed occurs at a very early stage ofthe thought process, which is at once both a very vulnerableand very critical element of innovation success.What distinguishes highly innovative companiesis how nurturing their environments are to innovativethinking. Directors should consider this characteristica vital precondition for having an innovativeorganization.

“To be innovative,” Jackson continued, “is to execute.The most important question for the board is,‘Are the conditions right for high-level, rapid executionof innovative ideas?’”

That comment spurred KayKoplovitz, the founder and formerchairman and CEO ofUSA Networks, to recall theearly days of the cable networkformed in 1977 under the auspicesof Madison Square GardenSports. “Even though itwas a private company, everyperson there felt that theyowned it and the team felt itwas important to deliverresults…Risk was somethingwe were all born to, and if youdidn’t take a risk, you weren’tbeing aggressive enough.”

In publicly traded companies,however, risk in the context of innovation islikely to be influenced by short-termism, or thedesire to keep investors happy by delivering results.How can boards best help a CEO to innovate?

William Roskin, now a senior adviser to Viacomand director of ION Media Networks, said theboard’s role is to make sure the company has theright CEO and then let them do their job. He hasworked for both Sumner Redstone, the legendaryfounder and chief executive of Viacom, and the lateSteven J. Ross, the creator of Time Warner and thecatalyst in the launch of MTV and Nickelodeon.

“Going back to 1981, Steve Ross had a way of hiringpeople who were on the payroll but who were freelancethinkers,” Roskin said. “Did Steve have avision to create what became MTV? No, but he supportedit, and he lent his support…He believed incable. And his boards had to be supportive.”

“That’s a different task in a large corporationwhere people are territorial,” Koplovitz replied.“How do you break down those barriers so thatpeople can innovate?” She cited the failed merger atParamount and Universal Studios as an example.Roskin, who was a senior executive at Time Warnerwhen it joined forces with Viacom, recalled that“what started as two warring companies werebrought together because the CEOs of both thosebusinesses worked together.”

Noting that “tone” and “sponsorship” must start atthe top, Laurence Charney, a director of MarvelEntertainment, believes in the power of creative tension.“I recall working with a young, bright colleaguewho challenged everything I said. I learnedthat both of his parents were professors who believedin creative tension. I believe that creative tensionbuilds the best products and that you have to build aculture from the top down that allows people tomake mistakes.”

At least one participant recounted how compensationplans mitigated a company’s ability to take risk.“I also tried to drive down P&L ownership for thesame reason,” said Richard Daly, CEO of BroadridgeFinancial Solutions. “I want to know who goesto bed at night and gets up in the morning thinkingabout the company. You have to be in a position tocreate a financial environment that will support thatmindset.”

Gap International has researched critical factorsthat create an environment for sustainable innovation.The company advises directors and officers tofocus on the following five factors:

Purpose—which drives energy and focus. Doesthe executive team have a clearly defined strategyand are the people in the organization connected tothe company’s purpose?

Ownership—which predicts reliability for producingresults. Is the executive team committed toand holding themselves personally responsible forachieving the company’s overall goals in addition totheir own functional/business goals?

Interdependence—which drives the quality ofexecution. Do the top leaders work collaborativelyand contribute to one another throughout the variousstages of their work?

Affinity—which impacts the speed of execution.Is the executive team connected to one another andto the CEO? Are the channels of communicationopen and is there a sense of ease and freedom intheir relationships?

Risk—which unleashes creativity. Are leaders freeto think and speak in unconventional ways? Is managementwilling to take chances and allow for failure?

“As we study innovation, it is the company’s cultureand the environment it creates that ultimatelybecome the paramount factors in running and growinga successful business,” concluded Jackson.

Gore’s joining KPCB comes as a result of a collaborationbetween the firm and Generation Investment Management, of which Gore is thechairman and co-founder, that is meant to find, fund, and accelerate greenbusiness, technology and policy solutions with the potential to help solve thecurrent climate crisis.  

“This alliance brings together world-class business talentto focus on solving the climate crisis,” Gore said in a statement. “Together,we have a working understanding of this urgent, multi-dimensional challenge andare resolved to help business and government leaders accelerate the developmentof sustainable solutions.”

The KPCB – Generation partnership will provide funding andglobal business-building expertise to a range of public and private businessesas well as entrepreneurs.

“This alliance brings together world-class business talentto focus on solving the climate crisis,” Gore said in a statement. “Together,we have a working understanding of this urgent, multi-dimensional challenge andare resolved to help business and government leaders accelerate the developmentof sustainable solutions.”

More than 80 environmental proposals were filed with publiccompanies this year, 43 of which were specific to climate change, a jump from31 in 2006, according to Financial Week. Environmental advocacy groups like Ceres and the Social Investment Forumhave said they are preparing for an even bigger season next year, as they seean increase in shareholder support for such proposals and a willingness bymanagers to negotiate changes before a proxy vote.

Activity will focus specifically on large-emittingindustries like oil, gas and timber companies, Rob Berridge, program manager ofinvestor programs at Ceres, told Financial Week.  Proposals that target the home building andauto industries are also expected, and advocacy groups will go after the banksthat finance coal and other “dirty industries,” says Berridge.

What’s more, the Senate Banking Committee Wednesday scheduleda hearing on climate change risk disclosure. And green proposals should not catch corporations off guard.

“These things tend to come in trends,” Tom Lehner, directorof public policy at Business Roundtable, told Financial Week.  “The environmental issue is very hot rightnow.”

Reuters, the New York Times, and a bevy of political pundits are predicting or calling for Al Gore to reenter the race for the United States Presidency after claiming his Nobel Prize for Peace on Friday, October 13th, 2007 in Oslo, Norway.

“I will be doing everything I can to try to understand how to best use the honor and recognition of this award as a way of speeding up the change in awareness and the change in urgency,” Gore said in a well constructed attempt to neither confirm nor deny any future intentions.

With Hillary Clinton’s political advisors wringing their hands over this new twist of political fate, the real impact from the point of view of business and boards is the mainstreaming of the environmental message. The political winds, which have consistently moved in favor of a Democratic Congress, now suddenly seem in favor of a Democratic President who was largely written off by both parties as a political no show.

“I will be doing everything I can to try to understand how to best usethe honor and recognition of this award as a way of speeding up thechange in awareness and the change in urgency,” –Al Gore, Winner of the Nobel Peace Prize

Whether he takes on this mantle, accepts a Democratic Convention draft, or simply acts as king maker, may be secondary to the salient fact that now the environment will be a major factor in the election, and so business and boards are contemplating how to get on this bandwagon. As fund raisers woo him and political sideliners jump into the fray to support the cause, it appears that the only safe position on the environment has become pro activist, and so watch for a variety of academic and foundation groups springing up to take advantage of the tailwinds.

An organization called Draft Gore said the award “will only add to the tremendous tidal wave of support for Al Gore.”

Just as certainly, there will be a negative impact for business – the reality that companies in chemical, automotive, construction, mining, transportation, among other industries whose business practices require making an impact on the environment will find limited access to friendly regions, large consumer advocate driven backlash, media harassment, and a very aggressive trial bar.

This movement is aligned with our observations that boardrooms are actively moving towards pro environmental policies with committees in place to monitor the risks, including other CSR efforts (corporate social responsibility). Boards will reach out to bring on more environrmentally savvy voices (See “The Greening of the Boardroom”) and CEOs will also be taking up the mantle as part of their corporate and personal marketing to establish their environmental bona fides – as GE’s Jeff Immelt (See, GE’s Eco-Push) has done with Ecomagination and his initiatives to turn GE’s environmental activities into a measurable and profitable business endeavor.

Then it all changed two years ago. General Electric CEO Jeffrey R. Immelt took the decisive step of turning global warming from adversary into opportunity and from defensive gesture to business strategy. In early 2005, he launched the company’s Ecomagination initiative, which combines a pledge to slash GE’s greenhouse gas emissions with a major marketing campaign aimed at selling billions of dollars of green products, technologies, and services. In style as much as substance, it was a major departure from Immelt’s much-lauded predecessors, and at the time a break from the rest of Corporate America’s position on the subject—dead silence or the hope that it would go away. Instead of resisting green demands, Immelt realized that vast new markets were opening up as foreign governments put in place new climate-change regulations, which both citizens and activists rallied around. For a company widely known for innovation, what Immelt did was to look at environment and regulations no differently than a chip manufacturer looks at a new market demand for larger and more powerful chips. The customer is king.

Other corporations are now beginning to jump on the green marketing bandwagon, too. Among the notables: Wal-Mart is peddling energy-efficient light bulbs, Ford Motor redoubled its hybrid car production (although it’s still playing catch-up to Toyota), and Home Depot launched Eco Options, a program that allows customers to identify hundreds of products that are environmentally friendly. Both Citibank and Bank of America have announced massive capital commitments to green initiatives and pledged to reduce their own corporate carbon footprints. To critics in the environmental movement, the Ecomagination campaign illustrates that eco-friendly policies can be good for shareholders as well as for the environment. “We use GE as a constant example, because it shows that there’s a market for building renewable infrastructure,” says Anne Kelley, the director of corporate governance at Ceres, a Boston-based group of investors and environmentalists that works on climate change.

Conservation Begins at Home

Of course, Immelt’s bold move would have little credibility if he hadn’t coupled it with significant emissions reductions. As part of the initiative, GE vowed to slice its greenhouse gas production by 1 percent from 2004 levels by 2012. Without the reduction, its emissions would have climbed by some 40 percent over the same period. Last year, GE held emissions flat even as revenues climbed by 10 percent. Such commitments have gone a long way toward offsetting the negative image that followed GE for its years-long court battle around the cleanup of PCBs the company had left in the Hudson River decades ago. Moreover, GE has implemented Ecomagination’s basic thinking and tenets throughout the company: “It’s got to start at home,” says GE director Ralph S. Larsen, who sits on the company’s nominating and corporate governance committees. “Are you reducing your power usage, your emissions? That’s what GE has done.”  

Immelt expects the real payoff for GE will come as markets for green products and services explode. Immelt called for sales of technologies such as highly efficient gas turbines, wind turbines, and hybrid diesel-electric locomotives to double by 2010, to $20 billion a year. But results are already materializing:  Sales of these products climbed by 20 percent in 2006 to $12 billion. “We have never had an initiative that generated better results,” Immelt told shareholders at GE’s annual meeting in April.

Some skeptics try to argue that Ecomagination is little more than a clever rebranding of products GE already sells. But Immelt seems to be putting up hard dollars to develop new offerings adapted to a carbon-constrained world. As part of the initiative, he has vowed to double the company’s R&D investments in such areas by 2010 to $1.5 billion a year. Already, it jumped to about $900 million last year, a $200-million hike from 2005’s investment.

Perhaps Immelt’s most surprising move is his embrace of government regulation on climate change. In mid-January, he spearheaded an alliance of four environmental groups and 10 companies, including Alcoa, Lehman Brothers, and PG&E, that issued a call for new federal policies to address the problem. “The time has come for constructive action that draws strength equally from business, government, and nongovernmental stakeholders,” Immelt said. “These recommendations should catalyze legislative action that encourages innovation and fosters economic growth while enhancing energy security and balance of trade.”

Despite all the praise, GE still has a long way to go in the view of some environmental groups. It scored just 58 out of 100 on a 2006 study, done for Ceres by Institutional Shareholder Services’ Investor Responsibility Research Center, called “Corporate Governance and Climate Change: Making the Connection.” The report looked at how 100 global companies addressed the issue in the 10 most carbon-intensive industries. While those figures may already be out of date, they also failed to weigh companies, such as manufacturers, whose industries are harder on the environment than others. For instance, in another section of the same study that ranked peer groups, GE was above the seven other industrial equipment companies on the list, including foreign rivals such as ABB, Hitachi, Mitsubishi, and Siemens.

Says Douglas G. Cogan, report author and center analyst: “Immelt is now a national business leader on the issue, with lots of disclosure, targets for GE’s own carbon emissions, and significant management resources at the executive level devoted to the issue.” It’s an example other boards might want to follow.