A group of investment organizations with about $43 billion in assets under management has sent letters to 35 major companies represented on the board of the U.S. Chamber of Commerce, urging company managements “to evaluate their role and to assess the risks and benefits of Board membership.”

The investors cited what they say are the “significant risks posed by misalignment between company and Chamber policy objectives.”  Of particular concern, they said, are the Chamber’s “obstructive positions on climate change legislation, the healthcare and financial reform bills enacted in 2010, and most recently… its partisan political spending reported to be $75 million in the 2010 elections."

The open letter was led by Walden Asset Management, a division of Boston Trust & Investment Management Company.   The investor coalition includes investment firms, mutual funds and religious investors as well as Common Cause and the AFL-CIO.

Adam Kanzer, General Counsel at Domini Social Investments, one of the signatories to the letter, said: “The Chamber claims that its board members set policy, and yet the Chamber’s policies often directly contradict the policies of the companies serving as board members. We’re asking companies to face these contradictions and address them. If they tell investors that a particular policy objective is important to the business, we think it is fair to ask why the Chamber is working to achieve the opposite outcome. As the Chamber commences an aggressive program challenging new and necessary regulation, being a silent or passive member of the Chamber Board is not responsible governance.”

In the letter to the companies, the investors said:

"We believe that the Chamber bases its advocacy on a general belief that regulation is bad for business while deregulation is good for citizens. CEO Tom Donohue stated that the Chamber will “continually tell the story to the American people about the massive costs of excessive regulations—a tax, if you will—on jobs and on their personal and economic freedom.” As long-term investors, we disagree strongly with this premise. Without a doubt deregulation was a major contributor to the financial crisis as was lax regulation in the disastrous Deepwater Horizon blow out and oil spill in the Gulf of Mexico and the Massey Energy mine blast. The sustainability of our ecological systems, our communities and our financial markets certainly cannot be achieved without effective regulation."

The letter was sent to the following companies: Accenture, Alcoa, Allstate, Anheuser-Busch Companies, A.O. Smith Corp., AT&T, Caterpillar Inc., Charles Schwab Corporation, ConocoPhillips, CVS/Caremark Corporation , Deere & Company, Dow Chemical Co.,  Duke Energy Corp., Eastman Kodak Company, Emerson Electric Co., FedEx Corporation, International Business Machines Corp., JPMorgan Chase & Co., Lockheed Martin Corporation, 3M Company, Melaleuca Inc., New York Life Insurance Company, Peabody Energy Corp., PepsiCo Inc., Pfizer, Inc., Ryder System Inc., Southern Company, Spencer Stuart, State Farm Insurance Companies, The Travelers Companies, United Parcel Service, Verizon Communications Inc., WellPoint Inc. and Xerox Corporation.

According to the investor group, a number of major companies have in recent years addressed the Chamber policy “misalignment” by leaving its Board or withdrawing from the Chamber altogether.  “In recent years, Nike withdrew as a Board member and Apple, Exelon and PG & E, among others, resigned as members of the Chamber over its climate change position,” the investors said. “Other companies have stated publicly that the Chamber does not speak for them on critical issues or declared that their dues cannot be used for lobbying or political spending purposes.”

Investors filed a record 101 climate and energy-related resolutions with 88 U.S. and Canadian companies in 2010, a 50% increase from the year-earlier, according to activist shareholder organizations.

A record 51 resolutions were withdrawn after the companies agreed to climate change and energy-related commitments.

Sixteen of the 42 resolutions that went to a vote achieved 30 percent or greater support, nearly three times the number that achieved that level of support in 2009.   The average vote for the 42 resolutions voted on so far this year was 24.6 percent, up from 21.7 percent last year.

The statistics were compiled by Ceres, a coalition of investors and environmental groups, and the Interfaith Center on Corporate Responsibility (ICCR), a coalition of nearly 300 faith-based institutional investors.

”The BP spill is only the latest reminder of why investors are ratcheting up their attention to climate and other environmental risks across their portfolios,” said Mindy Lubber, president of Ceres. “This year’s record results send a powerful message that companies should boost their attention to these issues.”

“If our portfolio companies are to provide long-term shareowner value, they need to be proactive, not reactive, in addressing climate change and other ESG matters,” said Jack Ehnes, CEO of CalSTRS, the second largest pension fund in the U.S.   Mr. Ehenes said the record results for shareholder filings in 2010 are “an encouraging sign that investors and companies are paying increasing attention to long-term drivers of value.”

Among the resolutions, requests for companies to provide a corporate responsibility or sustainability report have “increasingly resonated with investors,” according to Tim Smith, Senior Vice President for Walden Asset Management.  He  pointed to a  record 60 percent vote at Layne Christensen and votes at Gentex and St. Jude in the low 30s and low 40s, respectively. “We believe this signals a tipping point for the case for transparency on CSR,” he said.

Correction 7/26: An earlier version of this story incorrectly reported the comments of Walden Asset Management’s Tim Smith in discussing vote results at Gentex.

The issues with key high votes and share value of votes in favor, according to Ceres and ICCR, were:

Adopt greenhouse gas (GHG) reduction goals:
CMS Energy, 35.1%  ($729 million)
ExxonMobil, 27.2%   ($39.7 billion)
Massey Energy, 53.1% ($852 million)
Ryland, 37.4%  ($234 million)

Issue a sustainability report including GHG reduction strategies:
Boston Properties, 44.1%  ($3.2 billion)
Chesapeake Energy, 31.5%  ($2.4 billion)
EQT Corporation, 37.4%  ($1.4 billion)
Federal Realty Investment Trust, 44.6%  ($1.4 billion)
Layne Christensen, 60.3%  ($234 million)
St. Jude Medical, 42.8%  ($3.1 billion)

Report on the environmental and health risks associated with coal ash:
CMS Energy, 43.1%  ($875 billion)
MDU Resources Group, 40.5%    ($962 million)
The Southern Company, 21.0%  ($2.6 billion)

Report on risks posed by the environmental, social and economic challenges associated with oil sands operations:
ConocoPhillips, 27.1%  ($13.8 billion)
ExxonMobil, 26.4% ($38.3 billion)

Encouraged by recent Securities and Exchange Commission guidance, institutional investors have filed a record 95 shareholder resolutions on climate change issues for the 2010 proxy season.

The resolutions, up 40% from last year, have been presented to some of the nation’s largest coal companies, electric power and oil producers, home builders, big box retailers, financial institutions and “other businesses that investors believe are not adequately disclosing and managing potential climate-related business impacts,” according to the Ceres coalition of groups working on sustainability issues.

Ceres directs the Investor Network on Climate Risk, composed of 80 institutional investors with collective assets of $8 trillion.

The SEC in January said a number of areas involving climate change may trigger disclosure requirements when they involve the impact of legislation and regulation, the impact of international accords, the indirect consequences of regulation or business trends, and physical impacts of climate change.

"We are not opining on whether the world's climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics," SEC Chairman Mary Schapiro said at the time. "Today's guidance will help to ensure that our disclosure rules are consistently applied."

“We want our companies to closely look at the impact climate change legislation and regulation have on them, to realistically assess those risks, and to consider the indirect consequences of climate change-driven regulation and business trends on their activities,” said Jack Ehnes, CEO of CalSTRS (California State Teachers' Retirement System), which manages $131 billion dollars in assets.

Mindy S. Lubber, president of Ceres, said “climate change presents clear material risks and opportunities for U.S. businesses – and investors have a right to know which companies are well prepared and which are not.”

Investors often withdraw proposals when they receive a positive response from companies; 28 resolutions have been withdrawn this year, Ceres said.

Resolutions filed so far include measures asking for disclosures from ConocoPhillips on how it is addressing the impact of oil sands operations; from ExxonMobil on oil sands investments and reduction of greenhouse gases; and from Southern Company on GHG emissions targets and on the hazards of coal waste disposal.

Some 55 publicly-held U.S.-based companies have now voluntarily agreed to hold annual advisory shareholder votes on executive compensation, according to shareholder advocates who have been pushing for adoption of the practice.

The number of companies with so-called “say-on-pay” votes has increased from only 6 in 2008, when Aflac Inc. became the first to adopt the practice, and 19 in 2009.

“Say-on-pay holds corporate leaders accountable for unjustifiable CEO pay,” said Gerald W. McEntee, President of the American Federation of State, County and Municipal Employees (AFSCME), a 1.6 million member union whose members participate in public pension funds with combined assets worth more than $1 trillion. “Shareowners are demanding sensible pay for performance programs that discourage excessive risk taking.”

In addition to the 55 companies that have adopted say-on-pay votes, companies participating in the federal government’s Troubled Asset Relief Program (TARP) are also required to have annual advisory votes.

More companies are “stating a higher comfort level with the concept” and there are “several companies whose boards have voted to adopt but have not gone public as yet,” said Timothy Smith, senior vice president of Walden Asset Management and a leader in the say-on-pay movement.  Shareholder proposals urging the adoption of annual say-on-pay votes have been filed at 70 companies in 2010, according to Smith.

Votes Are Advisory

The say-on-procedures voluntarily adopted by companies to date generally establish mechanisms that enable shareholders to annually register their approval or disapproval of compensation for senior management.  In most cases, said Smith, the advisory vote is likely to result in “pro-forma” approval of executive pay packages.  However, if shareholders consider compensation excessive, especially when combined with poor corporate performance, investors could vote to register disapproval.

“It puts the (board’s) compensation committee on notice,” Smith said.  “”A stubborn company could ignore it entirely, but I don’t think they would.”  Smith noted that a majority of shareholders at Royal Dutch Shell last year voted disapproval of management pay, prompting revisions of pay packages.  Advisory shareholder votes on executive compensation are mandated in the United Kingdom.

The coalition pressing for say-on-pay reform includes a number of public pension funds, labor funds, asset managers, individual investors, foundations and religious investors.  Denise L. Nappier, Treasurer for the state of Connecticut, said: “Corporate boards have a primary responsibility to their shareholders – and this includes getting input from them on how well the company’s executive compensation ties pay to performance.  These 50 and counting companies deserve credit for listening to their shareowners.”

Smith said a number of financial firms are among the companies recently announcing they adopted a say-on-pay vote, including American Express, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase, State Street, SunTrust Banks and Wells Fargo. Other adopting companies, according to Smith, include Aflac, Ameriprise, Apple, Bristol-Myers Squibb, CVS Caremark, ConocoPhillips, Hewlett-Packard, Honeywell, Ingersoll-Rand, Intel, Motorola, Valero Energy and Verizon.