Oil, Coal, And Power Companies See 50% Increase In Climate- And Energy-Related Shareholder Resolutions In 2011 Proxy SeasonFebruary 17, 2011
Shareholders Urge Energy Companies to Tackle Risks from Climate Change, Water Scarcity and Other Environmental Threats Affirming the financial risks that climate change and other environmental concerns pose to leading energy companies, investors announced recently the filing of 66 climate and energy related shareholder resolutions with 41 coal, electric power and oil companies in the 2011 proxy season, making 2011 a record for shareholder engagement in the energy sector, even in the face of Congressional inaction on climate change. The surge in resolutions represents a 50 percent increase over the 44 resolutions filed with 31 coal, oil and electric power companies last year. The announcement comes a day after the consulting group Mercer released a report finding that climate change could increase portfolio risk by 10 percent over the next 20 years. A total of 96 climate and energy-related resolutions have been filed thus far with U.S. companies, including businesses with less direct, though still significant, exposure to climate-related business trends such as building, real estate, financial services and food firms. See a complete list of resolutions filed at http://www.incr.com/resolutions. The resolutions press companies on a wide range of issues, including the risks and opportunities from oil sands extraction in Canada, hydraulic fracturing in the U.S., global water scarcity, sustainable palm oil sourcing, overall greenhouse gas (GHG) emissions and usage of renewable energy. This year, investors have also filed 11 resolutions requesting that executive compensation be directly linked to sustainability metrics. "Challenges facing the energy sector are greater and more complex than ever," said Mindy S. Lubber, director of the Investor Network on Climate Risk (INCR) and president of Ceres, which helps to coordinate the filings. "Investors are concerned that companies are placing too much emphasis on higher-risk, carbon-intensive strategies and too little focus on viable clean energy opportunities, such as renewable energy, energy efficiency and cleaner fuels." "With increasing global awareness of the risks and opportunities posed by climate change, energy producers must respond to the demands of their investors and the public by taking steps to reduce their carbon emissions and other environmental pollutants, while seizing opportunities for sustainable growth and prosperity," said New York City Comptroller John C. Liu, whose office filed resolutions with International Coal Group, Dynegy and Genon, among others. "Companies that continue the same outdated practices put both the environment and their shareholders at risk." The NYC Comptroller manages pension fund assets worth $108.5B. The resolutions were filed by some of the nation's largest public pension funds, foundations and religious, labor and other institutional investors. Many of the investors are members of Ceres' Investor Network on Climate Risk (INCR), which has more than 90 members managing over $9T in assets. Electric Power and Coal With the U.S. Environmental Protection Agency moving forward with plans to issue greenhouse gas rules targeting the electric power sector, many of the resolutions ask the companies to set GHG reduction goals. Others focus on the financial risks of water-scarcity concerns, usage of renewable energy and risks from mountain top removal. The electric power sector uses enormous amounts of water, accounting for approximately 41 percent of the nation's total freshwater use. Power providers in drier regions of the country are starting to face water scarcity risks, in part driven by population shifts and climate change. Resolutions have been filed thus far with Dominion (withdrawn), PPL Corp, and Southern Company asking the companies to disclose plans to mitigate risks of water use and disposal, including low flows, thermal impacts, and emerging regulations. In a first, a handful of resolutions ask FirstEnergy, MDU (withdrawn) and Sempra Energy to link executive compensation with sustainability metrics. Coal companies, including Peabody, Arch (withdrawn) and International Coal Group, received resolutions seeking reports on their response to rising pressure to reduce CO2 and other emissions from their products. Oil Sands and Hydraulic Fracturing "Companies that fully integrate environmental, social and governance considerations into the way they do business are simply better positioned to create the type of value that lasts for decades to come," said Jack Ehnes, CEO of CalSTRS, which filed the resolution with ConocoPhillips and manages $146.4B in assets. "We expect our companies to play both defense and offense: they need to minimize risks, while implementing plans to innovate and compete." Investors filed nine resolutions with oil and gas companies requesting information about their plans to mitigate the risk associated with their fast-increasing natural gas hydraulic fracturing practices in the U.S. For more information, visit http://www.ceres.org/Page.aspx?pid=1325. Executive Compensation and Sustainability "Aligning executives' incentives with sustainability performance is a common-sense way to promote lasting shareholder value while minimizing risks like major oil spills," said Scott Zdrazil, First Vice President and Director of Corporate Governance at Amalgamated Bank. "Linking compensation to sustainability metrics, such as safety practices, enables companies to more clearly see the value of these issues." Amalgamated Bank, which filed resolutions on this topic with Hess, Marathon Oil, and ExxonMobil, has $12B in assets under management from labor and public employee pension funds. Sustainability Reports "Our investor members believe that it is incumbent upon corporations to have a prominent role in the sensible transition to a cleaner, more just economy," noted Laura Berry, executive director of the Interfaith Center on Corporate Responsibility (ICCR), which helps to coordinate the filings. "The shareholder proposal system has a long-standing record of creating win-win situations, and companies who engage authentically in this process are viewed as leaders by both investors and consumers." Climate and Energy Resolutions Filed in the 2011 Proxy Season Among the resolutions this year currently expected to go to
vote: Buildings / Real Estate / Energy Efficiency: AMB Property Corporation (AMB), Boston Properties (BXP), CB Richard Ellis (CBG), Equity Residential (EQR), Lennar (LEN), Lowe's (LOW), The Macerich Company (MAC), MGM Resorts International (MGM), The Ryland Group (RYL), Standard Pacific Corp. (SPF) Coal: Alpha Natural Resources (ANR), International Coal Group (ICO), Massey Energy (MEE), Peabody Energy (BTU) Electric Power: Ameren (AEE), Berkshire Hathaway (BRK-B), CMS Energy Corporation (CMS), Dominion (D), Duke Energy (DUK), Dynegy (DYN), Entergy Corp (ETR), FirstEnergy (FE), Genon, NRG Energy (NRG), Portland General Electric (POR), PPL Corp (PPL), Public Service Enterprise Group (PEG), SCANA Corp (SCG), Sempra Energy (SRE), Southern Company (SO), Xcel Energy (XEL) Finance: Royal Bank of Canada (RY), SunTrust Banks (STI) Oil & Gas: Anadarko (APC), Cabot Oil & Gas Corporation (COG), Carrizo Oil and Gas (CRZO), Chevron (CVX), ConocoPhillips (COP), El Paso (EP), Energen (EGN), ExxonMobil (XOM), Hess Oil (HES), Marathon Oil (MRO), Occidental Petroleum (OXY), Southwestern Energy Company (SWN), Tesoro (TSO), Ultra Petroleum (UPL), Valero Energy (VLO) S&P 500 / Other: Amazon (AMZN), C.R. Bard (BCR), Freeport-McMoran (FCX), Nordstrom (JWN), St. Jude Medical (STJ), Time Warner Inc. (TWX) Small Cap: Gentex Corp (GNTX), Layne Christensen Company (LAYN) Canadian: Great-West Lifeco (GWO), Scotia Bank (BNS) About Ceres About ICCR SOURCE: Ceres |