A Review: Investors Get Record Results Pushing Corporate Action on Climate Change In 2007
A record 43 climate-related shareholder resolutions were filed with US companies this year, of which 15 led to positive actions by businesses such as ConocoPhillips, Wells Fargo and Hartford Insurance. Shareholders withdrew their resolutions after the companies made their climate-related commitments. Remaining resolutions that went to a vote received record high average voting support of 21.6 percent, including 39.5 percent support for a resolution filed with Allegheny Energy, the highest vote ever on a global warming shareholder resolution.
The '07 proxy season also was marked by the first-ever filing of seven resolutions requesting that companies, including Exxon Mobil, set specific greenhouse gas reduction targets from their operations and products. These resolutions also received strong support, including 31.1 percent support at Exxon Mobil and 29.1 percent at General Motors.
"It's clear from these results that growing investor pressure is prompting more US companies to tackle climate change more aggressively," said Mindy S. Lubber, president of Ceres, a national coalition of investors and environmental groups that helped coordinate the shareholder filings. "Many insurers, banks, builders and power companies are boosting their attention to the risks and opportunities from climate change, but other companies, including Exxon Mobil, are still not responding adequately."
"The increasing support for our resolutions shows that investors want greater transparency about climate risks and information about how companies are preparing to meet the challenges and seize the opportunities," said Leslie Lowe, director of the Energy and Environment Program at the Interfaith Center on Corporate Responsibility (ICCR), an association of 275 faith-based institutional investors, which also helped coordinate this year's resolutions.
"Shareholder resolutions on climate-related issues enjoyed tremendous support and brought new successes this year," said New York City Comptroller William C. Thompson Jr., whose office filed resolutions with Allegheny Energy and several other electric power companies. "The New York City Pension Funds are especially proud of the record high vote supporting its global warming resolution with Allegheny Energy. There still is much work to be done, however, as some companies have not responded adequately to these important issues."
The 43 resolutions, seeking greater disclosure from companies on their responses and strategies to address climate-related business trends, were filed by state and city pension funds and labor, foundation, religious and other institutional shareholders. The filers collectively manage more than $200 billion in assets.
Of the resolutions that were filed, 15 were withdrawn by shareholders after companies responded positively to their requests and 15 went to a vote at corporate annual meetings. The remaining resolutions were either omitted by the SEC or were withdrawn by shareholders due to technicalities. Below are highlights from the '07 proxy season:
Oil and Gas Sector
ConocoPhillips - Resolution Withdrawn
Trillium Asset Management and the North Carolina State Treasurer withdrew their resolution after the oil company announced its support for an aggressive mandatory federal policy to reduce greenhouse gas emissions, committed to spend $300 million on low-carbon research, including alternative fuels, committed to set a greenhouse gas reduction target and took numerous other measures to reduce its climate impact.
Anadarko - Resolution Withdrawn
In the wake of major acquisitions that boosted the company's size by 50 percent, shareholders filed a resolution to encourage Anadarko to set a GHG emissions reduction goal for the newly enlarged entity. Anadarko, already a leader among US oil companies in addressing climate change, reaffirmed the company's commitment to climate risk disclosure, arranging investor meetings with senior executives, and pledging to set a GHG reduction target by June 2008.
Exxon Mobil - 31.1 Percent Support for Resolution
Shareholders owning over $120 billion - 31.1 percent - of Exxon Mobil stock supported a resolution requesting the board of directors adopt quantitative goals based on current technologies for reducing total GHG emissions from the company's products and operations. The resolution was filed by the Sisters of St. Dominic of Caldwell, New Jersey, and resulted in the highest support for a climate resolution in the company's history. Investors are concerned that Exxon Mobil has made little progress and continues to lag far behind competitors such as ConocoPhillips, Chevron, and Royal Dutch Shell and BP in addressing climate risks and escalating its renewable energy investments.
Ultra Petroleum - 31 Percent Support for Resolution
Shareholders owning 31 percent of the company's stock supported a resolution filed by the Nathan Cummings Foundation requesting that a committee of independent directors of the board assess how the company is responding to rising regulatory, competitive and public pressure to significantly reduce carbon dioxide and other greenhouse gas emissions and report to shareholders by Dec. 1, 2007.
Wells Fargo - Resolution Withdrawn
Ten shareholders, led by the Service Employees International Union (SEIU) Master Trust, withdrew a resolution requesting that the bank set GHG emission reduction goals after the company committed to completing GHG assessments of key lending portfolios including agriculture, primary energy production and power generation.
Hartford Insurance & Prudential Financial - Resolutions Withdrawn.
Calvert, one of the nation's largest socially responsible mutual fund firms, withdrew resolutions at Hartford Insurance and Prudential Financial after the two insurance companies agreed to improve their public reporting and disclosure regarding the potential financial risks they face from climate change and strategies for mitigating those risks. The companies specifically agreed to respond to a climate risk disclosure questionnaire sent to companies each year by the Carbon Disclosure Project (CDP) and to disclose their assessment of the business impacts of climate change. Calvert also filed a shareholder resolution with Ace Limited. Although the company challenged the resolution at the SEC, shareholders are encouraged because ACE has recently joined the EPA Climate Leaders program and CEO Evan Greenberg has spoken publicly about the importance of addressing climate change.
Electric Power and Coal Sectors
Allegheny Energy - Record High 39.5 Percent Support for Resolution
Allegheny Energy shareholders gave record high support to a resolution filed by the New York City Pension Funds requesting the PA-based electric power company produce a report on how it plans to reduce GHG emissions as pressure mounts from both public and regulatory bodies on climate issues. The resolution received the highest vote of any climate-related resolution.
TXU - Two Resolutions Withdrawn; One pending
Investors filed three resolutions with TXU which helped to ensure that a new climate change policy was included in the terms of the proposed acquisition of TXU by private equity firms Kohlberg Kravis Roberts & Co. (KKR) and Texas Pacific Group (TPG). The New York City Pension Funds, lead filer of one of the three climate resolutions, commended the Texas company in March 2007 for agreeing to reduce the number of coal-fired power plants it planned to build from 11 to three, preventing the release of 56 million tons of annual carbon emissions. TXU also announced that it would explore renewable energy sources and invest in alternative energy technologies and create an independent Sustainable Energy Advisory Board. A third resolution, filed by the Benedictine Sisters of Boerne, TX, asking the company to set emissions reductions targets for greenhouse gases and mercury will be voted on at TXU's annual meeting on Sept. 7.
D.R. Horton, Toll Brothers, Costco, Starwood - Resolutions Withdrawn
In response to shareholder requests two leading homebuilders, the nation's largest warehouse club chain and a large hotel chain agreed to significantly expand reporting and disclosure on energy efficiency performance and other climate change related topics. Resolutions with the four companies were withdrawn as a result. Resolutions asking for similar disclosure were voted on at Kroger Co. and Boston Properties and received 37.4 percent and 32.6 percent support, respectively. Buildings account for 40 percent of energy and 70 percent of electricity used in the United States annually. Therefore, the sector presents enormous opportunity for energy and financial savings. The resolutions were filed by the Nathan Cummings Foundation and several religious filers.
General Motors - Growing Shareholder Support for Climate Action
Just as General Motors launched a new national advertising campaign against legislative proposals to increase fuel economy standards, leading institutional investors called on GM to establish concrete goals to reduce GHGs emitted by both its products and operations. Just over 29 percent of GM's shareholders voted in favor of the resolution filed by the Sisters of St. Dominic of Caldwell, NJ.
Ceres is a leading coalition of investors and environmental groups working with companies to address sustainability challenges such as global climate change. Ceres also directs the Investor Network on Climate Risk, an alliance of 60 institutional investors with collective assets totaling more than $4 trillion. For more information, visit http://www.ceres.org and http://www.incr.com
For 35 years, the Interfaith Center on Corporate Responsibility has been a leader of the corporate social responsibility movement. ICCR's membership is an association of 275 faith-based institutional investors, including national denominations, religious communities, pension funds, asset management companies, colleges and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues. For more information, visit http://www.iccr.org