The number of climate and energy-related shareholder resolutions
filed with energy companies is the highest ever, says the Ceres'
Investor Network on Climate Risk (INCR). Investors have filed 66
climate and energy related shareholder resolutions with 41 coal,
electric power and oil companies in the 2011 proxy season. The
surge in resolutions represents a 50% 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% over the next 20 years. A total of
96 climate and energy-related resolutions have been filed so far
with U.S. companies, including businesses with less direct exposure
to climate-related business trends such as building, real estate,
financial services and food firms. (See a complete list of
resolutions filed by
clicking
here
.
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. For the first time ever,
investors have also filed 11 resolutions requesting that executive
compensation be directly linked to sustainability metrics. 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 INCR,
which has more than 90 members managing over $9 trillion in
assets.
Electric Power and Coal
The electric power sector saw the largest increase in resolutions
filed. Investors filed 29 resolutions with 19 electric power
companies, including Dominion, Dynegy, Southern and Xcel. Eleven
resolutions were filed with eight power companies last year.
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.
Oil Sands and Hydraulic Fracturing
Investors filed resolutions with ConocoPhillips and ExxonMobil
calling on the companies to address and reduce the business and
environmental risks from their significant investments in oil sands
production in Canada. Investors want the oil companies to report on
the environmental damage caused by oil sands operations and to
examine the impact that environmental rules, such as low carbon
fuel standards in the U.S., or lawsuits in Canada will have on
them. A resolution was also filed with Royal Bank of Canada,
asking the bank to report on the financial risks of oil sands
investments.
Executive Compensation and Sustainability
On the heels of major financial losses from last year's BP oil
spill and Massey Energy coal mine explosion, investors filed over a
dozen resolutions aimed at improving corporate governance of
environmental and social challenges. Investors focused especially
on executive compensation, bolstered by the U.S. Securities and
Exchange Commission's recent Say-on-Pay rule. Resolutions were
filed with Hess, Marathon Oil, Chevron and Lowe's and seven other
companies requesting that executive pay include
sustainability-related metrics.
Sustainability Reports
Shareholders have also filed 18 resolutions requesting a
sustainability report including climate change or GHG reduction
strategies. Such resolutions have been gaining traction with
investors seeking to analyze companies' environmental, social, and
governance (ESG) risks, and have received record-high votes in
support, including a 34% vote with Emerson Electric this proxy
season, the first such resolution this year to come to a vote.
Companies receiving this type of resolution include CONSOL Energy
(withdrawn), SunTrust Banks, and Tesoro.
Climate and Energy Resolutions Filed in the 2011 Proxy
Season
Of the 96 resolutions filed thus far, investors have successfully
negotiated 12 withdrawals after the companies made specific
commitments in response to the resolutions. For example, in
response to Varian Medical Systems' commitment to develop Global
Reporting Initiative (
GRI
)-based reporting and assign board oversight of sustainability
issues, Walden Asset Management withdrew its resolution. The
Teamsters withdrew a resolution with Covanta Energy after the
company issued its first GRI-based sustainability report. Among the
resolutions this year currently expected to go to vote: Agriculture
/ Food / Forestry: RR Donnelley (
RRD
), Yum! Brands (
YUM
) 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)
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