A record 95 global warming shareholder resolutions with 82 U.S. and Canadian companies have been filed by U.S. investors this proxy season.
The resolutions were filed by many of the nation's largest public pension funds, as well as labor, foundation, religious and other institutional investors. Many of the investors are part of the Investor Network on Climate Risk (INCR), an alliance of more than 80 institutional investors with collective assets totaling more than $8 trillion.
Companies targeted in the 2010 proxy season include some of the nation's largest coal companies, electric power and oil producers; homebuilders; big box retailers; financial institutions and other businesses that investors believe are not adequately disclosing and managing potential climate-related business impacts.
So far, 28 companies already have negotiated with investors to take some action so that resolutions have been withdrawn. For a complete list of resolutions and their status, click here.
"We think there's been a real change in companies where they do see an advantage in doing something, especially with the recent SEC guidance," says Meg Wilcox, a spokesperson for CERES, a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change.
On January 27, a divided SEC voted to encourage companies to disclose the effects of climate change on their business. The SEC's interpretive guidance clarified what publicly traded companies should disclose about climate-related material effects on their operations, whether from new carbon-reducing regulations in the U.S. and abroad, the physical impacts of changing weather or business opportunities associated with the growing clean energy economy. More than 50 investors managing $2.1 trillion in assets sent a letter to the SEC this week re-affirming their support for the SEC climate guidance.
Wilcox also noted that fewer companies are challenging climate change filings this year. Last year, 68 resolutions were filed and 14 were challenged, while this year that have been 95 resolutions and only been seven challenges.
Many of the resolutions filed aim directly at core materiality issues that were the foundation for the SEC's new interpretive guidance on climate disclosure. Resolutions were filed with ExxonMobil and ConocoPhillips asking them to report on regulatory, legal and reputational risks, as well as environmental impacts, from their extensive Canadian oil sands operations. Both companies are spending many billions of dollars on oil extraction in Canada, which faces a slew of regulatory and legal challenges both in the U.S. and Canada. Oil sands production typically has a significantly higher carbon footprint compared to traditional oil production.
Other shareholder resolutions seek disclosure from electric utilities, including Southern Company, and coal producers, such as CONSOL and Massey, on their plans for adopting greenhouse gas reduction goals in anticipation of expected carbon-reducing regulations.
Other recent policy developments further bolster investors' requests for increased disclosure, including the Environmental Protection Agency's new mandatory greenhouse gas (GHG) reporting rule requiring some 10,000 facilities that are large sources of GHGs to report those emissions to the EPA, beginning data collection on January 1, 2010.
The U.S. House of Representatives passed strong climate and energy legislation in June 2009 that caps greenhouse gas emissions, and Senators Kerry, Lieberman and Graham are working to produce a bipartisan climate bill for Senate consideration within weeks. The EPA is also moving forward with issuing regulations on greenhouse gas emissions for automobiles and certain industrial sectors.
"Investors cannot remain silent to the threats of global climate change, which has the potential to negatively impact businesses and their long-term profitability. The New York State Common Retirement Fund wants the companies it invests in to more clearly assess and better manage the far-reaching risks of climate change," said New York State Comptroller Thomas P. DiNapoli, whose office oversees the state's $129.4 billion pension fund and filed resolutions with CONSOL Energy and KBR Inc.