Investors Pushing Companies Harder On Environment

A major signal that public companies will need to take environmental issues more seriously has come this year, with the first-ever majority vote on a shareholder resolution asking a utility to set greenhouse gas (GHG) reduction goals.

In May, 51.2% of shares of IDACORP, an electric utility in Idaho, were voted to ask the company to establish greenhouse gas (GHG) reduction goals. "The game-changing majority vote at IDACORP shows that investors want companies to do more to address climate change," said Michael Passoff, associate director for As You Sow, a nonprofit that was the lead filer on the IDACORP resolution. "It is the first environmental resolution to get a majority vote in 30 years of shareholder activism."

Following the vote, IDACORP agreed to adopt GHG reduction goals by year's end, issued its first request for proposal for a wind farm and submitted a smart grid proposal to utility regulators.

The IDACORP resolution was one of a record 68 climate-related shareholder resolutions filed with U.S. and Canadian companies this year. Of them, 31 were withdrawn after the companies agreed to positive climate-related commitments.

Six of the 28 resolutions that went to a vote achieved 30% or greater support, including one filed with coal company Massey Energy that received 45.6% support, or $458.1 million in shares.

Financial analysts are increasingly supporting climate-related resolutions. RiskMetrics Group supported at least 21 resolutions (75% of the resolutions that went to vote) and PROXY Governance Inc. supported 15 resolutions (53.6%). A third key financial analyst of shareholder resolutions in the U.S., Glass Lewis, however, opposed all climate-related resolutions tracked by Ceres, a leading coalition of investors and environmental groups that helped coordinate this year's shareholder filings along with Interfaith Center on Corporate Responsibility.

Investors also filed resolutions with 27 companies asking them to provide company-specific sustainability reports detailing how they are managing environmental, social, and governance (ESG) issues beyond climate change. Overall this proxy season, more than a dozen companies have committed to producing a first-time sustainability report.

"Investor pressure is prompting more companies to see the value of making their businesses more climate-friendly," said Mindy S. Lubber, Ceres president. "By measuring and lowering the carbon footprint of their operations and products, these companies will have a distinct advantage as the global economy shifts to cleaner energy sources."

Other climate-related highlights of the proxy season:

Chevron, which investors had placed on a climate watch list last spring, agreed to develop and disclose a business plan setting an annual GHG emissions reduction target for its operations, and to track emissions from its products.

NV Energy (formerly Sierra Pacific Resources), after agreeing to provide expanded disclosure of its strategy to address climate change, announced it would increase its renewable energy generation and abandon a 1,500-megawatt coal plant.

Citigroup agreed to establish a due diligence process for loans related to mountain-top-removal coal mining and to consider shareholder input in the development of that process.

For more details on company agreements, see Highlights from the 2009 Climate Change Proxy Season: http://www.ceres.org/Page.aspx?pid=1121.