Rockwood Holdings Energy Efficiency 2013
|Company||Rockwood Holdings, Inc.|
|Subject(s)||Climate Change; Energy Efficiency (buildings); Energy Efficiency (industrial); Energy Efficiency (products)|
|Resolved Clause Summary||Energy efficiency goals|
Managing and reporting sustainability performance, including improving energy efficiency, will make our company more responsive to a global business environment characterized by heightened public expectations around climate change, volatile energy prices, and changing regulations.
Effective sustainability management and value creation are strongly linked. In 2012, Deutsche Bank conducted an exhaustive literature review of over 150 studies and four meta studies on sustainable investing. They found 89% of studies demonstrate that companies with high Environmental, Social, and Governance (ESG) ratings show market outperformance. 85% of the studies indicate that these companies outperform on accounting measures.
Sustainability practices matter to investors. For example, a Goldman Sachs report states, “firms with leading ESG scores tend to generate higher and more durable returns on capital than sector peers.” Additionally, the 915 signatories to the Principles for Responsible Investment, which collectively manage more than $30 trillion, have publically pledged to incorporate ESG factors into investment decisions.
Regulations increasingly call for improved energy efficiency in chemical production. Regulators will likely require that heavy-emitting industrial facilities prove use of Best Available Control Technology (BACT) for CO2 emissions. Energy efficient production is likely to be a principal component of BACT. Our company must be well positioned to respond to existing and forthcoming regulations.
Energy efficiency is also critical given the volatility of energy prices. U.S. chemical producers spent $26.9 billion on energy in 2008. (Annual Survey of Manufacturers, U.S. Chemicals (NAICS 325), 2008)
The chemical industry can invest profitably in energy efficiency.
McKinsey estimates that $1.3 billion per year could be saved from “economically attractive” investments in energy efficiency. Additionally, over 100 government incentives exist for energy efficiency projects at chemical plants.
According to a 2007 IEA report, the U.S. chemical industry has a 30% gap between current practice and “best practice technology”. The U.S. chemical industry lags behind that of many countries in energy efficiency, including Germany (9.8%), France (11%), India (15.8%), Brazil (17.2%), and China (20.5%). (http://www.iea.org/textbase/nppdf/free/2007/tracking_emissions.pdf)
Many companies already benefit from their investments in energy efficiency. Dow Chemical saves $1.9 million annually from an investment in improved efficiency steam systems. (http://www1.eere.energy.gov/manufacturing/tech_deployment/pdfs/42009.pdf ) FMC Chemicals saves $911,000 annually from boiler improvements, an investment with a payback period of only six weeks. (http://www.nrel.gov/docs/fy04osti/35863.pdf)
Unlike many of its peers, Rockwood Holdings does not disclose information investors need to evaluate its energy management. By contrast, both Dow and Eastman report on energy use through the Global Reporting Initiative, and both tout 10 year plans to reduce energy intensity by 25%. (http://files.shareholder.com/downloads/EXP/934444569x5566857x453621/555dbad0-e940-489c-961f-990f42c704b1/Eagle-2011_Sustainability.pdf) (www.eastman.com/company/news_center/2010/pages/eastman_chemical_company_becomes_a_save_energy_now_leader.aspx)
Opportunities to improve energy efficiency are abundant. Taking advantage of these opportunities is critical to our company’s competitiveness and our role as a corporate citizen.
Shareholders request that the Board of Directors develop policies that will minimize Rockwood Holdings’ impacts on climate change, with a focus on setting company-wide targets to improve energy efficiency, and annually assess progress in achieving the company’s goals.