Walter Energy Energy Efficiency 2013
|Company||Walter Energy, Inc.|
|Filer||California State Teachers' Retirement System|
|Sector||Mining & Resources|
|Subject(s)||Energy Efficiency (buildings); Energy Efficiency (industrial); Energy Efficiency (products); Energy Efficiency (utilities)|
|Resolved Clause Summary||Energy use management report|
|Status||Withdrawn; Company will address|
Investments in energy efficiency are an attractive way to manage rising energy costs, can enhance a company’s role as a corporate citizen, and are usually quite profitable and low-risk. A 2008 McKinsey report (How the World Should Invest in Energy Efficiency) estimated that $170 billion could be invested in energy efficiency with an average internal rate of return of 17%. The report estimated that by 2020, these energy efficiency investments could produce over five times their cost in annual energy savings.
Companies are increasingly committing to energy efficiency initiatives. According to the Center for Climate & Energy Solutions: Johnson & Johnson achieved an internal rate of return 19% from recent energy efficiency investments; Alcoa’s Energy Efficiency Network has captured sustainable annual savings exceeding $20 million; since 2003, Rio Tinto has saved $117 million through energy efficiency improvements; and DuPont estimates that its energy efficiency initiatives have saved the company about $4 billion.
Evidence linking environmental considerations, such as energy efficiency, and value creation is increasingly being seen. An October, 2010 report from Thomson Reuters (ESG and Earnings Performance) concluded that, “U.S. companies with stronger environmental, social and governance (ESG) scores consistently beat earnings estimates more frequently than those with lower scores.” And according to an October 4, 2011 report from Goldman Sachs (Why ESG Matters), “Firms with leading ESG scores tend to generate higher and more durable returns on capital than sector peers.”
According to a Cleantech magazine article published in September/October 2010 (Mining and Energy), energy costs are estimated to represent more than 15% of the total cost of production in the mining industry in the United States. A June 2007 study by the U.S. Department of Energy (Mining Industry Energy Bandwidth Study) stated that the U.S. mining industry (excluding oil and gas) consumes approximately 1,246 trillion Btu (approximately 365 billion kilowatt-hours) of energy per year, that there exists the potential to save a total of 667 trillion Btu (approximately 195 billion kilowatt-hours) per year, and that the greatest energy reductions could be actualized in the coal and metal mining industries.
Walter Energy has not provided adequate disclosure, whether in public filings, on its website, or through a report, that discusses the Company’s energy management strategy. An effective energy management strategy can yield a high return on investment while proactively responding to reputational risk.
Shareholders request that the Board of Directors issue a report describing the company’s short- and long-term strategies on energy use management. The requested report should include a company-wide review of the policies, practices, and metrics related to Walter Energy’s energy management strategy. The report should be prepared at reasonable cost, omitting proprietary information, and made available to shareholders by December 31, 2013.