2006 Proxy Season Produces Strong Results on Climate Change
Investors have been enormously successful engaging with companies on climate change during the 2006 proxy season. More than two-dozen climate-related shareholder resolutions were filed with U.S. companies, some of which were ultimately withdrawn by shareholders after a satisfactory pledge by the company to implement the request, or because the SEC excluded the proposal on technical grounds. Below are many of the highlights:
Electric Power Sector
Dominion Resources - 22.5% Support for Shareholder Resolution
Shareholders at the Dominion Resources annual meeting in April gave strong voting support to a shareholder resolution seeking greater analysis and disclosure from the company about the financial impacts posed by global climate change, including foreseeable greenhouse gas emission (GHG) limits on U.S. power plants. The resolution was supported by 22.5 percent of the company's shareholders, nearly three times higher than the 8.3 percent voting support a similar resolution received at the 2005 annual meeting. The resolution requests that the Richmond, VA-based company undertake a comprehensive review on how it is responding to growing regulatory, competitive and public pressure to reduce greenhouse gas emissions. Shareholders requested that the climate risk report be completed by Sept. 1, 2006 and be reviewed by a board committee of independent directors. Trillium Asset Management filed the resolution along with the New York City Employees Retirement System. CalPERS and CalSTRS were among the investors backing the measure.
Peabody Energy - Resolution Withdrawn
A similar resolution filed by shareholders at Peabody Energy in St. Louis, MO was withdrawn after the company agreed to prepare a sustainability report, including an analysis of climate risk. The resolution was filed by the New York City Employees Retirement System.
Resolutions Withdrawn from Four Power Companies
Resolutions introduced by shareholders at four Midwest electric power companies were withdrawn after the companies agreed to prepare the requested climate risk disclosure reports. The four companies-Great Plains Energy Inc. in Kansas City, MO, Alliant Energy in Madison, WI, WPS Resources in Green Bay, WI, and MGE Energy in Madison, WI-agreed to assess and disclose financial risks from potential GHG regulation and plans for mitigating these potential risks at existing and proposed power plants. All four of the companies have proposed to build new pulverized coal-fired power plants that could increase their vulnerability to regulation of greenhouse gas emissions. The companies join more than a dozen other U.S. electric power companies that have published or agreed to publish climate risk reports the past two years. The resolutions were filed by New York City Comptroller William S. Thompson, whose office manages $95 billion in assets in the New York City retirement funds.
Oil & Gas Sector
ExxonMobil - Investors send letter to board chair
Sixteen members of the Investor Network on Climate Risk (INCR) sent a letter in May to Michael Boskin, chair of the ExxonMobil Board Public Issues Committee, expressing the investors' concerns that the company has failed to address the potential financial impact of climate change on global energy markets. The letter requested that independent members of the Board of Directors meet with investors to discuss climate change issues. The 16 investors, including CalPERS, the New York State Comptroller, and the New York City Comptroller, represent $658 billion in assets. The letter was sent in the same week as the release of a Ceres study showing that ExxonMobil has made little progress in addressing climate change and clean energy issues. According to the study, an analysis of two new ExxonMobil reports revealed that the company continues to lag behind competitors such as BP and Royal Dutch Shell in addressing climate risks and burgeoning renewable energy opportunities.
Devon Energy - Resolution Withdrawn
Shareholders withdrew a resolution filed by Domini Social Investments requesting that Devon Energy assess and publicly report its efforts to significantly reduce carbon dioxide and other greenhouse gas emissions. The withdrawal came after the company released a formal climate policy acknowledging the seriousness of global warming and agreed to create a staff committee to address the issue, institute a formal board review process and hold a meeting with the company's CEO to discuss the issue. Devon also agreed to disclose its greenhouse gas emissions.
Standard Pacific - Record Shareholder Support for Resolution
The 39 percent support from Standard Pacific's shareholders in favor of a resolution relating to energy efficiency marked one of the highest votes ever on a global warming related resolution. The resolution, filed by the Nathan Cummings Foundation, requested that the home construction company assess its energy efficiency performance and release a report to shareholders by September.
Resolutions Withdrawn from Retail and Shopping Mall Companies
Shareholder resolutions were withdrawn from two leading retailers and the nation's largest shopping mall company after the companies agreed to improve disclosure of their energy efficiency performance. The resolutions, filed by the Nathan Cummings Foundation and the New England Yearly Meeting of Friends (a Quaker religious organization), were withdrawn from The Home Depot in Atlanta, GA, Lowe's in North Wilkesboro, NC, and the Simon Property Group in Indianapolis, IN, which collectively manage more than 500 million square feet of building space. The Home Depot and Lowe's agreed to disclose information on green/renewable power consumption, energy efficiency policies, facility operation and maintenance programs related to energy efficiency and company views on greenhouse gas emissions. Home Depot also agreed to discuss targets for renewable energy usage and reducing greenhouse gas emissions.
D.R. Horton: Shareholders of the building company D.R. Horton voted on a resolution to assess and report on the company's energy efficiency performance. 5.5 percent of the shareholders voted in favor of the resolution filed by the Nathan Cummings Foundation.
ExxonMobil: At the its May 31 annual meeting, shareholders of ExxonMobil voted on a resolution filed by the Sisters of St. Dominic to amend the qualifications for members of the company's Board of Directors. The resolution requested that the Nomination Committee for the Board of Directors nominate at least two directors each year with experience and expertise in the oil, gas, and energy industry. 6.3 percent of the shareholders supported the resolution.
General Motors Corp (GM): Shareholders at GM voted in early June on a resolution filed by Catholic Healthcare West requesting that the Board of Directors adopt a policy to separate the roles of Chairman and chief executive officer so that the position, Chairman of the Board, would be held by an independent director. The resolution received support from 17.8 percent of shareholders.
Chubb Group: A resolution filed with Chubb Group requesting that the insurance company publish a sustainability report was withdrawn after the company pledged to arrange a meeting with shareholders to discuss climate risk issues. The resolution was filed by Walden Asset Management.
General Motors, ExxonMobil: Climate change related shareholder resolutions filed at both General Motors and ExxonMobil were omitted by the Securities and Exchange Commission (SEC). One ExxonMobil resolution requested that the company adopt policies to become a recognized leader in low-carbon emissions.
The SEC allowed the omission of several resolutions filed in the banking and insurance sectors, including resolutions filed with Wachovia, Wells Fargo, Vintage and Anadarko.