Companies Feel Heat from Record-High Shareholder Resolutions on Climate Change

Companies Feel Heat from Record-High Shareholder Resolutions on Climate Change

Oil and gas companies, electric power producers, real estate firms, manufacturers, financial institutions, and automakers face a record number of global warming resolutions that have been filed by shareholders for the 2005 proxy season, according to investor groups Ceres and the Interfaith Center on Corporate Responsibility.

State and city pension funds and labor, foundation, religious and other institutional shareholders have filed 31 resolutions requesting financial risk disclosure and plans to reduce greenhouse gas emissions with nine oil and gas companies, six manufacturers, three electric power providers and two automakers. The companies are among the largest greenhouse gas emitters in the country, making them especially vulnerable to the risks of likely regulatory- and market-based limits on carbon dioxide emissions worldwide. In addition to the 31 resolutions, shareholders are also involved in negotiations with several dozen other companies aimed at improving those companies' disclosure and action on climate risk.

The announcement days after the formal kickoff of the Kyoto Protocol, which requires dozens of industrialized countries around the world to reduce their greenhouse gas emissions by about 5% below 1990 levels by 2012. The United States did not ratify the protocol, but many of the U.S. companies targeted by shareholder resolutions will need to reduce emissions in Europe, Canada, Japan and other countries.

The 31 filings easily surpass the 22 global warming shareholder resolutions filed last year. Many of last year's resolutions received the highest voting support ever, particularly in the oil and gas sector where support levels were as high as 37%. Seven resolutions were withdrawn by filers last year after companies agreed to undertake climate risk assessments and committed to specific greenhouse reduction targets.

One or more resolutions have been filed with each of the following U.S. companies:

Auto Sector
  • Ford Motor Co.
  • General Motors Corp.
Electric Power Sector
  • Dominion Resources
  • FirstEnergy
  • Progress Energy
i>Oil and Gas Sector
  • Anadarko Petroleum Corp.
  • Apache Corp.
  • ChevronTexaco Corp.
  • ExxonMobil Corp.
  • Marathon Oil Corp.
  • Tesoro Corp.
  • Unocal Corp.
  • Vintage Petroleum
  • XTO Energy Inc.
  • Allergan
  • Avery Dennison
  • Analog Devices
  • Corning
  • Dow Chemical
  • Newell Rubbermaid
Real Estate Sector
  • Centex Corp.
  • Health Care Property Investors
  • Lennar Corp.
  • Liberty Property Trust
  • Ryland Group Inc.
  • Simon Property Group
Financial Services Sector
  • J.P. Morgan Chase & Co.
  • Wachovia
  • Wells Fargo & Co.
The shareholder filers, collectively representing over $250 billion in assets, include state and city pension funds, three foundations, socially screened mutual funds and a number of religious funds associated with the Interfaith Center on Corporate Responsibility (ICCR). The filings were also coordinated by Ceres, a coalition of investors and environmental groups dedicated to improving corporate disclosure and practices on climate change and other issues.

Denise Nappier, treasurer, State of Connecticut, said: "The new regulatory environment regarding climate change brings both risks and opportunities for companies in countless industries. The consequences for those companies that do not act responsibly and take steps to assess these risks and opportunities -- and share that assessment with investors -- can be quite serious."

William C. Thompson Jr., comptroller, City of New York, said: "With increasing, credible, scientific evidence that global warming is occurring, and given the potential environmental and regulatory impacts across companies and industries, the boards of directors of public companies should direct their managements to assess these effects and to disclose the findings to their shareholders."

Mindy S. Lubber, president of Ceres, said: "Adoption of the Kyoto Protocol adds even greater urgency to these shareholder resolutions. There's a rising tide of investor concern because carbon limits are taking effect around the world."

Leslie Lowe, program director of ICCR, said: "More companies are taking global warming seriously because of shareholder concerns and we're hopeful that will result in some of these resolutions being formally withdrawn as companies agree to more climate risk disclosure and actions to mitigate risks."

Many of the resolutions seek greater disclosure on how the companies are responding to and preparing for rising regulatory and competitive pressures to reduce greenhouse gas emissions. ExxonMobil, which generates more than a third of its revenues in Kyoto participating countries, and the manufacturers, have received resolutions that focus specifically on understanding how the companies plan to meet Kyoto greenhouse gas reductions targets. In the case of Ford and General Motors, they are asked, among other items, to report on how they plan to remain competitive given the growing regulatory push to reduce greenhouse gas emissions from motor vehicles, as exemplified by actions in California, the Northeast states, Canada and overseas.

The resolutions come at a time of growing investor demand for information on how energy-intensive sectors are planning for coming constraints on carbon emissions. The electric power sector, which generates 39% of the CO2 emission in the U.S. and 10% globally, has received many of the resolutions in the past. Last year, American Electric Power, Cinergy, TXU, and Southern all agreed to shareholder requests by promising climate risk reports. Those reports have all been completed except for Southern's.