As of mid-February, there were 48 proposals about carbon asset risks and how companies will cope with a carbon-constrained world (including greenhouse gas (GHG) emissions management). Twelve others deal with energy solutions and four are on deforestation. The overall number is down from the levels of 2014-18 but similar to last year.

The context for climate change proposals is quite different from a few years ago, given the Trump administration’s extensive rollback of laws and regulations enacted in the past to curb emissions and reduce harms. Current U.S.political barriers to climate action have given greater urgency to non-governmental efforts to call companies to account and force them to act. Despite widespread destruction from the changing climate, including devastating storms and wildfires and melting icecaps and glaciers, it remains uncertain if U.S. voters feel strongly enough about these issues to bring about change in either Washington or state capitals around the country. Still, last year large mutual funds continued to vote in greater numbers for climate risk disclosure at their portfolio companies, although most still eschew any public pressure on lawmakers.

Proponents: The Ceres coalition coordinates nearly all these proposals, working with its Investor Network on Climate Risk (INCR) and a broad coalition of institutional investors, including many members of the Interfaith Center on Corporate Responsibility (ICCR), the New York City pension funds and some individuals. The proponents support Climate Action 100+, an effort focused on 100 carbon emitters that account for two-thirds of global industrial emissions and 60 more companies the network says will be key to a “clean energy transition.” Climate Action 100+ is backed by 450 institutional investors managing $49 trillion in assets.

RENEWABLE AND EFFICIENT ENERGY

As in the past, most of the proposals that set out possible energy solutions to climate change challenges are about using more renewable energy, often coupled with questions about energy use and energy efficiency. A majority have already been withdrawn after agreements, as this is an area where companies can see immediate, positive bottom-line impacts.

Pending: Just three proposals seeking renewable energy goals are still pending, at HD Supply Holdings, Home Depot and Steel Dynamics. With slight variations, the request is for a report on how feasible it would be to adopt “quantitative, company-wide goals for increasing the... use of renewable energy, energy efficiency, and any other measures deemed feasible by company management to substantially reduce the company’s greenhouse gas (GHG) emissions.” At Home Depot, it says the report could illustrate reduction in “climate change risks associated with the use of fossil fuel-based energy.”

Withdrawals: Proponents have withdrawn renewables proposals at seven companies, noted on the table. In a typical move, Rockwell Automation agreed to assess setting new environmental goals, including possible goals for increasing renewable energy use, and it will provide more disclosure about ESG topics in its 2020 sustainability report.

RENEWABLE ENERGY AND ENERGY EFFICIENCY = CLEAN ENERGY FUTURE

KATE MONAHAN
Shareholder Engagement Manager, Friends Fiduciary Corporation

Over the past several years, investors have increasingly focused on clean energy as a way for companies to mitigate climate risk and take advantage of opportunities as we transition to a low-carbon economy. In the absence of strong legislative action, corporate commitments are crucial in reaching the levels of decarbonization necessary to keep warming under 1.5°C .

SEC action: Two of the withdrawals occurred after SEC challenges. Air Products & Chemicals asserted the resolution was too detailed and thus ordinary business, and the Nathan Cummings Foundation subsequently withdrew after discussions with the company. At Newmont, the withdrawal was for procedural reasons—the proposal arrived past the submission deadline.

In addition, a different new request from an individual investor to ExxonMobil about facilitating electric vehicles seems likely to be omitted. It asks that the company “install electric vehicle rapid-charging facilities in either a fraction of its existing rural service stations, located along major highways, or in specially designed sites.” The company contends at the SEC that the proponent did not substantiate his stock ownership and that it relates to ordinary business since it involves the types of products and services offered for sale.

VERIZON HEEDS SHAREHOLDER CALL TO SOURCE MORE RENEWABLE ENERGY

LESLIE SAMUELRICH
President, Green Century Capital Management

When Green Century first engaged Verizon Communications, the company sourced 2 percent of its energy from renewable sources—and had a goal to increase that amount to 4 percent by 2025.

We thought 4 percent was the wrong number for Verizon, the largest telecommunications company in the country. Starting in 2016, therefore, we sent letters of inquiry and filed shareholder resolutions asking the company to address its climate risks and reduce its carbon footprint. In November 2018, we filed our third shareholder resolution with the company, urging it to increase the pace of its renewable energy commitments and explore how it might reduce its exposure to the material risks associated with the use of fossil fuel-based energy.