Climate Change

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As of mid-February, proponents have filed a total of 66 proposals on climate change. Fifty-six proposals are about carbon asset risks companies face and how they will cope with a carbon-constrained world—and how they plan to manage greenhouse gas (GHG) emissions. The climate slate is rounded out with 10 more, six on clean energy and four on deforestation. This year appears notable for the number of new types of resolutions, including those asking about climate transition plans and annual votes on these plans.

Last year saw five majority votes on climate, as several proposals attracted support from major mutual funds. The number of withdrawals recently has meant both new and more demanding proposals as well as companies that seem less receptive to proponents’ demands. Support has grown dramatically, with average support for all climate change proposals in 2020 at 39.4 percent, up from just under 19 percent ten years earlier.

With the Biden administration promising aggressive action to address climate change, companies and their investors face a completely different public policy context than they have over the last four years. While work has begun to reverse the Trump administration’s widespread rollbacks of laws and regulations enacted earlier to curb emissions and reduce harms, the demands of the COVID-19 pandemic and its related economic woes likely mean this will take some time. Just how companies will position themselves as they face the Biden administration’s climate plans is on the minds of many investor activists, and explains their focus on lobbying discussed on p. 33.

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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, state pension funds, As You Sow and many responsible investment firms, as well as some individuals. The proponents support Climate Action 100+, an effort focused on more than 100 carbon emitters that account for two-thirds of global industrial emissions and several dozen more companies the network says will be key to a “clean energy transition.” Climate Action 100+ is backed by 450 institutional investors managing more than $52 trillion in assets. This year, a significant addition to the proponents is the British hedge fund The Children’s Investment (TCI) Fund, which is sponsoring “say on climate” proposals asking for net-zero GHG emissions plans and shareholder advisory votes on them.

Carbon Asset Risk

In a shift from earlier proxy seasons, this year proponents are concentrating even more of their requests on proposals that consistently ask for plans about reconfiguring businesses to cut carbon in line with the Paris climate accord, without being too specific. Proposals about GHG goals were hit by a new interpretation of the SEC’s “ordinary business” rule from 2018 onward, when the SEC staff agreed that a request for reporting at EOG Resources on emissions was “micromanagement”—even though this interpretation had not previously applied to emissions. The key stumbling block at EOG was a request for “company- wide, quantitative, time-bound targets.” Proponents have been trying ever since to come up with language that will pass scrutiny, with varying degrees of success, but they also have doubled-down on engagement outside proxy season and filed fewer proposals. Last year, six emissions proposals averaged more than 46 percent, double the 2010 average.

Emissions Reporting and Goals

Paris-compliant goals: In 2021, the proposal at Costco Wholesale, Sysco and Wendy’s seeks a report that includes supply chain emissions for goals “well below 2 degrees,”

describing if, and how, it plans to measure and reduce its total contribution to climate change, including emissions from its supply chains, and align its operations with the Paris Agreement’s goal of maintaining global temperature increases well below 2 degrees Celsius.

Proponents have filed a similar proposal, with minor variations, at another 15 companies (see table for list) asking each to describe “if, and how it plans to reduce total contribution to climate change and align its operations with the Paris Agreement’s goal of limiting global temperature increases to 1.5 degrees C.”

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Pending—The proposal is pending at Booking Holdings, CarMax, Danaher, Domino’s, Federal Realty, McKesson and United Parcel Service.

Withdrawals and SEC action—As of mid-February, proponents have withdrawn 11 of these proposals, at Albemarle, Amgen, Cleveland-Cliffs, Comcast, Corning, Costco Wholesale, Public Storage, Skyworks Solutions, Sysco, Waters and Wendy’s. Only one, at Skyworks, faced a challenge at the SEC, which noted the proposal arrived past the submission deadline. Agreements include the following:

  • Cleveland-Cliffs plans to cut its Scope 1 and 2 GHG emissions by 25 percent by 2030, compared with 2017 baseline levels.

  • Comcast is discussing benchmarks and targets for climate goals.

  • Costco Wholesale released a new Climate Action Plan that includes an intention to set absolute emissions reduction

    targets and to track and measure its supply chain footprint.

  • Public Storage agreed to consider new goals for its GHG emissions and energy use, to work with the Science-Based Targets Initiative and to continue dialogue.

  • Sysco will issue new climate data, including on its full agricultural supply chain.

  • Wendy’s made new climate change commitments.

Adopting specific goals: The Dutch-based collaborative Follow This has requested reports on how three companies will approach climate change and set emissions goals:

  • McKenzie Ursch, working with Follow This, wants Chevron “to address the risks and opportunities presented by the global transition towards a lower emissions energy system by devising a method to set emissions reduction targets covering the greenhouse gas (GHG) emissions of the company’s operations as well as their energy products (Scope 1, 2, and 3).

  • At ConocoPhillips, the request is for a “report on the strategy and underlying policies for reaching [GHG] targets and on the progress made, at least on an annual basis.” It says in the resolved clause that “Nothing in this resolution shall limit the company’s powers to set and vary their strategy or take any action which they believe in good faith would best contribute to reaching these targets.” Further, “We believe that the company could lead and thrive in the energy transition. We therefore encourage you to set targets that are inspirational for society, employees, shareholders, and the energy sector, allowing the company to meet an increasing demand for energy while reducing GHG emissions to levels consistent with curbing climate change.”

  • At Phillips 66, the proposal is simply “to set and publish emissions reduction targets covering the greenhouse gas (GHG) emissions of the Company’s operations and energy products.”

Separately, Zevin Asset Management proposes that the board at Expeditors International of Washington “oversee the adoption of time-bound, quantitative, company-wide, science-based targets for reducing total greenhouse gas (GHG) emissions, taking into account the goals of the Paris Climate Agreement, subject to board and management discretion, and report...on its plans to achieve these goals.”

Follow This also is asking Chevron and Occidental Petroleum specifically to reduce Scope 3 emissions, seeking “medium- term targets covering the greenhouse gas (GHG) emissions of the Company’s energy products (Scope 3) on their pathway to their long-term target, which is net-zero emissions before 2050,” while attempting to forestall a challenge by saying it does not seek to “micromanage” or undercut company management of the issue. The Scope 3 focus at Chevron is new, although it has received countless emissions proposals in the past. At Occidental, a proposal seeking a report on the company’s analysis of a 2-degree scenario earned notably high support of 67.3 percent in 2017, while another regarding methane emissions earned 45.8 percent the same year—but no proposals have been filed since until now.

SEC actionChevron is contending at the SEC that all four of its climate-related proposals (including one about natural gas and another on transition plans, described below) can be omitted, in a nested set of arguments. It asserts the Ursch proposal duplicates the one from Follow This and another on natural gas, which it received first, and also concerns ordinary business. At the same time, Chevron argues the Follow This proposal is ordinary business since it is too detailed, and also duplicates the natural gas proposal.

For its part, ConocoPhillips has told the SEC the Follow This proposal concerns ordinary business by dint of micromanagement and also has been implemented because of its "publicly disclosed emission targets.” A 2020 Chevron proposal on emissions was omitted for this reason.

Reporting on goals: Five proposals ask for reports on emissions goals, with two variants:

  • All scopes—The California Public Employees’ Retirement System (CalPERS) withdrew a new resolution at ExxonMobil that asked:

In order that investors can better understand and measure the material longterm business risks associated with the low-carbon energy transition, shareowners request that ExxonMobil Corporation provide annual public reporting of the company’s greenhouse gas (GHG) emissions across its full value chain, so as to include scopes 1, 2 and 3 emissions.

At the Board’s discretion, the annual public reporting may be in a stand-alone ExxonMobil report or incorporated into existing reporting....

The withdrawal came after the company publicly reported on its Scope 3 emissions, adding to earlier Scope 1 and 2 disclosures. Exxon argued at the SEC that this report made the proposal moot and CalPERS withdrew before any SEC response.

  • Net-zero—Proponents reference a new net-zero aim set out by the Ceres Climate Action 100+ initiative. The Net Zero Company Benchmark calls on the world’s largest carbon emitters “to work toward reducing greenhouse gas (GHG) emissions to net zero, improving climate governance, and providing specific climate related financial disclosures,” by 2050. Its framework addresses all emission scopes and seeks alignment with a 1.5-degree warming goal, with specific indicators. In addition to GHG goals, the proposal’s supporting statement also asks about “Any climate performance elements incorporated into executive remuneration.”

    As You Sow filed at Caterpillar, General Electric and Twitter, seeking a report from each, with slightly different language, to disclose “the Company’s climate policies, performance, and improvement targets, if any, responsive to each of the indicators set forth in the Net Zero Benchmark, or any rationale for failure to adopt such metrics.”

    Mercy Investments echoed the request at United Airlines but withdrew after the company announced in its Global Citizenship Report that it would cut its emissions to zero by 2050.


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INVESTOR CLIMATE SUPPORT FOR CLIMATE ACTION 100+ NET ZERO BENCHMARK


MORGAN LAMANNA
Senior Manager, Investor Engagements, Ceres

PAUL RISSMAN
Co-founder, Rights CoLab

Climate science is clear on the need to reach net-zero global GHG emissions by mid-century to limit global warming to 1.5°C and to avoid the most devastating impacts of climate change to communities and the natural world. Net-zero commitments matter to investors because they provide a long-term market and policy signal, reduce regulatory uncertainty, create opportunities for innovations, and give investors confidence that they are developing strategies to address climate risk. Climate Action 100+ was initiated in December 2017 to support 161 companies that are systemically important in the transition to net zero emissions by 2050 or sooner. More than 500 investors, responsible for over $52 trillion in assets, are now part of the initiative.


Refrigerants: Another new issue has come up at Walmart. The Rhode Island Treasurer wants the company to report “if and how it plans to limit its impact on climate change by increasing the scale, pace and rigor of its plans to reduce refrigerants released from its operations.” The proposal notes that “hydrofluorocarbons (HFCs), a common class of refrigerants, are super pollutants with global warming potentials (GWP) hundreds to thousands of times greater than CO2. It points out the company saw a 15 percent increase in HFC emissions in 2019, which amounted to about half its total global Scope 1 carbon footprint. It contends Walmart “has a vague intention to “improving the performance of our refrigeration systems” by 2040 but says it could keep up with competitors and do more by:

  • Replacing HFC refrigerants with ultra-low GWP and non-HFC substances,

  • Limiting leakage and ensuring end of life refrigerant recovery by use of good management practices,

  • Increasing refrigeration efficiency,

  • Establishing quantitative refrigeration targets and action plans.

Extreme weather and public health: As You Sow has returned with its proposal seeking more information about the risks petrochemical operations pose to community health if they are located in flood-prone areas that are particularly vulnerable to rising water levels and resulting chemical leaks. A similar version of the proposal first went to a vote in 2019, with a 7 percent result at DuPont but 25 percent at ExxonMobil. It went on in 2020 to earn 54.7 percent at Phillips 66 and 46 percent at Chevron, but the same tally of just under 25 percent at ExxonMobil. This year, As You Sow has withdrawn at new recipient Dow, reporting an agreement.

Petrochemical stranded assets: As You Sow has expanded on its previous petrochemical-focused resolution with Exxon to now ask for a report “describing if and how it is reducing the risk of stranded assets related to environmental impacts of its petrochemical investments.” The company is arguing at the SEC that the proposal is moot and addressed by existing disclosures claiming high growth projections for plastic demand.

Methane and natural gas:

Supply chainAs You Sow has withdrawn a new proposal asking two utilities—Duke Energy and Southern—to provide “annual public reporting of the indirect upstream GHG emissions from its supply chain.” The proposal outlines risk from utilities’ “growing reliance on natural gas” that it says is “a major contributor to climate change due to methane leaks occurring throughout the supply chain.” It reasons that better disclosure will help investors assess risk that are both material and critical to transformation of the electric grid to low-carbon energy. The proposal notes that neither Duke nor Southern currently report on upstream releases that occur during natural gas exploration, production and transportation. As You Sow is continuing its dialogue on the issue and withdrew both proposals as a result.

Flaring—Direct producers of methane are targeted in another new proposal. It asks Hess and PDC Energy if each will “curtail its impact on climate change from routine flaring and venting, beyond existing efforts,” and to report by November. Trinity Health withdrew at PDC Energy after an agreement, but the proposal remains pending at Hess, from the Vermont Treasurer. (At Hess, proposals asking for Paris-compliant GHG reductions were omitted in both 2020 and 2019 on the grounds that they were moot, while a resolution seeking a 2-degree scenario report in 2017 earned 30.1 percent support.)

Liquid natural gas risks—Individual investor Stewart W. Taggart has returned for the third year with detailed proposals expressing concern about a variety of risks caused by climate change, all about liquid natural gas (LNG). He proposed similar resolutions starting in 2019, but just one has gone to a vote so far, earning 28.1 percent last year at Cheniere Energy. This year, Taggart asks Cheniere to prepare a report outlining the business case and premature write down risk for the global Liquid Natural Gas trade under a range of rising carbon price scenarios (say to $30 to $120 by 2030 in 2018 dollars) applied to the life-cycle emissions (production, transport and combustion) of the company’s natural gas assets.

Such a report should include discuss of how carbon pricing, a parallel ‘implicit price’ derived by intergovernmental action or a third method of achieving the 2C scenario (such as shifting to hydrogen exports) under the Paris Accords will affect the longevity of the company’s sunk and planned investments in Liquid Natural Gas infrastructure and the length of its carbon- adjusted economic lifespan.


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Plastic: The New Stranded Asset Risk Facing Big Oil


LILA HOLZMAN
Senior Energy Program Manager, As You Sow

As the oil and gas industry reckons with the clean energy transition, its emerging plans show one last desperate attempt to cling to continued fossil fuel extraction: a theory of growing global demand for petrochemicals, especially plastics. In a world flooded with plastic waste, however, the proposed expansion of plastic production raises red flags for investors and requires enhanced scrutiny.


The report should also include discussion of cost overrun, delayed starting and future technology risks run by Liquid Natural Gas industry compared to competing energy technology (primarily sun and wind, the two most mature, low cost forms of renewable energy).

Taggart also proposes that NextDecade

produce a report at reasonable expense and without revealing propriety information discussing price, amortization, technology and climate change risk from rising carbon prices, advancing renewable energy technology and potential rising seas in coastal areas such as Brownsville where it plans LNG plants.

In addition, he wants Chevron to

report on the Scope Three emissions from Chevron’s Liquid Natural Gas operations and how the company plans to offset, pay carbon taxes on or eliminate via technology these emissions to meet post-2050 Paris Accord carbon emission reduction goals to which Chevron is publicly committed and fellow oil major British Petroleum has pledged to meet.

Finally, at Sempra, he poses a series of questions:

Sempra shall confirm whether or not It supports the goals of the Pans Climate Accord. If yes, Sempra shall outline how it intends to meet the objectives of the accord given Sempra’s existing investments in Liquid Natural Gas. It should specifically discuss the potential for hydrogen production from renewable energy as a future use for legacy Liquid Natural Gas infrastructure at risk in future years from emissions constraints, carbon pricing and technological dislocation from (among others) wind and solar. If no, Sempra shall discuss how It plans to handle long-term Environmental-Social-Governance divestment risk (should Sempra believe it exists) from continued exposure to the Liquid Natural Gas trade given LNG’s Scope Three emissions of around 66 tonne per megawatt-hour equivalent (according to the US Department of Energy, Bloomberg New Energy, the Union of Concerned Scientists, and others.

SEC action—All of the Taggart proposals have been challenged. Chevron says a forthcoming report will make it moot, Cheniere says he failed to prove his stock ownership and that the proposal impermissibly consists of multiple proposals, and Next Decade and Sempra also both say he did not prove stock ownership.

Arctic drilling: Proponents have addressed development of oil and gas in the Alaskan arctic from two directions this year, but have withdrawn. Trillium Asset Management asked Bank of America to report “describing if and how” it “plans to respond to rising reputational risks for the company related to involvement in Arctic oil and gas exploration and production,” but then withdrew when the bank said it will not finance such development. Chevron, the other recipient, took the opposite approach in response to a resolution from Green Century. The proposal asked for a public report “assessing the benefits and drawbacks of committing to not engage in oil and gas exploration and production in the Arctic, particularly in the Arctic Refuge, as well as the financial and reputational risks to the company associated with such development.” Green Century withdrew after a procedural challenge.

Climate Transition Planning and Investor Feedback

As it becomes abundantly clear that our planet and the worldwide economy faces substantial disruptions from climate change, shareholder proponents have been asking ever more pointed questions to companies about how they will adapt. The 2021 proxy season has several new variants on this idea. The big new idea is to have investors weigh in annually in routine votes about company plans, in a “say on climate” approach. Also new is that these plans should undergo a formal audit to ensure the assumptions and data they present are accurate. As of mid-February nine proposals were pending, although five face SEC challenges.

Transition report: As You Sow and Hermes Investment Management are asking three companies to issue climate transition plans.

The Hermes proposal is much longer. It says:

In order to promote the long-term success of Berkshire Hathaway...and so investors can understand and manage risk more effectively, shareowners request that the board of the Company publish an annual assessment addressing how the Company manages physical and transitional climate-related risks and opportunities, commencing prior to its 2022 annual shareholders’ meeting. At the board’s discretion, shareholders recommend that the report also includes:

  • Summaries of risks and opportunities for each of the Company’s subsidiaries and investee organizations that the board believes could be materially impacted by, or significantly contributing to, climate change;

  • An explanation of how the board oversees and manages climate-related risks and opportunities; and,

  • An examination of the feasibility of the Company establishing science-based, greenhouse gas (GHG) reduction targets, consistent with limiting climate change to well-below 2C.

The disclosure ought to include the details of any scenarios used, along with any material assumptions for determining physical and transitional risks for the Company’s subsidiaries and investee organizations which are deemed by the Company to be materially impacted by climate change and the energy transition. The assessment may be a stand-alone report or incorporated into existing reporting, and may cover topics such as governance, strategy, risk management, and metrics & targets. The assessment should be prepared at reasonable cost and omit proprietary information.


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SAY ON CLIMATE: NET-ZERO WITH ANNUAL SHAREHOLDER VOTES – A GLOBAL MOVEMENT

SIR CHRIS HOHN
Founder, Children’s Investment Fund Foundation

ANDREW BEHAR
CEO, As You Sow

Carbon emissions resulting in climate change pose increasingly growing material risks to society and corporations. These impacts will reach into every supply chain, capital market, and customer base. A recent study found that more than eight million people died prematurely in 2018 from fossil fuel air pollution. To address these risks and shareholder concerns, companies should establish accredited science-based greenhouse gas reduction targets that adhere to the Paris Agreement and limit global warming to 1.5° Celsius from pre-industrial levels.


At both Booking Holdings and Union Pacific, As You Sow wants the board to “issue a climate transition report, at least 120 days prior to the next annual meeting, and updated annually, that addresses the scale and pace of its responsive measures associated with climate change.”

SEC action—Union Pacific is arguing at the SEC that As You Sow failed to prove stock ownership.

Annual advisory vote: Four proposals (one of them a rare binding bylaw amendment) ask for annual votes by investors. At Booking Holding and Union Pacific, As You Sow asks each to

provide shareholders with the opportunity, in the annual proxy statement (starting with 2022), to provide an advisory vote on whether, in consideration of global climate benchmarks, they approve or disapprove of the Company’s publicly available climate policies and strategies.

At Monster Beverage, the proposal is to:

Amend Article I of the Bylaws by adding the following section:

Section 16. Annual Proxy Vote and Report on Climate Change. The annual corporate proxy statement shall include a proposal requesting an advisory vote by shareholders expressing non-binding advisory approval or disapproval of the Company’s publicly available climate policies and strategies, in consideration of key climate benchmarks.

The Board of Directors is authorized to include in the Company’s annual proxy statement, or publish elsewhere, a report that characterizes the scale and pace of its responsive measures associated with climate change, including referring, at Board discretion, to the Company’s alignment with climate-related benchmarks.

Nothing in this section shall be construed as constraining the discretion of the board or management in disclosing or managing issues related to a climate change transition.


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CLIMATE CHANGE: FOLLOW THE MONEY


DANIELLE FUGERE
President, As You Sow

The Shareholder Rights Group includes leading shareholder proponents working to defend SEC Rule 14a-8. After the SEC issued its proposed rule on November 5, 2019, we examined how it would have affected recent proposals and engagements at companies with high profile corporate responsibility challenges: Boeing, Wells Fargo and Chevron.


A second proposal at Union Pacific from The Children’s Investment (TCI) Fund references guidance issues by the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD). The proposal asks that the board:

disclose at each annual meeting of shareholders, as soon as reasonably practicable but no later than 60 days after this annual meeting, and thereafter no later than the date the Company disseminates its proxy statement in connection with each subsequent annual meeting, a report disclosing the Company’s greenhouse gas emission levels (the "Emissions") in a manner consistent with the Task Force on Climate-related Financial Disclosure recommendations as well as any strategy that the Company may have adopted or will adopt to reduce the Emissions in the future, including any Emissions’ progress made year over year (the "Reduction Plan"), and provide shareholders with the opportunity, at each such annual meeting (starting at the next annual meeting), to express non-binding advisory approval or disapproval of the Reduction Plan.

SEC action—Union Pacific has challenged both proposals at the SEC. It argues that As You Sow failed to provide sufficient proof of stock ownership (as with the other proposal noted above), that the resolution impermissibly consists of two proposals and that it duplicates TCI. Regarding the TCI proposal, the company also says it impermissibly consists of more than one request.

Audited plans: Christian Brothers Investment Services (CBIS) is joining As You Sow in filing a new request at Chevron and ExxonMobil about formally audited climate plans. The proposal asks for

an audited report to shareholders on whether and how a significant reduction in fossil fuel demand, envisioned in the [Internal Energy Agency] Net Zero 2050 scenario, would affect its financial position and underlying assumptions. The Board should summarize its findings to shareholders by January 31, 2022...

Both companies are arguing at the SEC that the proposal is false and misleading and moot given current disclosures. Chevron also contends that the proposal duplicates other climate resolutions it received first (described above).

High Carbon Finance

As investors look at ways to persuade companies to reduce their emissions, they have increasingly tried to get financial institutions not to underwrite projects that have high carbon footprints. Boston Common Asset Management (BCAM) first filed these proposals in 2013 to cut off funding for mountain-top removal mining; they earned in the mid-20 percent range, as did a broader proposal from the Sisters of the Holy Names the next year, at Bank of America. Proposals next sought specific limits on high carbon financing in 2017 and 2019, but these were omitted on ordinary business grounds, when the SEC agreed they were “micromanagement.” In 2020, this argument did not sway the SEC when the proposal was more general; it sought a report from JPMorgan Chase and earned 49.2 percent, just shy of a majority; the proponents withdrew after agreements last year at Goldman Sachs and JPMorgan Chase. This year, As You Sow has returned, asking Bank of America, Citigroup and Goldman Sachs each to

issue a report, at reasonable cost and omitting proprietary information, outlining if and how it intends to reduce the GHG emissions associated with its financing activities in alignment with the Paris Agreement’s 1.5 degree goal, requiring net zero emissions.

At JPMorgan Chase, the resolution asks for a report that will address “whether, when, and how” the bank “will measure and disclose the greenhouse gas footprint of its financing activities.”

SEC action and withdrawal: JPMorgan Chase and Wells Fargo both are arguing at the SEC that the resolution is moot given company reporting. But Bank of America announced on February 11 that it has set a net-zero GHG goal to be achieved by 2050, and As You Sow withdrew. As You Sow withdrew before the SEC responded to Chase, which said its disclosures and plans for a report in spring 2021 make the proposal moot. As You Sow reports the bank will provide “more clarity and details on how it measures its financed emissions.”

Clean Energy and Electrification

Proposals about clean energy have largely dried up. Nearly all of these proposals have been withdrawn in the last few years since companies have agreed that making their operations more energy efficient makes economic sense, and that renewable energy presents attractive options from many perspectives.


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CLEAN ENERGY ADVOCACY IS KEY TO NY STATE INVESTMENT STRATEGY


THOMAS P. DINAPOLI
New York State Comptroller, Trustee of the New York State Common Retirement Fund

In 2020, the New York State Common Retirement Fund (Fund), announced a goal of achieving net-zero greenhouse gas (GHG) emissions for the Fund’s portfolio by 2040. The goal builds on the Fund’s Climate Action Plan 2019. A key component of this initiative is a four year review of investments in energy sector companies, using minimum standards to assess transition readiness and climate-related investment risk, and, where consistent with fiduciary duty, potential divestment of companies that fail to meet minimum standards.


Goals: New York State Common Retirement Fund (NYSCRF) is asking three companies this year to report on their goals, asking each “if, and how” it

plans to reduce its total contribution to climate change. In the report, shareholders seek information on--among other things, at board and management discretion--the relative benefits and drawbacks of adopting quantitative and company-wide goals for increasing the Company’s use of renewable energy and energy efficiency (together, "clean energy"). The report should be issued within one year of the 2021 annual general meeting...

The resolution is pending at Advance Auto Parts and Realty Income but NYSCRF withdrew after an agreement at Pentair, as Green Century did with the same proposal at Duke Realty.

Electrification and the energy transition: As You Sow has a new proposal this year asking Dominion Energy and DTE Energy to report

exploring options as to whether and how the Company could reduce its total contribution to climate change by encouraging electrification of the built environment within the company’s service areas as part of a Company transition toward enterprise-wide alignment with the Paris Climate Agreement.

The heavily footnoted proposal explains that natural gas use for heating and cooling buildings, and for cooking, “is a primary reason commercial and residential buildings account for 12.3% of greenhouse gas (GHG) emissions nationwide.” It says electrifying heating and cooking can help move us away from fossil fuels, and asserts that gas distribution networks used by the utilities present related transition challenges and opportunities. The proposal therefore seeks information about “the relative benefits and drawbacks” of:

  • Providing expertise and financial support or incentives for commercial and residential electrification efforts;

  • Supporting public policies that encourage new building construction to utilize electricity rather than gas for heating and cooking, and to transition buildings currently served by gas;

  • Setting time bound targets related to the actions above.

The proposal is still pending at DTE but As You Sow withdrew after a Dominion commitment; the company also had argued at the SEC that the proposal was ordinary business and moot given current disclosures. The SEC agreed a 2020 proposal about stranded carbon assets could be omitted for that reason. Dominion has had many proposals about reducing its carbon footprint, but many also have been omitted; the last to go to a vote was a request from NYSCRF for a 2-degree scenario analysis in 2017; it received 47.8 percent support.


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BUILDING SECTOR ELECTRIFICATION: TAKING FOSSIL FUELS OUT OF OUR HOMES


DANIEL STEWART
Senior Research Associate, As You Sow

Power utilities are now taking more ambitious strides on decarbonizing their electric generation business through setting mid-century net-zero GHG emissions targets and implementing major rollouts of solar and wind resources. But the net-zero proclamations for electric generation only cover part of many utilities’ total emissions.


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Forests

At Bloomin’ Brands, owner of Outback Steakhouse and other restaurant brands, Green Century wants a report “outlining if and how it could increase the scale, pace, and rigor of its efforts to reduce its total contribution to climate change, including emissions from its supply chain.” It points out that the company’s 1,450 restaurants in 21 countries have commodity supply chains with “high carbon footprints, including palm oil, soy, beef, and pulp/paper, which are leading drivers of deforestation globally.” This contributes to climate change and presents “significant risks to restaurant businesses and their supply chains given growing agricultural commodity price volatility. The company’s goals are too modest, Green Century asserts, outstripped by competitors such as Chipotle, McDonald’s and Yum! Brands. A similar proposal asking for the same report about “deforestation and land use change” earned 26.4 percent in 2020. Green Century filed but withdrew the proposal at Costco Wholesale.

At Bunge, the proposal is fairly specific, seeking a report on “if and how it could increase the scale, pace, and rigor of its efforts to eliminate native vegetation conversion in its soy supply chain.” Earlier, a proposal seeking more information about deforestation and human rights at the company received 29.3 percent in 2015.

Green Century has a new proposal at JPMorgan Chase, seeking a report, “outlining if and how it could improve efforts to reduce negative impacts and enhance positive impacts on natural ecosystems and biodiversity across its banking and investment portfolios.” The proposal points out the link between ending deforestation and meeting the Paris climate treaty goals, and the company’s membership in the voluntary Soft Commodities Compact that aims to “achieve zero net deforestation by 2050 through its financing of forest-risk commodities.” But the proposal contends the bank compares unfavorably with peers, pointing to “attention” from lawmakers and civil society groups. It suggests the report include:

  • The forest, ecological, and biodiversity footprints of its financial activities

  • Any actions Chase could take to strengthen policies and set targets to reduce the forest and biodiversity impacts of its financial activities, and on what timeline

  • Whether Chase would endorse the Finance for Biodiversity Pledge


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INVESTORS LINK DEFORESTATION AND CLIMATE RISK


JESSYE WAXMAN
Shareholder Advocate, Green Century Capital Management

Deforestation is a climate risk. While conversations about the climate crisis often focus on fossil fuels, investors cannot overlook the risks posed by deforestation and native vegetation conversion in corporate supply chains. To address the climate crisis, biodiversity loss, and the risks they pose, corporations and investors must protect tropical and boreal forests, peatlands, grasslands, and other native vegetation.