Investors lead push for more action on climate change

Apr 7th 2014

Motivated by mounting scientific evidence that human activity is a leading cause of climate change, major institutional investors are pushing for stronger action by companies in climate-related shareholder resolutions in the 2014 proxy season.

The 35 institutional investors are led by Walden Asset Management, the New York State comptroller's office, the California State teachers' retirement system, Calvert Investments, the Connecticut Treasurer's Office, Trillium Asset Management, Mercy Investments and Green Century capital management.

They have filed 142 resolutions in a coordinated effort to spur action by 118 companies - including Chevron, ConocoPhillips, Kinder Morgan, Lowes and several electric utilities - on a wide range of climate-related issues such as greenhouse gas (GHG) emissions, energy efficiency and sustainable palm oil.

"The combined package of 2014 resolutions demonstrates a common urgency that investors and companies alike need to 'raise the bar' and expand our actions to address climate change," said Timothy Smith, senior vice president and director of Environmental Social and Governance Shareholder Engagement at Boston-based Walden Asset Management.

"The range of resolutions shows how investors are broadening their outreach to more companies and deepening their message to other companies on difficult climate issues such as lobbying on climate by fossil fuel companies."

This year's record number of climate-related resolutions demonstrates that investors are paying more attention than ever to risks and opportunities that climate change and environmental issues pose to companies in their portfolios. The investors - many of which are members of the Investor Network on Climate Risk, coordinated by the sustainability advocacy group Ceres, and members of the Interfaith Centre on Corporate Responsibility (ICCR) - ask for specific action from companies such as adopting and achieving company-wide goals for reducing GHG emissions from operations.

"Investors are not standing still as the climate crisis worsens. These wide-ranging resolutions reflect a deepening concern that stronger actions from companies are needed," said Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk, which helped coordinate the filing of the resolutions.

Recent analysis shows that many US businesses, including numerous Standard & Poor's 500 index firms, have reported a higher rate of return on investments in carbon-reduction technologies than on overall corporate capital investments.

Meanwhile, a shareholder resolution filed by Mercy Investments at BorgWarner prompted an enterprise-wide commitment to assess not only GHG emissions, but also other waste streams from manufacturing, such as water waste. After dialogue with Calvert and Mercy Investments, PACCAR - one of the world's largest manufacturers of medium and heavy-duty trucks - agreed to improve its reporting on climate change and the steps the company is taking to minimise its impacts.

Green Century also coordinated 40 investors representing $270 billion assets under management to successfully lobby the world's largest palm oil trader, Wilmar, to adopt a zero deforestation policy- a move estimated to save the 1.5 gigatons of CO2 by 2020, the equivalent of annual CO2 emissions from all of Central and South America. Investors have filed with a number of other companies calling for sustainable sourcing of palm oil, including Panera Bread and Safeway. As one of the world's largest food processing companies, Kellogg's commitment is a critical development.

"Kellogg's commitment to only purchase palm oil from responsible sources positions it as a company working to curb climate change instead of one accelerating it," said Leslie Samuelrich, president of Green Century Capital Management.

Kellogg's commitment is just the latest example of shareholder impact. In 2013, Ceres worked with INCR member Mercy Investments to file a resolution with Continental Resources, the largest company operating in North Dakota's Bakken region, to save energy and curb carbon pollution by reducing flaring. Three months later, the company set an aggressive goal to reduce flaring, setting an important precedent for shale energy production across the US. On January 29, 2014, the entire industry in North Dakota pledged to significantly reduce flaring while advocating for stricter regulations moving forward.