Utility Companies Respond to Shareholder Proposals Seeking Commitments on Scope 3 Emissions
CMS Energy was the latest utility company to expand its net-zero greenhouse gas (GHG) emission commitment to include the company’s natural gas production and delivery system — covering customers and suppliers — by 2050. This announcement was made in response to a shareholder proposal filed by the Sisters of the Presentation of the Blessed Virgin Mary of Aberdeen, South Dakota (PBVM).
CMS set a 2030 interim target to reduce emissions from the burning of natural gas by customers by 20%. The company had previously committed to modernizing its gas distribution system to achieve net-zero methane emissions from its operations by 2030. This target has now been expanded to include Scope 3 emissions caused by suppliers during natural gas production and transport, which are significant.
Energy utilities have a critical role to play in achieving the Paris Agreement’s goal of limiting global temperature rise to 1.5 degrees Celsius. However, early net-zero targets that addressed only Scope 1 emissions from electricity generation missed a significant portion of utilities’ climate impact. Scope 3 emissions from natural gas suppliers and customers’ burning of the fuel account for as much as 50% of a utility’s full value chain emissions.
“The Sisters have been part of the engagement with CMS for several years now,” said Sister Pegge Boehm, PBVM. “We are delighted to hear that the company has responded to our request to include Scope 3 emissions in its net-zero commitment, just another of many steps it has taken to create a more livable future for generations to come.”
A similar proposal was filed by the Sinsinawa Dominicans Sisters with MGE Energy which committed to analyzing its Scope 3 emissions to inform future goal-setting related to its natural gas distribution. A third proposal from the School Sisters of Notre Dame was discussed with WEC Energy, leading to its commitment to set a Scope 3 target to address upstream and downstream GHG emissions and alignment with the goals of the Paris Agreement goals. These engagements were coordinated by Seventh Generation Interfaith (SGI) a member of the Interfaith Center on Corporate Responsibility (ICCR).
The momentum on this issue is striking. Similar proposals filed by ICCR member As You Sow with Duke Energy and Dominion Energy were withdrawn after the companies committed to expanding their net-zero 2050 targets to include all material Scope 3 emissions.
“Investors applaud this leadership in expanding net-zero targets to fully account for material Scope 3 emissions,” said Daniel Stewart, Energy Program Manager of As You Sow. “Not doing so will lead to ill-informed strategic investment decisions and risk mismanagement that can result in stranded assets or lock-in large sources of emissions for decades to come – we expect peers to follow Duke and Dominion’s ambition.”
According to the EPA, over 60 percent of homes use gas or other fossil fuels for heating, accounting for 13 percent of total U.S. GHG emissions. The IEA net-zero scenario calls for a 95 percent reduction of emissions from the buildings sector.
Cities and states are starting to mandate transition to all-electric buildings, posing both a risk to gas distribution businesses and an opportunity for electricity demand growth. Proposed federal legislation includes investment tax credits for geothermal and heat pumps and rebates for high-efficiency electric homes.
“The recent IPCC report confirmed that carbon emissions are still rising and countries are off track in delivering their climate pledges,” said Frank Sherman, Executive Director of SGI. “These voluntary company commitments are very important, but robust climate policy will be critical for the U.S. to meet its 2030 GHG emission reduction target.”
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn, and Facebook.