After setting a new high-water mark in 2009 in terms of US shareholder proposals (more than five dozen) and support (one majority vote and three others exceeding 40% of the votes cast), proponents of climate change resolutions are gearing up for an even bigger 2010 proxy season. Close to 100 proposals, spanning more than a dozen sectors are planned. As in prior years, fossil-fuel industries are heavily targeted – large integrated oil accounts for 15 resolutions alone, for example – but this year also sees the continuation of a recent trend to broaden the loosely-knit campaign, coordinated by Boston-based sustainability NGO Ceres, into other ‘less’ carbon-intensive sectors. For example, there are crafted resolutions targeting the food industry and its supply links to palm oil, and the greenhouse gas emissions of the rail industry. Resolutions requesting sustainability reports with an emphasis on GHG reporting have also been filed at S&P 500 businesses ranging from online travel booking, semiconductors, to jam-making. In addition, the energy efficiency of buildings, an issue which has gained traction with both investors and policy-makers over the past several years, and one of the first areas targeted by proponents outside of the traditional fossil-fuel focus, is now a clear thrust of the campaign, with homebuilders, REITs, hotels and large retailers accounting for around two-dozen resolutions.
At the same time, this year sees a widening of the issues or ‘asks’ being pushed. The costly and widely-reported coal ash spill at a power plant in Kingston, Tennessee in 2008 has prompted new resolutions targeting coal ash — a nasty byproduct of coal combustion that can contain toxic chemicals, such as arsenic. Proponents have also re-approached Wall Street banks on the coal-issue — specifically the funding of new coal-fired generation and mountain top removal – having initially raised the issue with some success in 2008. Meanwhile, a new proposal, filed at a handful of prominent companies, broaches the issuers’ public policy stance towards climate change. However, the most significant development in the resolved clause is, perhaps, the inclusion of the phrase “financial risk” in a number of resolutions. Although getting at fundamental business risk has been the chief aim of proponents, past resolutions had to be carefully crafted around the SEC’s position that proposals enquiring into the business risks raised by environmental issues encroached on ‘ordinary business’ and could thus be omitted by corporate issuers. The policy, dating back to 2005, was reversed in an SEC Staff Legal Bulletin issued last October.
More good news for climate-concerned investors came from the SEC late last month, when the agency issued new interpretative guidance for corporate disclosure of material climate risks and opportunities. The guidance provides direction on how material risks surrounding climate change should be discussed in financial filings. The decision, which split SEC commissioners along party lines, follows repeated requests for full disclosure from institutional investors representing more than a $1 trillion in assets. Broc Romanek, editor of the TheCorporateCounsel.net. blog, has assembled extensive resources for boards and investors relating to the guidance at TacklingGlobalWarming.com
For more information please contact Allie Monaco at PROXY Governance Inc