Shareholder Environmental Resolutions Hit Record

Shareholders filed 66 climate and energy resolutions with 41 coal, electric and oil companies in the 2011 proxy season, making it the busiest yet for such resolutions in the sector, according to environmental and investment coalition Ceres.

Climate and energy-related resolutions surged 50 percent over the 44 filed with 31 coal, oil and electric power companies last year, according to Ceres, which helped coordinate the filings. Resolutions were filed with Dominion, Dynergy, Southern and Xcel, among other companies (see list, at bottom). Resolutions were also filed with Massey Energy, the owner of the West Virginia mine blast that killed 29 people last year.

And another 30 such resolutions have been filed so far with companies in other sectors, such as building, real estate, financial services and food firms. These companies include Amazon, Avon, CB Richard Ellis, Dr. Pepper Snapple, DR Horton, Hershey, MGM Resorts, Nordstrom, SunTrust Banks and Time Warner.

The resolutions press companies on a wide range of issues, including the risks and opportunities from oil sands extraction in Canada, hydraulic fracturing in the U.S., global water scarcity, sustainable palm oil sourcing, overall greenhouse gas (GHG) emissions and usage of renewable energy. Investors have also filed 11 resolutions requesting that executive compensation be directly linked to sustainability metrics.

The resolutions were filed by some of the nation’s largest public pension funds, foundations and religious, labor and other institutional investors, Ceres said. Many of the investors are members of Ceres’ Investor Network on Climate Risk (INCR), which has more than 90 members managing over $9 trillion in assets.

Of the 96 resolutions filed thus far, investors have successfully negotiated 12 withdrawals after the companies made specific commitments in response to the resolutions, Ceres said. For example, in response to Varian Medical Systems’ commitment to develop Global Reporting Initiative (GRI)–based reporting and assign board oversight of sustainability issues, Walden Asset Management withdrew its resolution. The Teamsters withdrew a resolution with Covanta Energy after the company issued its first GRI-based sustainability report.

“Challenges facing the energy sector are greater and more complex than ever,” said Mindy S. Lubber, director of the Investor Network on Climate Risk (INCR) and president of Ceres, which helps to coordinate the filings. ”Investors are concerned that companies are placing too much emphasis on higher-risk, carbon-intensive strategies and too little focus on viable clean energy opportunities, such as renewable energy, energy efficiency and cleaner fuels.”

A complete list of resolutions with company names, petitioner names, date and subject matter is available here.

Consulting group Mercer this week released a report finding that climate change could increase portfolio risk by ten percent over the next 20 years, but also creates enormous opportunities for investments in low carbon technologies.

And a report this week by Deutsche Bank Climate Change Advisors (DBCCA) found that more and more institutional investors are realizing the potentially profound impact that climate change may have on their portfolios.

The report, DBCCA’s fourth annual review of the climate change investment market, points out that 2010 was the largest year on record for investment in clean energy, with $243 invested, according to Bloomberg New Energy Finance, and the investment opportunity steadily continues to improve.

DBCAA notes the growth of assets governed by the Carbon Disclosure Project (CDP), from $4.5 trillion in 2002 to $64 trillion in 2010 (see chart).

But markets and incentives for climate change industries can be volatile, Deutsche Bank said, so investors must understand and actively manage the asset-specific risks.