Climate Change: Investor Angles Heating Up

January 17, 2007

 Business/finance stories are spilling over onto the environment beat, and vice versa, as the potential impacts of climate change become more tangible and costly. Right now is a good time to start watching these "crossover" stories:

SHAREHOLDER RESOLUTIONS

So far this year investors in several US publicly traded companies have filed dozens of shareholder resolutions related to climate change. This is the peak time of year for filing shareholder resolutions, because most major companies hold their annual meetings between March and May. Electric utilities with plans to build new coal-fired power plants, such as TXU, are a current focus of this activity.

Ceres, an advocacy group that focuses on cooperation between investors and environmentalists, has compiled a list of 43 such resolutions,with contact information for each. You can follow up on these via the filing shareholder, and often also via the company's investor relations site and staff. It is currently a TipSheet exclusive, since CERES hasn't posted it yet.

  • Ceres press: Peyton Fleming, 617-247-0700 x20. Ceres can also connect reporters with investors and companies around the country that are engaged with this issue but may not have specific resolutions filed this year. Check with them to see who's involved from your state or region.
  • See Ceres March 2006 report on corporate governance and climate change, which analyzes the activities of 100 major companies. Full report. Summary.

The winter 2007 issue of the Natural Resources Defense Council magazine OnEarth includes an excellent overview by Laura Wright about how shareholder resolutions work.

These resolutions are non-binding that is, companies are not required to act upon them. But if they're successful, companies take action such as supplying information, changing policies or strategies, or putting them on the ballot at the company's annual meeting. If you're reporting on shareholder resolutions, attending the company's annual meeting can be intriguing and educational, as well as fun.

Shareholder resolutions can be filed by any investor who holds at least $2,000 market value or 1% of the company's voting shares. In the case of climate change resolutions, it's notable that many have been filed by institutional investors such as pension funds or university endowments. Such major investors have sufficient clout to get companies to respond.

  • Council of Institutional Investors: 202-822-0800.
  • Investor Network on Climate Risk (INCR): A sister organization of Ceres, launched as part of the UN's 2005 Institutional Summit on Climate Risk. Includes more than 50 institutional investors that collectively manage over $3 trillion in assets. Contact page.
  • Several state treasurers (especially in NC, CA, KY, and VT) are getting more involved in using their investing clout to influence companies on emissions-related matters. Many of these treasurers also are part of the Ceres investor network. Natl. Association of State Treasurers.

SUSTAINABILITY REPORTING

Many public companies now provide annual environmental or sustainability reports which disclose emissions and other key information related to climate change and other environmental concerns. Many of these can be found through this portal.

What's good information and what's greenwashing in these reports? That's not always easy to tell, but at least these reports generally give specific numbers and actions that reporters can follow up on and dig into. If you find some information confusing or contradictory, talk to your colleagues in the business section, or to local university professors who teach investment, finance, and corporate governance. Having knowledgeable business/finance mentors can help you spot the best stories and get past hype.

Ceres holds an annual sustainability reporting awards program, highlighting the best models for these reports. Past award winners.

For some of the best coverage of investor-related climate change issues, watch for Jeffrey Ball's byline in the Wall Street Journal.

Wall St. analyst reports can be a valuable source of information about how a company's greenhouse gas emission performance can affect its stock performance. These high-priced reports can be hard to get lists of them aren't available to the general public, and Wall St. firms are generally shy about giving reports (or even naming them) to reporters. But you may be able to acquire them by building relationships with institutional investors and other key shareholders. A good place to start when looking for analyst reports is to find such reports on the electric power industry. Also you might see some of these reports cited in the WSJ, Investors Business Daily, or high-level energy industry publications such as from Platts.com