Shareholder activists focused on climate issues are gaining traction in their push to have large energy companies and utilities take account of the impact rising global temperatures could have on their businesses.
Proponents ranging from giant New York and California state pension funds to Wespath Investment Management of Illinois scored a number of victories this month.
Those include a resolution at electricity company PPL Corp approved by 57% of votes cast calling for the company to publicly report how it could be affected by policies and technologies aimed at limiting global warning. The PPL result comes on the heels of a vote at oil company Occidental Petroleum Corp on a similar resolution, backed by two-thirds of votes cast.
Also, top proxy advisers recommended votes in favor of a third such resolution set for Exxon Mobil Corp’s annual meeting on May 31.
Activists say the developments suggest they are at an inflection point after years of seeking support from big institutional investors like BlackRock Inc. The giant New York asset manager switched sides in this year’s vote at Occidental, citing concerns about the company’s pace of disclosures to date.
The reports the activists have sought through the advisory shareholder resolutions are sometimes known as “2 degree scenario analysis” reports after the goal of the 2015 Paris climate accord to limit global temperature increases to 2 degrees Celsius (3.6 degrees Fahrenheit) from preindustrial levels by phasing out fossil fuels.
The limits could hit companies’ bottom lines such as by reducing the revenue they can expect from extracting fossil fuel reserves. Activists hope that having the companies lay out plans for dealing with future regulatory, technology and market changes will smooth their transition to cleaner energy.
Edward Kamonjoh, executive director of the 50/50 Climate Project in Washington, which supports the resolutions, said actions by U.S. President Donald Trump like the dismantling of Obama-era climate policies may have moved big investors to take on a more active role.
While Trump has not so far followed through on a campaign promise to take the United States out of the Paris deal, investors cannot count on strong environmental regulations in the future, he said.
“Investors who feel that climate is a risk now realize they just have themselves to manage this risk in the next few years,” Kamonjoh said.
Source: Business Insider