Climate Change

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The Trump administration continues to roll back environmental regulations and previous commitments to address climate change. Policy casualties include U.S. commitments made in the UN Paris climate treaty and the Obama Administration’s Clean Power Plan, the treaty’s main expression in domestic U.S. policy. The administration is pursuing more oil and gas development around the country, trying to undermine previous priorities that aimed to boost clean energy development. Yet the realities of extreme weather and associated political and economic disruption, as well as disruptions in far-flung global supply chains, are not affected by who sits in the White House. The chasm between the currently dominant views of Congressional leaders and the concerns by many on Wall Street about climate change impacts has never been more apparent. It was clearly on display in spring 2017 when the four of the largest mutual funds, including the $5.7 trillion fund BlackRock and the $4 trillion fund Vanguard, lent their support to two shareholder resolutions seeking more climate disclosure at some of the world’s biggest energy companies and produced unprecedented, healthy majority votes. Many large institutional investors are firmly convinced companies and governments must take urgent action to address climate risks and opportunities; they continue to evaluate their portfolio companies’ performance on these metrics, and to demand that their investment managers do the same. Shareholder resolutions in 2018 will continue to be affected by these dynamics, which lend urgency to longstanding interaction between proponents and their companies.

Proponents are focused mainly on carbon asset risks, looking for more oversight, management and disclosure of stratgy—with 27 resoutions. They have filed 27 more about greenhouse gas emissions management, with almost all asking companies to set goals. Fifteen are seeking clean energy solutions, mostly goals for using more renewable energy sources but also attending to energy efficiency. Unconventional fossil fuel energy production and its associated methane releases are the subject of 11 more proposals. The slate is rounded out by three about deforestation. (See pie chart, right.)

The Ceres coalition coordinates nearly all these proposals, working with its Investor Network on Climate Risk (INCR) and a broad coalition of institutional investors, including many members of the Interfaith Center on Corporate Responsibility (ICCR) and some individuals. Undergirding many of the resolutions, and the strategic concern of long term investors, is the sense that regulatory regimes that favor lower-carbon fuel sources will leave stranded carbon assets that account for a large part of the market value claimed on the balance sheets of oil, gas and coal companies. Proponents also contend that utilities dependent in large part on fossil-fuel powered electricity will be caught short if they do not aggressively manage a transition to lower carbon-intensive power generation.

Mounting concern over climate risk by large institutional investors has also led to new shareholder campaigns that are focused on those companies with the most significant climate impacts. Climate Action 100+ is comprised of 256 global investors with $28 trillion in assets under management that are engaging one hundred companies responsible for about 85 percent of total climate greenhouse gas (GHG) emissions. The 50/50 Climate Project works with the largest pension funds and endowments to build climate competent boards at the 50 publicly traded companies with the largest carbon footprint.

Advocacy Position: $30 Trillion Shareholder Initiative Partnering With Biggest Greenhouse Gas Emitters

(Sections on Environmental Management and Sustainable Governance, contain information on proposals about topics that touch on both climate change and additional environmental and social matters.)