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climate change action fends off US activists

May 2005

Shareholder activists in the US have agreed to drop climate change resolutions tabled at five oil and gas businesses now that the companies have announced new measures on the issue.

In a sign that SRI investors are finding back-room negotiation more fruitful than public confrontation, resolutions tabled for the annual meetings of Anadarko Petroleum, Apache, ChevronTexaco, Tesoro and Unocal were withdrawn after ‘extensive negotiations’ between company managements and shareholder groups.

The companies have said they will set greenhouse gas emission reduction targets, increase investments in low-carbon and no-carbon energy technologies, integrate climate risk into their core business, and give their boards direct responsibility for overseeing climate change corporate strategies.

The Coalition for Environmentally Responsible Economies (Ceres), which led the shareholder actions, said all five businesses had taken ‘far-reaching actions’ by beginning to disclose their climate change risks and to develop methods of reducing greenhouse emissions and using renewable energy.

‘Most of the oil and gas companies are taking climate change much more seriously than just a year ago,’ said Mindy Lubber, the Ceres president. ‘These disclosure commitments are only a beginning, but there’s a much broader recognition from companies that climate change is a serious issue with financial consequences for investors if it isn’t well managed.’

Plans to raise climate change at Marathon Oil’s annual meeting this year were also dropped because the company made similar pledges before resolutions could be filed.

Two of the five – Anadarko Petroleum and Apache – were subject to similar shareholder resolutions in 2004. A resolution on climate change received 37 per cent support at Apache.

The investor groups include Boston Common Asset Management, Christian Brothers Investment Services, Trillium Asset Management and the United Methodist Church’s General Board of Pension and Health Benefits.

The perceptions of both SRI investors and company managements with regard to shareholder resolutions on social and environmental issues are analyzed in a forthcoming research paper by Franck Amalric of the Center for Corporate Responsibility and Sustainability at the University of Zurich. Of 116 resolutions submitted by US investors during last year’s proxy season calling on management to publish sustainability reports or develop corporate social responsibility (as opposed to governance) policies, 46 were withdrawn before a vote, suggesting managers had responded positively.

Challenging the conventional view that shareholder activism arises because the interests of managers and shareholders conflict, Amalric concludes that such activism on corporate responsibility issues is ‘a device used by investors to bring business relevant information to managers’ attention’, and managers are proving receptive to information on stakeholder expectations, regulation and management processes.


Further Information
http://www.ceres.org
franck.amalric@ccrs.unizh.ch
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