Investors Get Action From Dynegy on Climate Change
SACRAMENTO, CA – Leading U.S. investors announced today that Dynegy, a Houston-based company that provides wholesale electricity to utilities, cooperatives, municipalities and other energy companies in 15 states, has agreed to prepare a report for shareholders on how it is responding to the business challenges posed by climate change.
Two of the nation’s largest public pension funds, the California State Teachers’ Retirement System (CalSTRS) and the North Carolina Retirement System, filed a shareholder resolution with Dynegy requesting a report on the feasibility of adopting specific greenhouse gas reduction goals for its existing and proposed power plants. The company agreed to prepare such a report by Dec. 31, prompting investors to withdraw the resolution today.
The agreement comes as Dynegy is proposing to build as many as six new coal-fired power plants in the U.S., which will be especially vulnerable to emerging carbon-reducing regulations.
“The time for debating the science is passed and now it’s time for this first common sense step to executing an action plan,” said CalSTRS Chief Executive Officer Jack Ehnes, whose staff held extensive negotiations with Dynegy to reach an agreement on preparing the report. “Doing the kind of analysis called for in this report is fundamental to any company’s operational success and the risks it confronts.”
“This action by Dynegy is a positive step forward – especially for a power company – and demonstrates the power that investors have to encourage companies to address the critical issue of climate change,” said North Carolina State Treasurer Richard Moore, whose office co-filed the resolution with CalSTRS. “This success is part of a national trend that is improving business and our environment.”
Investors announced last week that they have filed a record 54 global warming shareholder resolutions with U.S. companies this year, which is nearly double the number filed two years ago. Companies targeted in the 2008 proxy season include electric power companies, oil and coal producers, airlines, homebuilders and other businesses that investors believe are not adequately dealing with potential climate-related business impacts, whether from physical changes, emerging climate regulations or growing global demand for low-carbon technologies and services.
Resolutions were filed with 40 companies in eight industries, including Dynegy in the electric power sector, Massey Energy in the coal sector, ExxonMobil and ConocoPhillips in oil and gas, U.S. Airways in the airline sector and Standard Pacific in the building sector. Resolutions were filed with five other electric power companies, including Allegheny Energy, Alliant, Dominion Resources, FirstEnergy and Southern Company. The power sector accounts for about 40 percent of all greenhouse gas (GHG) emissions in the U.S.
Resolutions seeking greater disclosure from companies on their responses to climate change, including GHG reduction and renewable and energy efficiency strategies, were filed by some of the nation’s largest public pension funds, as well as labor, foundation, religious and other institutional investors. Many of the investors are part of the Investor Network on Climate Risk (INCR), an alliance of 60 institutional investors with collective assets totaling more than $5 trillion.
This year’s filings come on the heels of a record high number of resolutions and record high voting support for global warming resolutions in the 2007 proxy season. Investors filed 43 resolutions with U.S. companies last year and average voting support was 21.6 percent. The shareholder filings are coordinated by the Ceres investor coalition and the Interfaith Center on Corporate Responsibility (ICCR), a group of 275 religious investment funds.
“Many US companies are confronting the risks and opportunities from climate change, but others are not responding adequately – and may be compromising their long-term competitiveness as a result,” said Mindy S. Lubber, president of Ceres, which helped coordinate the shareholder filings and directs INCR. “We want all companies to understand the business impacts of climate change – and plan for it accordingly.”
Established 95 years ago, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 813,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.