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Voting With Their Stock

Shareholder pressure may prove to be a key tool for convincing large businesses to adopt practices less likely to promote global warming. GreenBiz reports that, for the 2005 proxy season, a record number of shareholder resolutions on climate change were filed with automakers, oil companies, real estate firms, financial institutions and power utilities. The landslide may be starting.

State and city pension funds and labor, foundation, religious and other institutional shareholders have filed 31 resolutions requesting financial risk disclosure and plans to reduce greenhouse gas emissions with nine oil and gas companies, six manufacturers, three electric power providers and two automakers. The companies are among the largest greenhouse gas emitters in the country, making them especially vulnerable to the risks of likely regulatory- and market-based limits on carbon dioxide emissions worldwide. In addition to the 31 resolutions, shareholders are also involved in negotiations with several dozen other companies aimed at improving those companies' disclosure and action on climate risk.

[...] The 31 filings easily surpass the 22 global warming shareholder resolutions filed last year. Many of last year's resolutions received the highest voting support ever, particularly in the oil and gas sector where support levels were as high as 37%. Seven resolutions were withdrawn by filers last year after companies agreed to undertake climate risk assessments and committed to specific greenhouse reduction targets.

The resolutions didn't come from cranky individuals. The filers represented over $250 billion in assets, and included foundations, socially responsible investment funds and state/city pension funds. (While an impressively large amount, it still pales in comparison to the $20 trillion held by the participants in the Carbon Disclosure Project.) The threat they pose isn't that they'll have sufficient clout to force the companies' boards to act directly, but that they represent pressure on other institutional shareholders. If large funds start to divest from those firms, share value is put at risk.

Climate-related divestment is a movement waiting to happen, and savvy asset managers -- and company directors -- know it.


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