Investor groups point finger at "Climate Laggards": Exxon, GM and Others

"The writing is clearly on the wall: The low-carbon global economy is coming and companies need to be ready."

So said Mindy Lubber, president of the environmental investor group Ceres, this week during a press conference unveiling a list of the companies that are lagging on environmental action.

The Climate Watch List of "Climate Laggards" this year includes nine companies singled out by Ceres, the Interfaith Center on Corporate Responsibility (ICCR) and other investment funds and investment groups that are working on corporate responsibility and the environment.

Some of the companies on the list come as no surprise: ExxonMobil, for instance, made the list this year and has long been seen as opposed to environmental regulations and actions. Other companies on the Climate Watch List come from heavily carbon-intensive industries, notably Southern from the electric power industry, Massey Energy and Consol Energy from the coal industry, and other oil and gas companies including Ultra Petroleum, Chevron and Canadian Natural Resources.

The remaining two companies on the list come from carbon-intensive, but at times overlooked industries: General Motors represents the auto industry, while homebuilder Standard Pacific also made the list.

These companies have been singled out by the investor groups largely for their failure to respond and react to shareholder requests on environmental impacts, but there are several other factors that went into creating the list: these companies all lag their competition, they have had poor interactions with investors on climate issues, as well as poor overall disclosure of their environmental impacts, and they have not played a role in mitigating their climate footprint.

"They haven't done anything, they're not responsive to investors, and they're lagging their peers," Lubber said in summation.

Three of the companies are repeats from a list compiled last year on the same issue: Massey Energy, ExxonMobil and Consol Energy all remain resistant to shareholder requests for information on how these companies are addressing the looming risks posed by climate change and climate legislation.

Jack Ehnes, the CEO of the California State Teachers Retirement System (CalSTRS), one of the largest pension investment funds in the country, explained on a press call that the investor groups involved in making the Climate Watch List see understanding and measuring climate risk as a fundamental business activity, like any other kind of business risk - and an ever-growing number of investors see these issues as key to making informed investment decisions.

Ken Silvester, the Assistant Comptroller for pension policy decisions at New York City's comptroller's office, said there had been a measurable increase in interest in shareholder resolutions related to global warming issues.

In 2007, shareholders submitted a resolution urging Consol Energy to disclose how the company is responding to regulatory and competitive pressure to reduce its greenhouse gas emissions; that resolution earned just six per cent support, but the same resolution introduced in 2008 received over 30 per cent support. A similar trend occurred with support for resolutions filed with Massey Energy in 2007 and 2008, Silvester said.

Fittingly, the announcement of the list came just a day before US president Barack Obama made his first official visit to Canada, a visit that will likely touch on one of the most pressing issues affecting companies on the Climate Laggards list: oil sands extraction.

Chevron made its place on the list for its unwillingness to respond to requests to provide more information about how it plans to mitigate or reduce the environmental impact of its planned oil sands extraction operations in Alberta, Canada.

Oil sands have been held up as a way to reduce North America's reliance on Middle Eastern and Venezuelan oil supplies: the reserves of oil in Alberta are estimated at 175 billion barrels of oil, far more than either Iraq or Iran, and second only to Saudi Arabia's estimated 250 billion barrels.

However, this method of extraction of oil is vastly more carbon intensive than other methods. Margaret Webber, the board chair of the ICCR, said that oil-sands extraction released three times as many greenhouse gases than other methods, and said the groups' concerns about Chevron's involvement with oil sands are both "wide and deep".

"There are partial solutions that can mitigate the worst of the impacts of oil sands on the environment, but our concern is that those solutions are not being pursued," explained Andrew Logan, Ceres' director of energy and finance programs. "There's a concern that companies are barreling ahead into the oil sands without considering the significant risks from investing there."

Outside of energy industries, just two companies made the Climate Watch List: General Motors and Standard Pacific. GM earned its spot on the list for what Ceres calls its "ongoing legislation to stop California's clean car standards from being adopted", as well as how far behind it lags its industry peers, notably Ford, on developing a business plan that will prepare the company for the coming low-carbon economy.

Standard Pacific is a national residential building company that has, over the last three years, opposed shareholder requests urging the company to outline its strategies for building energy efficiency. Residential and commercial buildings are one of the leading causes of greenhouse gas emissions nationally, responsible for as much as 40 per cent of total annual emissions; as a result, government, environmental and now investor groups are working on ways to increase energy efficiency in buildings of all types and thereby reduce emissions.

The announcement of the laggards list comes during a very active shareholder resolution seasons: Ceres said that during the 2009 proxy season there were a total of 63 global warming resolutions filed by shareholders, including 56 aimed at U.S. companies.

A version of this article first appeared at ClimateBiz.com