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August 21, 2013

Record Number of Sustainability Resolutions in 2013
    by Robert Kropp

In its overview of the 2013 proxy season, Ceres reports that 40% of all resolutions filed address environmental and social issues, and that 40 of the 110 such resolutions were withdrawn. -- The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC) was leaked last week in advance of its official publication, and as was widely expected it warns that the effects of climate change are occurring more quickly than was previously thought.

According to the Washington Post, the new report projects that sea level rise could be as much as two feet by 2100, and global average temperatures could increase by seven degrees Fahrenheit during that time.

Whether AR5 convinces governments to enact long-overdue policies to address climate change in meaningful ways remains to be seen. But the nature of the crisis is so stark by now that no stakeholder—and that includes every one of us on the planet—can afford to ignore the responsibility to address it, even on a personal level.

One group of stakeholders that has been trying to do something about climate change has been sustainable investors, who have engaged with corporations for decades to pressure them into reconsidering their operations. Since the first environmental shareowner resolution gained enough support to reappear on the proxy ballot the following year, sustainable investors have seen an increasing number of resolutions gaining more and more support. In fact, Jackie Cook of Fund Votes recently reported that the 21% vote in support of environmental and social resolutions in 2013 represents a ten-year high.

Ceres, which coordinates many if not most of such resolutions, has published its own analysis of the results of the 2013 proxy season, and reports that 40 of the 110 resolutions filed this year were withdrawn after companies agreed to implement the changes requested by shareowners. Commitments were secured on issues ranging from using sustainable palm oil, board oversight of environmental and social matters, greenhouse gas (GHG) reduction goals, and sustainability reporting by companies and their suppliers.

If climate change is to be addressed in a meaningful way, the vast majority of fossil fuel reserves now counted as assets on the books of companies will have to stay in the ground. First-time resolutions filed this year by As You Sow and the Unitarian Universalist Association requested that two of the nation's largest coal producers report to shareowners on fossil fuel reserve valuation risks. The two resolutions gained votes in support of 22% and 18%.

Resolutions filed with three companies by Trillium Asset Management, requesting that they report on fugitive methane emissions in their natural gas operations, gained even more support from shareowners, exceeding one-third of the vote in two annual general meetings.

Requests for improved transparency on the environmental impacts of hydraulic fracturing won significant support from shareowners at ExxonMobil, Chevron, and Pioneer Natural Resources. Similar resolutions were withdrawn at three companies when they agreed to provide improved transparency.

“Investors are ever more mindful of escalating environmental and social risks and want answers on how companies are dealing with them,” said Mindy Lubber, president of Ceres. “This year’s proxy results showed strong progress on wide-ranging sustainability challenges such as water availability risks, supply chain vulnerabilities and greenhouse gas emissions.”

“While the 2013 proxy season just ended, we don't plan to rest on our laurels,” Rob Berridge, Senior Manager of Investor Programs at Ceres, wrote. “Investors want to see evidence that fossil fuel companies are preparing for a low carbon future. We plan to tackle the risk that approximately two-thirds of proven fossil fuel reserves cannot be extracted and burned without causing what scientists say is an unacceptable level of global warming.”

A full list of the shareowner resolutions coordinated by Ceres can be found here.

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