The season of corporate shareholder meetings is just
beginning, but already global warming activists have
claimed a major victory in the first of a series of 14
anticipated fights with some of the country's largest companies.
A resolution calling on American Electric Power (AEP), one
of the nation's biggest emitters of the greenhouse gases
that are believed to contribute to climate change, to take
"early action" to reduce emissions garnered almost 27
percent of shareholder support at the company's annual
meeting Wednesday in Ohio.
The resolution - and a similar one that was defeated by an
undisclosed margin at a meeting of General Electric's
shareholder meeting late Wednesday - calls on management
to report back on the economic risks and benefits of the
companies' past, present and planned future emissions of
the major greenhouse gases, which include carbon dioxide
(CO2), sulphur dioxide, nitrogen oxide, and mercury.
"This is a stunning result," said David Gardner, a
consultant to the Coalition for Environmentally
Responsible Economics (CERES), which helps to co-ordinate
shareholder challenges to corporate environmental policies
and advises a number of significant institutional
"These are much higher numbers than we've seen in the
past, especially for a first-time vote by shareholders of
a major company on global warming, and clearly shows a
sharply rising concern on their part about potential
financial implications for companies," he added.
That assessment was echoed by Leslie Lowe of the
Interfaith Center on Corporate Responsibility (ICCR) whose
member organizations have a combined investment portfolio
worth about $110 billion.
Noting that the average vote achieved by global-warming
resolutions presented at seven shareholder meetings last
year was 18 percent, she said, "the final tally of
shareholder support [in the AEP vote] exceeded our most
"It sends a strong signal to the U.S. utilities industry
that you can't just ignore global warming or pay it some
kind of token lip service. Religious shareholders and
other concerned investors are understandably worried that
the value of the stock they possess is being held ransom
to the refusal of companies like AEP to come to terms
fully with the reality of climate change."
While 27 percent does not constitute a majority of shares
in a company, it is an unusually high vote for shareholder
resolutions. Until just a few years ago, most of them
gained three percent or less on their first run, in part
because management often controls a large portion of
shares through proxies and direct ownership, and most
institutional investors and money managers have
traditionally voted automatically with management.
But this has changed in recent years as concerns about
corporate governance, especially executive compensation
and the independence of the board of directors from
management, have escalated.
Precisely because management usually has such a large
percentage of shares in its pocket, "getting 10 or 12
percent of the vote is usually considered sending a strong
message to management", according to David Schilling, who
directs ICCR's Global Corporate Accountability Programme.
But in the last two years, there has been an explosion in
resolutions concerning exclusively social or environmental
issues, which are also receiving a higher share of the
Last year, for example, more than 31 percent of shares
voted at Unocal's annual meeting approved a resolution
urging the oil giant's board of directors to implement a
company-wide employee policy based on core labor rights as
defined by the International Labor Organization (ILO).
Global-warming activists have made among the most
spectacular gains in shareholder contests, particularly
since the completion of the Kyoto Protocol, an
international accord to reduce greenhouse gas emissions
that has been signed by virtually all industrialized
countries but rejected by the Bush administration.
In the spring shareholder season of 2001, global-warming
resolutions averaged a respectable 10 percent, and then
almost doubled last year.
Environmental groups have argued that U.S. companies risk
losing heavily to foreign rivals in the international
marketplace over time if they do not begin to reduce their
emissions and their reliance on fossil fuels, whether or
not the United States ever ratifies Kyoto.
Studies produced by the World Resources Institute and
other respected groups have shown that the failure of
companies to assess those risks and take action
accordingly will ultimately hurt their bottom line and
Those studies have had a major impact on institutional
investors, particularly pension funds like CalPERS,
California's largest public employee fund, which has about
$150 billion in assets, as well as their advisers, like
Institutional Shareholder Services, Inc, which counseled
its clients to vote for AEP's resolution.
Wednesday's AEP vote was the first of two more shareholder
contests against the managements of what activists call
the "Filthy Five" electrical utilities which, together,
produce 10 percent of all U.S. CO2 emissions, or almost
three percent of the global total. They include Southern
Company and TXU Corporation.
Of the five, AEP is the biggest emitter, primarily because
about 70 percent of its electricity is produced by burning
The AEP resolution was sponsored by the State of
Connecticut Plans and Trust Fund and Christian Brothers
Investment Services, which manages about $3 billion
dollars for Catholic organizations. Both are ICCR members.
"This is a material financial issue to the entire electric
utility industry, and the kind of disclosure we are
seeking should become standard practice on an
industry-wide basis," said Julie Tanner of Christian
Brothers. "Today, a significant share of AEP shareholders
sent a message to management that they are not content to
sit by while the company in which they hold stock fails to
address this very serious hidden risk to the value of
Altogether, 14 global-warming-related resolutions have
been cleared by the Securities and Exchange Commission
(SEC) for votes this season. Besides the electric utility
sector, targeted companies include automakers like General
Motors and Ford and big oil and gas producers, including
ChevronTexaco and ExxonMobil.
Last year, a resolution that urged ExxonMobil to move more
aggressively into renewable energy sources garnered 20
percent of shares, up from nine percent the year before.
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