New York State Comptroller Thomas P. DiNapoli today announced agreements with several portfolio companies relating to lowering greenhouse gas (GHG) emissions and helping safeguard the New York Common Retirement Fund’s (Fund) long-term investments. The agreements are part of DiNapoli’s broader strategy to protect and grow the Fund’s long-term value through sustainable investments and by seeking greater corporate efforts to meet the challenges of climate change.
“Climate risk is one of the greatest threats to our investments across the board,” DiNapoli said. “We’ll continue to use our strength as a major investor and call on our publicly held companies to plan ahead and address climate change now. The companies that have agreed to take steps to lower their emissions are to be commended. Their actions will benefit their long-term profitability.”
Two major energy providers, Allete and NorthWestern, agreed to DiNapoli’s request to examine ways to reduce GHG emissions by increasing deployment of low-carbon electricity generation resources. As a result of the agreements, the Fund, which owns shares in each company with respective values of $5.9 and $3 million, withdrew shareholder proposals it had filed with them.
DiNapoli filed the same shareholder proposal with five other energy companies, which went to a vote and received the following support from fellow shareholders: PPL Corp. (43%), Devon Energy (36%), OGE Energy (29%), Westar Energy (28%) and DTE Energy (27.5%).
In response to another shareholder proposal filed by DiNapoli, General Dynamics agreed to set quantitative goals for lowering its GHG emissions based on guidance from the most recent report by the United Nations Intergovernmental Panel on Climate Change. The IPCC has estimated that a 55 percent reduction in global GHG emissions is needed by 2050 to stabilize global temperatures. Climate change puts trillions of dollars at risk globally, affecting a significant percentage of the market capitalization of the world’s stock exchanges, according to recent reports. The proposal was withdrawn before going to a vote, based on the company’s agreement. The Fund has $124.4 million in General Dynamics shares. DiNapoli’s proposal at Fluor Corp. received support from 42.9% of shareholders.
Best Buy and Nordstrom both agreed to DiNapoli’s request that they find ways to increase their use of renewable energy.
DiNapoli filed several other climate related shareholder resolutions that went to a vote when no agreement was reached, including:
- Resolution calling for ExxonMobil to address climate change and explain how it could adapt its business to meet the global movement toward a lower carbon economy received strong support from 38% of fellow shareholders, a record for a climate change proposal at the company.
- Resolution calling on Domino’s Pizza to commit to using palm oil that was certified free of links to deforestation. Palm oil harvesting is one of the leading causes of deforestation, a major contributor to global warming. When Domino’s declined to take action as requested by the proposal it went to a vote and was supported by 26.2% of shareholders.
- Resolution asking Chevron to bring on the board a director with environmental expertise received support from 19% of shareholders.
- Resolutions asking Kinder Morgan and Facebook to issue annual sustainability reports describing their short- and long-term plans for handling Environmental, Social and Governance related issues, such as GHG emissions and workplace rights, received support from 34.1% and 8.9% of shareholders respectively.
In addition to engaging companies on lowering their emissions profile, the Fund has also taken action by investing $2 billion in a customized index that underweights companies that are large greenhouse gas carbon emitters relative to peers. http://www.osc.state.ny.us/press/releases/dec15/120415.htm
Because the Fund’s low emissions index relies on corporations to report their carbon emissions, DiNapoli’s office has asked all the companies in the Russell 1000 to provide their emissions data to the CDP. CDP's reporting framework provides a means to effectively compare portfolio companies’ climate risk governance and it is the global standard for voluntary environmental disclosure covering 1/5 of the world's emissions.
In July, DiNapoli wrote to Securities and Exchange Commission in response to its request for comments, calling for more robust reporting requirements on climate risk and a number of other ESG issues.
DiNapoli and the Fund’s efforts to protect investments by managing climate risk earned a AAA rating and the top ranking among U.S. institutional investors from the Asset Owners Disclosure Project.
See an infographic of the Fund’s Climate Risk work http://osc.state.ny.us/pension/infographic/infog.htm
About the New York State Common Retirement Fund
The New York State Common Retirement Fund is the third largest public pension fund in the United States with assets of $178.6 billion as of March 31, 2016. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has consistently been ranked as one of the best managed and best funded plans in the nation. The Fund’s fiscal year ends March 31, 2017.