Trillium Lobbies Berkshire Hathaway Shareholders in Support of Sustainability Reporting Proposal
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Boston, MA (April 27, 2009) Trillium Asset Management Corporation (“Trillium”) is joining two nonprofit advocacy organizations, the International Labor Rights Forum and the International Rivers Network, in calling on fellow Berkshire Hathaway investors to back a proposal on the agenda for the company’s upcoming May 2, 2009 annual meeting which requests that Berkshire prepare a Sustainability Report on its performance on environmental and social issues. Boston-based Trillium today released a letter filed last week with the Securities and Exchange Commission and sent to Berkshire’s nearly 2,000 institutional shareholders, who own more than $26 billion in its preferred and common stock. The letter urges a vote in favor of the proposal, which was submitted by Berkshire shareholder Joseph G. Petrofsky. The letter comes in the wake of a report recently issued by leading shareholder advisory firm PROXY Governance that recommends a vote in favor of the resolution, calling Berkshires disclosure of environmental and social issues affecting its portfolio relatively poor, and concluding that additional disclosure in this area would help shareholders. Read more.
Putting China on the Spot for Sudan
Trillium Spearheads Effort to Protect and Enhance Shareholder Rights
Obama Administration has the Opportunity to Reverse SEC Policies that Censored Environmental and Social Inquiries
The current financial and economic crisis demonstrates the extent to which all sectors and all participants in the market, whether companies, investors, employees, or communities, are interrelated and deeply affected by the actions of any one participant. Protecting and enhancing the rights of investors to seek and receive information from their companies about company activities improves the stability of the financial system as a whole. President-elect Barack Obama can help to avoid future market disruptions and also pave the way for a sustainable economy if he protects and strengthens investors’ rights to use the shareholder resolution process to highlight corporate risk factors and press for needed remedies, according to a joint letter submitted today by more than 60 leading U.S. institutional investors, investment firms and investor groups representing more than $5 trillion in assets.
Letter to President-Elect Obama
ExxonMobil – Greenhouse Gas Emissions Reduction
WHEREAS
The International Energy Agency warned in its 2007 World Energy Outlook that “urgent action is needed if greenhouse gas [GHG] concentrations are to be stabilized at a level that would prevent dangerous interference with the climate system.”
ExxonMobil operates in countries that have ratified the Kyoto Protocol, obliging them to reduce GHG emissions below 1990 levels by 2012. Yet Kyoto targets may be inadequate to avert the most serious impacts of global warming. Dozens of companies, including competitors ConocoPhillips, BP America, and Shell, have endorsed calls for the US to reduce carbon emissions by 60-80% by 2050. 150 global corporations have called on world leaders to finalize a comprehensive, binding UN framework to tackle climate change, urging already industrialized nations to make the greatest efforts (11/30/07).
ExxonMobil has minimally invested in cogeneration, improved energy efficiency in refineries, reduced gas flaring, and supported climate research. For five years, ExxonMobil has stressed its donation to Stanford University’s Global Climate and Energy Project, and its partnerships with Toyota and Caterpillar on advanced fuels and engines, yet shareholders are given little information on progress or outcomes regarding these initiatives.
ExxonMobil has identified opportunities to increase operational energy efficiency by 15-20%, yet has implemented only half of these, missing potential savings of $750 million per year (Carbon Disclosure Project 5). ExxonMobil’s global energy costs for 2006 totaled $10 billion, equal to 1,475 trillion BTUs of energy.
Despite its well-publicized efforts, ExxonMobil’s global CO2 emissions increased from 2003 to 2006 – absolute operational emissions were 145.5 million metric tons in 2006, a 5.4% increase since 2005 (CDP5).
BP, Shell, ConocoPhillips, and Chevron each have significant commitments to investments in renewables, low-carbon technologies to reduce emissions, integration of the cost of carbon into strategic planning and investments, and compensation incentives for climate performance. These commitments have already enabled competitors to: secure positions in specific alternative energy markets, deliver emissions reductions, prepare for regulatory requirements, and raise their credibility in public policy debates.
Shifts in consumer preference, coupled with emissions regulations and sustained high oil prices, could significantly alter ExxonMobil’s market assumptions for the next 30 years. A March 2007 Credit Suisse report notes: “An increase in the efficiency of energy consumption and in the amount of renewable electricity production will likely lower long-term future demand growth for both oil and gas relative to current expectations.”
Proponents are concerned that ExxonMobil’s business plan appears to consider few scenarios that incorporate a decline in these markets due to forthcoming regulations and incentives, or governments’ need to stabilize global GHG emissions because of the physical risks they pose.
RESOLVED
Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Company’s products and operations; and that the Company report to shareholders by September 30, 2008, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
ConocoPhilips – Environmental Impacts of Oil Sands
WHEREAS
ConocoPhillips has considerable interests in oil sands operations in the Canadian boreal forest that mine and upgrade bitumen. ConocoPhillips holds a 9% interest in Syncrude, a joint venture expected to produce 350,000 barrels/day by 2010, and is the operating partner of the Surmont oil sands joint venture project, with a 50% equity stake (potential production: 200,000 barrels per day).
The boreal provides critical climate regulation and carbon storage for the earth as a whole. This ecosystem is the breeding ground for 30% of North American songbirds and 40% of our waterfowl.
Industrial logging and oil sands have reduced it to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species. According to the Canadian Parks and Wildness Association, it will take over 300 years before reclaimed areas become functioning forest again. The UN Environmental Program has identified the Canadian boreal as one of the world’s top 100 “hot spots” of environmental change.
Processing oil sands is highly resource intensive and environmentally damaging, requiring the draining of wetlands, diversion of rivers and the removal of all trees and vegetation. Tailing ponds from mining operations cover almost 20 square miles. Their pollutants are acutely toxic to aquatic life and threaten to leak into the groundwater system and surrounding soil and surface water.
Extracting one barrel of bitumen requires 2-5 barrels of fresh water. Less than 10% of the water withdrawn from the Athabasca River is returned, threatening the long term survival of numerous fish, songbird and waterfowl species. Current withdrawals from the Athabasca River for oil sands development are twice the amount used annually by the population of Calgary. The Pembina Institute predicts that withdrawals may increase by 50% within 6 years. Future demand for groundwater is also expected to increase exponentially.
On average, one barrel’s extraction requires enough natural gas to heat a Canadian home for 1.5-5.5 days, and the removal of four tons of earth. While processed sand must be replaced and the site reclaimed, in 40+ years of oil sands operations, not a single acre has received a reclamation certificate from the Canadian government.
Oil sands have made Alberta the largest emitter of industrial pollutants in Canada. They are the fastest growing source of Canada’s greenhouse gas emissions, generating 3x the amount during production as conventional oil. These emissions may more than quadruple by 2015.
RESOLVED
Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansions and should be available to investors by May 2009.
SUPPORTING STATEMENT
The requested report should discuss the intense environmental and social impacts of oils sands operations that occur despite best efforts at mitigation, including: greenhouse gas emissions, water resources, biodiversity, and social impacts upon Albertans, including indigenous populations.
ExxonMobil – Greenhouse Gas Emissions Reduction
WHEREAS
ExxonMobil Corp. “is the world’s largest petroleum and petrochemical
enterprise,” and “largest net producer of hydrocarbons in Europe”;
“ExxonMobil recognizes that the impact of greenhouse gas emissions [GHG] on society and ecosystems may prove to be significant”;
ExxonMobil faces potential strategic challenges from “the competitiveness of alternative hydrocarbon or other energy sources” (2006 10K);
Leaders of 25 corporations, including KLM, Statoil, GE International, and Shell UK, wrote European Commission President Barroso (11/27/06) urging “policy inconsistencies and perverse incentives that undermine the effectiveness of climate policy should be eliminated…” and “that scientific opinion across the world is virtually unanimous in agreeing on the urgent need to stabilize the concentration of atmospheric greenhouse gases at a sustainable level”;
Claude Mandil, Executive Director of the International Energy Agency, noted that “…the benefits of strong, early action on climate change outweigh the costs. That conclusion is one that the IEA fully endorses – notably in its World Energy Outlook 2006.” “The world’s energy economy is on a pathway that is plainly not sustainable” (FT Energy Special 10/20/06);
ExxonMobil operates in about 200 countries, many having ratified the Kyoto Protocol that obliges Annex I signatories (industrialized countries) to reduce national GHG emissions below 1990 levels by 2012;
According to ExxonMobil’s 2006 Carbon Disclosure Project response, from 2003 to 2005, the Company’s global carbon dioxide (CO2) equivalent emissions increased;
ExxonMobil reported that operational emissions were a fraction of those caused by use of its product: 15 tons of CO2 for every 100 tons emitted by product users (CDP4);
A 2003 Climate Mitigation Services study by Richard Heede estimated ExxonMobil’s emissions of CO2 and methane from the founding of precursor Standard Oil Trust in 1882, to 2002. During that period, the combustion of ExxonMobil-produced fuels resulted in approximately 20.3 billion tons of carbon emissions, estimated to be 4.7% -5.3% of global CO2 emissions;
While ExxonMobil has made incremental improvements in energy efficiency and emissions reductions (through cogeneration, advanced lubricants, flaring reductions, and carbon capture), it has underinvested in low-GHG emissions businesses and technologies. As of Fall 2005, ExxonMobil had contributed a mere $8.9 million to the Stanford Global Climate and Energy Project, its most touted climate investment. This represents .003% of the 2006 commitment made by Virgin’s Richard Branson ($3 billion) and .0008% of ExxonMobil’s 3rd Q 2006 earnings. The Company’s oil and gas investments averaged $50 million per day in 2005 alone;
ExxonMobil has set an initial goal to improve energy efficiency by 10% by 2012 across its U.S. refining operations, but this goal does not address GHG emissions, nor does it cover overall operations or products.
RESOLVED
Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Company’s products and operations; and that the Company report to shareholders by September 30, 2007, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
Anadarko – Greenhouse Gas Emissions Reduction
WHEREAS
Anadarko’s operates in four countries worldwide that have ratified the Kyoto Protocol, which obliges industrialized countries to reduce national greenhouse gas (GHG) emissions below 1990 levels by 2012, and provides financial incentives for non-industrialized participants to reduce their GHG emissions.
Since Kyoto was adopted, the urgent need for action to prevent the most damaging effects of climate change has become increasingly clear. To avoid the most dangerous impacts of climate change, experts believe that we must hold CO2 emissions at or near 2004 levels for the next 50 years, but emissions are continuing to rise.
British finance minister Gordon Brown says the EU should aim to reduce its carbon dioxide (CO2) emissions by 30% below 1990 levels by 2020 and by at least 60% by 2050; the UK’s reduction target, under Kyoto, is just 12.5% by 2012.
The 2006 Stern Review on the Economics of Climate Change, lead by the former chief economist at the World Bank, “… estimates that if we don’t act, the overall (worldwide) costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever.” In contrast, the costs of action would be about 1% of global GDP each year. While some may criticize this scenario, Nobel Prize economists have applauded this work, urging immediate responses.
Anadarko’s measures to reduce greenhouse gas emissions include the use of carbon sequestration as part of enhanced oil recovery operations and working to minimize the flaring and venting of methane gas. However, in 2005 (the latest figures available, which pre-date the Kerr-McGee and Western Resources acquisitions), Anadarko’s direct GHG emissions from Anadarko operations totaled 4.9 million metric tons of CO2 equivalent.
RESOLVED
Shareholders request that the Board of Directors publicly adopt quantitative goals, based on current and emerging technologies, for reducing total greenhouse gas emissions from the company’s products and operations below 2004 levels; and that the company report to shareholders by September 30, 2007, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
SUPPORTING STATEMENT
Anadarko’s web site states: “We continually look for innovative ways to minimize the overall environmental impacts of our activities, including reduction of greenhouse gas emissions….In our view, it’s possible to achieve reductions in greenhouse gas emissions in a cost-effective and voluntary manner.” Anadarko’s Greenhouse Gas Management Plan (http://www.anadarko.com/PDF/GHG_Managment_Plan_exec_summary.pdf) commits our company to “continually improving its performance in [this] area by…Setting corporate objectives and targets and communicating the progress and overall performance in achieving those objectives and targets.”
However, Anadarko has yet to report publicly on its objectives and targets, its progress toward meeting them. A vote in support of this proposal will register interest in holding Anadarko accountable to its pledge to set GHG reduction targets and communicate their progress and performance.
ConocoPhillips – Efforts to Develop Renewable Energy Sources Report
WHEREAS
Due to the international requirements of the Kyoto Protocol, ConocoPhillips is facing unprecedented pressure to reduce emissions and meet clean energy demands, and growing public pressure to make significant emissions reductions.
To avoid the most dangerous impacts of climate change, experts believe that we must hold CO2 emissions at or near 2004 levels for the next 50 years. Some governments are implementing ambitious reduction targets, driving the demand for renewables. For example, California and New Mexico have plans to reduce greenhouse-gas emissions from 75 to 80% by 2050; the U.K., 60% by 2050. Thirty-eight states, provinces or countries have adopted renewable portfolio standards, and 49 countries have adopted targets for the electricity share provided by renewable sources.
In July 2006, the E.U. overwhelmingly approved a jet fuel tax on flights within member nations, which could potentially reduce demand.
Failure to reduce operational emissions, or to offer low-carbon products may result in the purchase of expensive carbon credits even as competitors are generating new revenue sources through the sale of excess credits.
Renewables are the fastest growing segment of the energy market. In the past ten years, wind energy worldwide has grown by around 28% per annum. President Bush said that wind energy could provide 20% of the country’s electricity supply. In 2006, US photovoltaic installations grew by 20% over 2005, among the highest growth rates in the world due to new federal and state programs to stimulate demand.
Two of our main international competitors, Royal Dutch Shell and BP, have significant renewable energy divisions. Shell is investing US $500,000 – $1 billion in new energy technologies over a five-year period. BP has been in the solar business since 2002, realizing its first profit in 2004 and currently enjoying a 20% worldwide market share. It plans to invest $8 billion in alternative and renewable energy businesses over a 10-year period.
Today’s 10,000 MW of wind power used in the U.S. displaces the equivalent of 3.5% of the natural gas used nationwide to generate electricity.
The Department of Energy estimates that by 2015, U.S. photovoltaic capacity will displace the emission of 10 million metric tons per year of CO2 emissions.
RESOLVED
Shareholders request the Board to prepare a report (at reasonable cost and omitting proprietary information) by September 1, 2007 explaining how the company will respond to rising regulatory, competitive and public pressure to significantly develop renewable energy sources.
SUPPORTING STATEMENT
ConocoPhillips’ Baseline Sustainable Development Report states – “We plan to continue to develop technology options with the potential to enable renewable energy and in particular, renewable fuels.” Yet the company’s portfolio currently includes no investments in renewable energy projects, nor has our company told investors how it intends to meet growing regulatory pressures for renewable energy.
Supporting this resolution will indicate shareholder desire for full disclosure of the company’s strategy to meet growing demand for diversified energy sources and to remain competitive in increasingly carbon-constrained energy markets.
Social Issues
At any given time, the social research and advocacy staff of Trillium Asset Management Corporation are actively working on numerous social and environmental issues of concern to our clients. (Please visit our Engagement page to read more about the means we use to influence corporations.)
The categories below link to more specific descriptions of our work on various issues. The information is provided in the form of Adobe Acrobat (PDF) files.
Animal Rights
Environmental Advocacy
Equal Employment Opportunity
Human Rights
Indigenous Rights
Media Responsibility
Sexual Orientation
You can view additional information about each issue by clicking on the Social Issues links in the sidebar on the left.
Climate Change Report – Dominion Resources
WHEREAS:
In 2005, the scientific academies of 11 nations, including the U.S., stated that, “The scientific understanding of climate change is now sufficiently clear to justify nations taking prompt action. It is vital that all nations identify cost-effective steps that they can take now, to contribute to substantial and long-term reductions in net global greenhouse gas emissions.”
A 2004 Conference Board report declared that, “scientific consensus that the climate is changing is growing steadily stronger over time; Corporate boards will be increasingly expected to evaluate potential risks associated with climate change; and, the global economy will become less carbon-intensive over time…The real questions are what the pace of the transition will be and who will be the winners and losers.”
U.S. power plants are responsible for nearly 40 percent of the country’s carbon dioxide emissions, and 10 percent of global carbon dioxide emissions.
In June 2005, a majority of U.S. Senators voted in favor of a resolution stating that, “…Congress should enact a comprehensive and effective national program of mandatory, market-based limits on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions…”
In 2004 and 2005, AEP, Cinergy, DTE Energy, TXU, and Southern Company issued comprehensive reports to shareholders about the implications of climate change for their businesses. AEP stated, “some initial mandatory reductions of greenhouse gas emissions are likely in the next decade…”
Nine northeastern states are developing the Regional Greenhouse Gas Initiative, which aims to significantly reduce emissions from electric power companies and develop a market to trade emissions allowances. California plans to reduce the state’s emissions of greenhouse gases to 2000 levels by 2010, 1990 levels by 2020, and 80 percent below 1990 levels by 2050.
In February 2005, the Kyoto Protocol took effect, imposing mandatory greenhouse gas limits on the 148 participating nations. Companies with operations in those nations must reduce or offset some of their greenhouse gas emissions. For example, companies with operations in Europe can make reductions using the European emissions trading program, where CO2 has regularly traded for more than $20 per ton.
The California Public Utilities Commission now expects all utilities to add a greenhouse gas cost of $8/ton of CO2 in all long-term power contracts, and the Colorado Public Utilities Commission agreed that Xcel Energy should assume a $9 per ton cost for a new coal power plant.
Dominion is proposing to build several thousand megawatts of coal-fired power generation with an estimated investment of several billion dollars, which will emit millions of tons of CO2 per year.
RESOLVED: Shareholders request a report [reviewed by a board committee of independent directors] on how the company is responding to rising regulatory, competitive, public pressure to significantly reduce carbon dioxide and other emissions from the company’s current and proposed power plant operations. The report should be provided by September 1, 2006 at a reasonable cost and omit proprietary information.
Report on Kyoto Protocol Compliance. – ExxonMobil
WHEREAS, international energy companies face unprecedented pressure to reduce greenhouse gas (GHG) emissions. Nations implementing the Kyoto Protocol are committed to significant reductions.
The Guardian (10/07/04) reported: “Exxon… saw its greenhouse gas emissions jump 2% last year to 135.6m tones” and that “an Exxon spokesman admitted that the company had no targets for reductions in CO2 emissions although he insisted that it was working hard on ‘energy efficiency’ gains.” It said ExxonMobil’s “emissions are more than 50% higher than those of rival Britain’s BP despite the US firm’s oil and gas production being only slightly larger.”At the World Energy Congress (09/07/04), ExxonMobil’s Science Strategy and Programs Manager, Brian Flannery, said the company depends on new technology to address the issue, “not emissions abatement goals” (Asia Pulse Pte Limited, 09/07/04).
Flannery also noted the bulk of new energy demand “would come from developing countries which were outside the Kyoto Protocol.” However, presently ExxonMobil is significantly exposed to climate regulations. In 2003 at least 37% of our Company’s revenue came from just five nations (Canada, Japan, UK, Germany, Italy) that have signed the Kyoto Protocol.
ExxonMobil’s commitment toward “technological solutions for energy supply and use with much lower greenhouse gas emissions” seems overly dependent on the $10 million a year it’s given Stanford University’s Global Climate and Energy Project.
Competitors (ie, Shell, BP, ConocoPhillips, Statoil, Amerada Hess and Suncor) have taken early actions to reduce their exposure to climate related risks, including assuming costs for carbon in their strategic planning, reporting on and reducing their GHG emissions, engaging in emissions trading, and investing in renewable energy. BP’s emissions reduction activities have generated savings with an NPV of $650 million.
ExxonMobil’s own data show its total spending on research and development from 1997 – 2003 decreased between 2002-2003; meanwhile two of its three main competitors’ expenditures increased (WSJ 07/17/04).
Such conflicting data and statements create confusion about whether and how the company is prepared to cost-effectively meet GHG reduction requirements, exposing it to unnecessary risks. Pressure from pension funds to examine climate change risks raises the possibility that industry segments like our own “could be viewed as inherently risky because of their exposure to climate-change regulations” (WSJ 10/27/04).
This same resolution received an unprecedented 28+% of the vote of shareholders at the 2005 annual meeting.
RESOLVED: Shareholders request the Board undertake a comprehensive review and publish within six months of the annual meeting a report on how ExxonMobil will meet the greenhouse gas reduction targets of those countries in which it operates which have adopted the Kyoto Protocol.
Supporting Statement:
The proponents hope the report will include:
- Projections of costs;
- Timelines for meeting mandatory reduction targets.
- An evaluation of whether earlier action to reduce emissions, as undertaken by key ExxonMobil competitors, would have reduced these costs.
- A study of the feasibility of reducing emissions in the US, which does not have restrictions on GHG emissions at the federal level but might implement them in the future.
