Agreements Reached on Greenhouse Gas Reduction and Climate Lobbying in Alignment with the Paris Agreement, Prompting Withdrawal of Shareholder Proposals.
New York City Comptroller Brad Lander and trustees of three of New York City’s public pension funds today jointly announced several agreements reached with leading energy and high-tech industrial companies to improve disclosure of climate-related lobbying and capital expenditures.
The Office of the New York City Comptroller, on behalf of the New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS) successfully engaged with General Electric Company (GE), Duke Energy Corporation, and Dominion Energy, Inc., beginning late December. The funds filed shareholder resolutions at each company last fall and agreed to withdraw them based on the agreements reached.
“Climate change presents a clear and significant risk to our economy,” said New York City Comptroller Brad Lander. “Energy companies have an especially critical role to play in ensuring we are confronting those risks head on. I applaud General Electric, Duke Energy, and Dominion Energy for providing investors with critical information on their lobbying activity and capital expenditure plans – so that investors can assess their efforts in relation to the urgent need to transition to a low carbon future.”
Shareholder advocacy with corporations in the pension funds’ portfolio is one part of the New York City Retirement Systems’ comprehensive effort to confront the climate crisis and finance a just transition. As one of the country’s largest institutional investors, NYCRS uses a range of tools to advance the transition to a green economy – including divesting from fossil fuel reserve owners, investing in climate solutions like renewable energy and resiliency projects, engaging with corporate actors to bring about more ambitious climate action across the economy, and deploying municipal finance to invest in green infrastructure. Read more about our comprehensive climate finance strategy here.
General Electric Company: Paris-Aligned Climate Lobbying Reporting
General Electric has expressed clear support for the Paris Agreement’s goal of limiting greenhouse gas emissions, but investors have not received necessary information on GE’s lobbying activity which may contradict the goals of the Paris Agreement. Corporate lobbying activities inconsistent with meeting the goals of the Paris Agreement and holding global warming to 1.5 degrees Celsius over pre-industrial levels present regulatory, reputational, and legal risks to companies, and systemic risks to economies and markets.
In response to constructive engagement on a shareholder proposal submitted by the three New York City Retirement Systems — which serve as lead investors at GE on behalf of the Climate Action 100+ — GE agreed to provide reporting during 2022 on its climate-related lobbying activities. The report will describe whether GE’s lobbying activities are aligned with the Paris Climate Agreement’s aspirational goal of limiting average global warming to 1.5 degrees Celsius, and how the company plans to mitigate risks presented by any misalignment.
The Climate Action 100+ is an ambitious global investor collaboration through which 700 global investors with more than $68 trillion in assets across 33 markets encourage the world’s 166 highest emitting companies — responsible for an estimated 80% of global emissions — to take necessary action on climate change. Focus companies are assessed on their net zero transition using the Climate Action 100+ Net Zero Company Benchmark, which includes a climate policy engagement indicator, including whether the company has a Paris Agreement-aligned climate lobbying position and all of its direct lobbying activities are aligned with it.
The three Systems own 1.72 million shares in GE, valued at $164.3 million as of February 28, 2022.
Duke Energy Corporation and Dominion Energy, Inc.: Paris-Aligned Capital Expenditures
The Comptroller’s Office negotiated agreements with two of the country’s largest corporate greenhouse gas emitters to disclose detailed information about planned capital expenditures that will enable investors to assess whether the companies are on track to meet their net zero goals. While net zero goals are important steps that address climate-related financial risks, clear and transparent reporting is critical to ensuring that a company’s future capital expenditures will allow it to adequately invest in proven low-carbon technologies to meet these goals. Near-term investments in natural gas assets with long useful lives can lead to stranded assets, a significant risk for investors, and impede progress towards the long-term goal of net zero emissions.
Following negotiations, Duke Energy agreed to include additional disclosures in its earnings materials, upcoming climate report and ESG investor day materials. Dominion Energy agreed to include in its climate report a narrative discussion on its capital allocation evaluation process related to the company’s climate goals and its planned and projected investments.
These steps will meaningfully enhance the companies’ climate-related financial disclosures and provide investors with decision-useful information necessary to assess the alignment of the company’s capital expenditures with its decarbonization goals.
As of February 28, 2022, the three Systems own more than 982 thousand shares in Duke Energy, valued at $98.7 million, and more than 886 thousand shares in Dominion Energy, valued at $70.5 million.
The trustees of those systems are as follows:
New York City Employees’ Retirement System (NYCERS): New York City Comptroller Brad Lander; Mayor Eric Adams’ Representative Preston Niblack (Chair); New York City Public Advocate Jumaane Williams; Borough Presidents: Mark Levine (Manhattan), Donovan Richards (Queens), Antonio Reynoso (Brooklyn), Vito Fossella (Staten Island), and Vanessa L. Gibson (Bronx); Henry Garrido, Executive Director, District Council 37, AFSCME; Tony Utano, President Transport Workers Union Local 100; and Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.
Teachers’ Retirement System (TRS): New York City Comptroller Brad Lander; Mayor Eric Adams’ Appointee Philip Dukes; Chancellor’s Representative, Lindsey Oates, New York City Department of Education; and Debra Penny (Chair), Thomas Brown and David Kazansky, all of the United Federation of Teachers.
Board of Education Retirement System (BERS): Schools Chancellor David C. Banks, Represented by Lindsey Oates; Mayoral: Tom Allon, Vasthi Acosta, Gregory Faulkner, Dr. Angela Green, Anthony Lopez, Alan Ong, Gladys Ward, Karina Tavera; Thomas Sheppard (CEC); Geneal Chacon (Bronx), Tazin Azad (Brooklyn), Kaliris Salas-Ramirez (Manhattan), Jaclyn Tacoronte (Staten Island), and Deborah Dillingham (Queens); and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.
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