Today, Thomas P. DiNapoli, New York State Comptroller, announced that companies are taking steps to address investment risk posed by climate change as well as the impacts of environmental justice.
The climate emergency presents huge risks and opportunities to investors, but corporate America must step up, adapt, and address the challenges they face, DiNapoli stated. As the trustee of the state pension funds, it is my responsibility to protect our investments and strengthen them. Our top priority is to ensure that our investments and the retirement securityof our 1.1million members, retirees, and beneficiaries are protected from the effects of climate change.
The Fund works with portfolio companies to address investment risks and opportunities. It encourages companies adopting robust climate policies, practices, disclosures, and disclosures. Shareholder proposals can be a powerful way to directly communicate and inform portfolio companies, boards and shareholders about transitioning to a low carbon economy and protecting shareholder value. The Fund seeks productive dialogue with the company when it submits a shareholder proposition. If the company does not agree to implement the proposal request, the Fund will withdraw it.
Climate Risk Shareholder Proposals for 2022
GHG Reduction Targets
DiNapoli submitted proposals to lower greenhouse gas (GHG), emission targets for five companies: Antero Midstream and Eastman Chemical, Eversource Energy; Carnival Corp. and Vulcan Materials. The selection of the companies was based on their carbon emissions. All have accepted DiNapolis’ request to set targets for lowering them. Antero Midstream, a natural gas-focused energy midstream company, announced its goal to be net-zero by 2050. Vulcan Materials is a construction material manufacturer that has committed to pursuing science-based GHG goals in line with a 1.5 C climate future.
DiNapolis’s proposals for reducing GHG emissions from corporations have led to numerous agreements over the years with many companies, including General Dynamics Corporation, Domino’s Pizza, Inc., American Electric Power Company, Inc.
Environmental Justice Reporting
DiNapoli’s new shareholder proposals asked global chemical companies Chemours, and conglomerate 3M, to publish an annual report on environmental justice. This report would detailabove and beyond legal requirements what they are doing to reduce their negative effects on the environment and health of low-income communities and communities. 3M and Chemours now agree to expand their reporting on environmental justice.
Climate Change Physical Risques Reporting
Impax Asset Management joined DiNapoli, the Fund in pioneering a new type shareholders proposal that calls for Alphabet as well as The J.M. Smucker Company was asked to assess the risk their facilities and operations face from rising sea levels, flooding, and other climate change impacts. Alphabets San Francisco Bay Area headquarters is, for instance, vulnerable to extreme weather events and rising sea levels. These companies are required to publish periodic reports detailing the steps they have taken in addressing these risks.
Accounting for Climate Change Business Effect
CalSTRS and DiNapoli teamed up to file a proposal asking Duke Energy to prepare a report assessing the impact of the expected reduction of fossil fuel use on its business. This was in light of the International Energy Agencys Net Zero Emissions by 2050 scenario (IEA), which projects a 55% drop of natural gas demand starting in 2020. The report would give investors and the company more insight into Duke’s ability to adapt to a lower-carbon economy. Duke’s commitment to publish an IEA NZE scenario assessment of both Duke Energy’s electric and natural gas distribution companies by the end 2022 has led to the proposal being withdrawn.
Voting against Directors of Companies That Fail To Address Climate Change
DiNapoli also today announced the adoption of updated Proxy voting Guidelines. This will increase the Fund’s scrutiny of board directors of companies that fail climate risk mitigation. The revised Guidelines include the Fund’s expectations regarding alignment with net zero as well as the Paris Agreement goals. These guidelines provide guidance on how the Fund evaluates companies’ climate performance, including their climate transition targets, strategies and capex alignment. They also include the International Financial Stability Boards Task Force for Climate-Related Financial Disclosures.
The Fund will announce key votes in opposition to directors of companies that fail climate risk mitigation. This announcement will be made ahead of the annual meetings of these companies. It will also announce its support for important climate proposals such as those calling upon banks in Canada and the U.S. to reduce climate-related risks through consistent financing.
The Fund voted against 404 directors at 88 companies in 2021, including Berkshire Hathaway Corporation, Chevron Corporation and Phillips 66. The Fund also supported Engine No.1s Exxon Mobil slate of directors, where three of four challengers were elected.
DiNapoli is a global leader among institutional investors because of his efforts to protect the Fund’s investments, address climate change material risks and pursue sustainable investment opportunities. The DiNapolis Climate Action Plan was released in 2019. It includes engagement with corporations, a $20 million commitment to sustainable investments, climate solutions, and a net zero goal for the overall portfolio by 2040.
Since 2007, the Fund has filed more than 160 climate-change-related shareholder resolutions and reached 81 agreements with portfolio companies to analyze climate risks, set GHG reduction targets and renewable energy and energy efficiency goals, prevent deforestation, publish sustainability reports and appoint directors with environmental expertise.
About the New York State Common Retirement Fund
The New York State Common Retirement Fund, which has assets of $279.7 billion, is one of the largest US public pension funds. The Fund invests in the assets of New York State and Local Retirement System, on behalf of more that one million state and municipal employees, retirees, as well as their beneficiaries. The Fund is consistently ranked among the top-funded and most well managed plans in the country.
