Wednesday, March 10, 2004
By GreenBiz.com
NEW YORK, New York — In response to shareholder proposals for greater
transparency on how companies are planning for potential constraints
on carbon dioxide and other emissions, electric power giants American
Electric Power and Cinergy have agreed to report publicly about
on how they are responding to growing pressure to reduce greenhouse
gas and other emissions.
The company reports will assess the impacts of and potential responses
to a number of policy scenarios, including various proposals in
Congress and existing state legislation to limit carbon dioxide
and other emissions. Both companies agreed to the shareholders'
request that a committee of independent directors oversee the report.
As a result, shareholders will withdraw resolutions facing the two
companies.
The resolutions focus on the potential risks to shareholders posed
by the company's CO2 emissions, the primary greenhouse gas linked
to global warming. The resolutions' proponents believe that the
public reports to shareholders, which were agreed to by AEP and
Cinergy following discussions with the investors, will raise the
benchmark for disclosure of and action on climate change risks.
They heralded the decisions as precedent-setting.
"These landmark agreements are an important milestone for
shareholders, one that we hope will be emulated by corporate leaders
across this industry, and across many industries," said Denise
Nappier, treasurer of Connecticut. "The consequences for companies
that do not act responsibly and take steps to assess and mitigate
risks posed by climate change can be just as devastating to shareholders
as the corporate scandals of the past few years. We look forward
to reports that will provide shareholders with essential information
we need to make informed investment decisions."
Bill Somplatsky-Jarman, associate for Mission Responsibility Through
Investment, Presbyterian Church, said, "Shareholders have been
raising this issue since the early 1990s, so it's significant that
we're working together to cooperate on an action plan. Cinergy made
a forward-looking announcement last year with their pledge to reduce
emissions; we're hoping that this report will also be a leading
example of risk assessment and disclosure that can be taken up by
other companies."
The resolutions were filed at American Electric Power by Connecticut
Retirement Plans and Trust Funds and cofiled by Christian Brothers
Investment Services, Trillium Asset Management, Board of Pensions
of the Evangelical Lutheran Church in America, The Pension Boards
— United Church of Christ, and the United Church Foundation and
at Cinergy Corp. by the Presbyterian Church (USA).
Similar resolutions have been filed at additional electric utilities
and other companies by shareholders associated with the Interfaith
Center on Corporate Responsibility (ICCR), a coalition of 275 religious
institutional investors, and CERES, a coalition of investors and
environmental groups. Both companies expressed their willingness
to work collaboratively with the shareholders on addressing the
emissions issue.
American Electric Power agreed to print the resolution in its proxy,
with a statement describing the company's decision to "accept
and comply" with the resolution. The proxy statement will also
outline the parameters of the company's report. Cinergy will describe
the collaborative effort on the report in the letter to shareholders
in its 2003 annual report.
Dale Heydlauff, senior vice president of Governmental and Environmental
Affairs, AEP, said, "We reviewed their proposal and concluded
that their request for an emissions assessment and report was reasonable.
We view it as consistent with the hard work we are doing to make
environmental improvements while keeping our power plants competitive."
Meanwhile, at Cinergy, Jim Rogers, CEO, said, "Cinergy has
undertaken several initiatives to establish its leadership in social
and environmental policy. We are partnering with Environmental Defense
on our greenhouse gas emissions reduction pledge and we are delighted
to join with the Mission Responsibility Through Investment to produce
another effective collaborative process on these crucial public
policy matters."
The agreements come on the heels of increasing pressure on the
electric power industry to address the issue of coming carbon constraints.
Similar resolutions last year garnered the support of Institutional
Shareholder Services, a group that advises institutional investors
on proxy voting, resulting in record high votes — an average 23
percent vote in favor — with 27 percent of shareholders voting for
such disclosure at American Electric Power. Although last year's
resolution was successfully challenged at the SEC, Cinergy announced
in September 2002 that it would reduce its greenhouse gas emissions
5 percent below 2000 levels by 2010 and freeze them through 2012.
Source: GreenBiz.com
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