Green Investing

Socially Responsible Investors Can Hold Companies Accountable for Green Practices

By Lauren McLean, 10-01-09

For over a decade, socially responsible investors have called on companies to address the risks and opportunities posed by climate change and a carbon constrained future. We’ve worked with companies in the west and elsewhere who have emerged as leaders in the climate movement, such as Nike, Google, and Pacific Gas and Electric. They’ve prepared their companies for the realities of potential legislation and worked to affect policies well before many of our regional elected officials were willing to do so. 

We’ve persistently called on companies to address the risks and opportunities posed by climate change, achieving increasing support for these resolutions as more mainstream investors come to recognize that smart social and environmental policies and strong financial performance often go hand in hand.  This linkage likely influenced the results on a broad array of this year’s shareholder resolutions requesting increased energy efficiency as an important driver of bottom-line savings for companies; GHG emissions reductions; and greater disclosure from companies on their strategies for addressing climate-related risks and opportunities.

Investors are increasingly calling on their companies to change their policies or to at least plan – because if they don’t pay now and plan, they’ll likely pay much more later.

This year marked major milestones in investors’ shareholder engagements with U.S. and Canadian companies around climate change. Investors filed a record 68 climate related shareholder resolutions, and achieved the first ever majority vote on a climate resolution here in Idaho - asking Idaho Power (IdaCorp) to establish greenhouse gas emissions reduction goals. 

Idaho Power agreed to adopt greenhouse gas (GHG) reduction goals by years end, issued its first-ever wind farm RFP, and submitted a smart grid proposal to utility regulators – all following a 51.2% majority vote on a climate related resolution filed by a consortium of socially responsible investors. Another regulated utility in the west, NV Energy, agreed to expand its disclosure of its strategy to address climate change and then announced it would abandon a 1,500 MW coal plant, opting to increase its renewable energy generation. These results will have implications beyond the potential to reduce greenhouse gas emissions. I’m hopeful that we’ll see more renewable RFPs in Idaho and potentially bring rural economic development with greener energy as a result.

The Intermountain West is rich with energy resources that, coupled with our entrepreneurial spirit, could be the key in revitalizing our economy.  In Nevada, the largest solar plants in the country are being built, investors bidding on leases for land with potential geothermal resources have picked up, and a transmission line is proposed that would make it possible to put renewable resources into the power grid. 

Rural Lake County Oregon sees a clean energy economy as key to their future, and has announced its intention to become a net exporter of renewable energy within five years by developing wind and biomass to name a few options. 

In Idaho, entrepreneurs are developing biomass, geothermal, and wind resources.  As the Department of Energy continues to announce energy efficiency grants, companies such as Itron in Spokane which develop smart meters will benefit, as will communities and power companies, when Smart Grid applications are successful.

As carbon policy is being developed globally, shareholders have provided a crucial and influential voice to help companies focus on improving their own strategies and preparedness for a changing regulatory landscape.  If companies act, they can help eliminate a threat to our planet and economy, while positioning themselves for long-term value creation – not only for shareholders, but for the communities where they operate and for the entire economy.

Lauren McLean is a portfolio manager at Trillium Asset Management, a socially responsible investing firm.  She covers utilities, renewable energy, and a bit of clean tech for Trillium, serves on Ceres’ national utility stakeholder group, and files shareholder resolutions calling on utility companies to become more sustainable.

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