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Kinder Morgan reports dip in emissions reductions, introduces diversity data

Kinder Morgan Inc.'s greenhouse gas emissions reductions fell slightly in 2018 while the company recorded significantly higher volumes of spilled fossil fuels, the North American energy infrastructure giant said in its second stand-alone environmental, social and governance report.

In 2018 Kinder Morgan reduced its greenhouse gas emissions by 1.9 million tonnes, down from the 2.2 million tonnes it cut in 2017, according to the report released Oct. 24. The company's voluntary methane emissions reductions also trended downward, totaling 4.0 MMcf compared to 4.6 MMcf in 2017.

While the pipeline firm saw fewer hydrocarbon spills in 2018, their combined volume of 11,530 barrels doubled compared to 2017.

Kinder Morgan began issuing the reports in 2018 due in part to pressure from investors to publicize and quantify impacts on climate change and sustainability. It became the first pipeline company to adopt a climate-change-related shareholder resolution after shareholders at the company's 2018 annual meeting voted in favor of issuing reports on both sustainability and how the company will function in a world that restricts the use of carbon in accordance with the Paris Agreement on climate change.

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Analysts and portfolio managers have called on the pipeline industry to improve and streamline their environmental disclosures, pointing to the absence of standardized best practices. Kinder Morgan, Williams Cos. Inc. and Oneok Inc., meanwhile, have ramped up disclosures enough to be included in several ESG-focused exchange-traded funds. Their conversion from master limited partnerships to C-corps also helps because the partnership structure's tendency to limit shareholder voting rights and concentrate decisionmaking power in the C-suite presents corporate governance issues.

Kinder Morgan's ESG report for the first time included workplace diversity disclosures, with women and minorities holding 18% and 19% of management positions, respectively, in 2018 while each group accounted for 13% of the company's board. Those metrics reflect a sectorwide struggle to boost the number of women in U.S. energy leadership positions, particularly in the oil and gas segments, even though the benefits of gender-diverse leadership grow more apparent. U.S. women held just over 12% of senior management positions in the oil, gas and coal industries and represented only 14% of oil and gas boards in 2019, according to a recent S&P Global report.

In 2016 the Connecticut Retirement Plans and Trust Funds, which held less than 1% of Kinder Morgan's common stock at the time, submitted a resolution requesting the board prepare a report on what the company was doing to increase board diversity. The board responded that the cost of doing so "would outweigh any potential benefits to ... stockholders," and the resolution failed to pass at that year's annual meeting.