PNM Resources Inc. shareholders rejected a proposal to have the company report on its climate risks after the electric utility earlier this year outlined how its long-term plans align with the goals of the Paris Agreement on climate change.
At PNM's May 22 annual meeting, only 14% of shares backed a proposal to have the utility report on its efforts to remain competitive as markets transition to a lower-carbon economy, PNM said in a May 25 filing with the SEC. The vote marks a significant drop from the 49.9% shareholder support the resolution garnered in 2017 and signals that some shareholders may have been appeased by PNM's posting of its climate transition plans on its website early in 2018.
PNM, the parent company of two electric utilities in New Mexico and Texas, is among a number of energy companies that faced environmental resolutions from shareholders at their annual meeting this year and that also issued reports ahead of the meetings in hopes of sating investor's appetite for those details. Shareholder resolutions in the U.S. largely are symbolic in nature, although companies tend to cooperate with measures that garner majority support.
The proposal by The Max & Anna Levinson Foundation asked PNM to examine the risks and challenges it could face under a scenario in which technologies emerge and state and federal policies are adopted in line with the Paris agreement's goal of reducing emissions to limit global warming to 2 degrees C from pre-industrial levels.
PNM's board, in the materials for the meeting, said it had released some key details on the company's sustainability portal, including that PNM plans to halt all coal-fired generation by 2031 and aims to reduce its annual carbon dioxide emissions by 87% from 2012 levels by 2040.
"PNM's multi-part, long-term plan includes revisions to its generation portfolio, investing in renewable energy projects and promoting energy conservation and efficiency efforts," the board said. The utility, along with several other large energy companies, is participating in the Electric Power Research Institute's climate scenario and goal setting study. "Therefore, the subject matter of this proposal is already being addressed," the board said.
But SEC staff in March rejected PNM's argument that it should not have to hold a vote on the resolution because it had "substantially implemented" the proposal through the online disclosure, participation in EPRI's study and the filing of an integrated resource plan at the state level.
"It does not appear that the company's public disclosures compare favorably with the guidelines of the proposal," an SEC staffer wrote in a March 28 letter. "Accordingly, we do not believe that the company may omit the proposal from its proxy materials."
Levinson foundation President Charlotte Levinson also contended PNM has not addressed how it will tackle a number of challenges associated with the climate change transition, including how it will handle coal ash from closed plants or store spent nuclear fuel. It also did not address the risks of "investing in fracked gas from indigenous homelands," Levinson said in a May 29 email.
"Investors should want the answers to these and other questions related to climate justice," she said.
