Dominion Energy Inc. will issue a report by late fall on its climate risks, following pressure from major investors.
The New York State Comptrollers Office, which manages that state's massive pension fund, has withdrawn its shareholder proposal for the utility to assess and disclose its long-term risks and opportunities associated with implementing the Paris Agreement on climate change. Before it agreed to issue the report, Dominion was facing a vote on the comptroller's proposal for a second time after the measure garnered 47.8% shareholder support in 2017.
Dominion decided to issue the climate report "because of our belief in transparency, responsibility and responsiveness to our shareholders," Dominion spokesman Ryan Frazier said in a March 27 email. Frazier later clarified that the comptrollers office withdrew its shareholder proposal "because we committed to a report."
In a March 23 Annual Proxy Meeting Statement, the utility said that in addition to issuing the climate risk report, it will begin participating in the CDP climate survey in 2018 and increase the scope of its sustainability and corporate responsibility disclosures. Frazier said the company also has updated its methane emissions report.
Dominion is the latest in a string of publicly traded companies to respond to pressure from investors with respect to climate issues. A number of utilities face the prospect of votes on climate disclosures in 2018 after similar proposals came within a few percentage points of garnering majority support the previous year. One of those companies, Duke Energy Corp., already issued a report finding that the company may have to stop using coal-fired generation by 2050 under an emissions-constrained future in line with the goals of the Paris climate accord.
President Donald Trump has pledged to withdraw the U.S. from that agreement, but a number of U.S. businesses, cities, counties and investors have said they will continue to pursue the goals of the accord. The Paris deal aims to reduce carbon dioxide emissions and limit global warming to no more than 2 degrees Celsius above pre-industrial levels.
The New York comptroller's office withdrew climate-related proposals for a few other companies this year, including for Southwestern Energy Co. and DTE Energy Co. to report on climate risks and strategies and for American Electric Power Co. Inc. to adopt greenhouse gas emissions targets, according to documents and items in Ceres' online shareholder resolutions tracker.
AEP in its annual meeting proxy statement noted that in February 2018, it announced new goals of reducing its carbon dioxide emissions 60% by 2030 and 80% by 2050 from 2000 levels. AEP projected it would emit about 90 million tonnes of carbon in 2018. The notice also broadly forecast that federal and state mandates on carbon emissions in the future could force AEP to close some coal-fired facilities and could reduce the value of its "assets."
Patrick Doherty, director of corporate governance at the New York comptroller's office, said in a recent report that the decision to withdraw the DTE proposal was made "after agreements to conduct the analysis."
DTE in March issued a sustainability report using the Edison Electric Institute template for disclosing environmental, social and governance practices and figures. The report highlighted the company's May 2017 decision to reduce its carbon dioxide emissions from 2005 levels by at least 80% by 2050, a goal the company said is in line with those set out in the Paris agreement. DTE noted that the Michigan Public Service Commission confirmed the feasibility of the plan.
The company said its base assumptions included energy efficiency savings as well as the likelihood that many of its existing coal facilities will have retired by 2030 and demand response programs will grow over the next five to 10 years. DTE said it will invest in renewables and natural gas-fired generation with greater reliance on those resources that end up being the most economical and reliable options.
Although Dominion may have appeased investors on climate resolutions for now, its shareholders will vote at the annual meeting May 9 on a proposal sponsored by As You Sow for the company to issue a more extensive report on how it handles and plans to curb methane emissions from its natural gas storage assets. Nearly 24% of Dominion's shareholders in 2017 backed a similar proposal by Arjuna Capital, according to Ceres.
Dominion's board opposes that move, and the company in its proxy statement said it already complied with the proposal and thinks that preparing an additional report "would be an inefficient use of company resources."
Shareholder proposals are advisory in that companies are not legally required to take action on even those supported by a majority of shareholders. That said, companies tend to comply with widely supported resolutions, given that investors and shareholders can take additional steps such as removing uncooperative board members.
The comptroller's office did not respond to requests for comment, and Southwestern Energy spokesperson Jan Sieving in an email declined to comment.