Yesterday New York State Comptroller Thomas P. DiNapoli used his office for good to help fight climate change. Among his many responsibilities, DiNapoli oversees the state’s pension fund. This includes keeping an eye on the companies that are in fund’s investments.
As the New York Times’ Diane Cardwell reports, DiNapoli helped craft an agreement to get a big electric company to take the first steps towards reducing its carbon emissions. This change will not only help make the air cleaner and healthier for people in the tri-state area, but also help our country overall.
Under Investor Pressure, Utility to Study Emissions
FirstEnergy, one of the countryâs largest electric companies, has agreed to work toward reducing its carbon emissions in response to pressure from shareholders including New York State and Connecticut pension funds, New York Comptroller Thomas P. DiNapoli said on Tuesday.
The company, which operates in six states, including Ohio, Pennsylvania and New Jersey, promised to study and report on what it could do to help meet President Obama’s goal of reducing carbon emissions by 80 percent by 2050.
And I love the DiNapoli’s reasons for going after this agreement. He’s got a long-term view on how global climate change is going to impact businesses. And he sees his responsibility to make sure that the New York state pension fund takes those risks into account.
“Many of our energy holdings obviously have been very profitable for us in the short run,” he said. “What we’re trying to ensure is that in the long run that profitability is sustainable. We do see tremendous risk if issues of climate change are not incorporated into corporate strategy.”
This win shows that shareholder activism can work for broadly positive changes. DiNapoli is using his overseer role for the New York pension fund, and his ability to broker partnerships across state lines, to get businesses moving towards a lower-carbon future and more sustainable business practices.
And it tells me that climate change is no longer political kryptonite, which is an incredibly good thing. Government and businesses have to work together for climate change action.
The timing is not accidental. Just yesterday, the SRI investing coalition called CERES asked energy companies to give themselves “stress tests” to see how well prepared they are (or not) to deal with a lower-carbon future. Again, from the Times:
In the case of FirstEnergy, Mr. DiNapoli and his partners filed the proposal as part of a larger effort with Ceres, a coalition of environmentalists and investors, to make companies more environmentally responsive. The New York State pension fund owns 1,205,383 shares of FirstEnergy, according to the comptroller’s office, worth about $38 million at the market’s close on Tuesday. More than half of the power sources for the utility are coal, according to its website, but it says it has been working to reduce emissions and pollution over the last two decades by closing plants and installing more emissions-control equipment.
In his position as New York Comptroller, DiNapoli has a big stick for climate change action. And he’s using it.
Sure, carrots are nice too. But in a world where businesses can continue to sit on their hands and claim that their top job is returning shareholder value, I say let’s use the sticks we’ve got.
In the best cases, like this most recent one, it’s only the threat of a stick. With this agreement, the pension fund will withdraw its shareholder resolution. Everybody wins. Healthy pension fund. Cleaner air for millions of people. Stronger energy company.
As a result, Mr. DiNapoli, the State of Connecticut and As You Sow, a shareholder advocacy group, agreed to withdraw a shareholder resolution they had filed for First Energy’s annual meeting this year.
(And this isn’t the first time that DiNapoli has used his office to help the environment. In March 2013, he got Dunkin Donuts to move towards more sustainable palm oil.)
DiNapoli’s leadership shows that shareholders, investors, government officials and businesses can work together to make a more sustainable future for all of us.