Institutional Investors Call on Electric Utilities to Address GHG Emissions

Several U.S. institutional investors have called on the country's 50 largest investor-owned greenhouse-gas emitters in the electric-power industry to report within a year how future greenhouse-gas limits will affect their financial bottom lines, and also to report steps they are taking to reduce those financial impacts and improve their competitive positioning, according to Ceres . The investor requests follow first-time climate-risk evaluation reports by three of the nation's largest power sector companies -- American Electric Power, Cinergy and TXU -- at the urging of shareholders. According to an analysis of those reports released today by the Boston-based Ceres investor coalition, there is widespread concern in the industry about regulatory uncertainty and the potential financial exposure it is causing for long-term capital investments.

"These first-in-the-industry reports demonstrate the need for companies across the country to take a hard look at the business ramifications of climate change," said Denise Nappier, Connecticut State Treasurer, whose office has been active the past several years urging electric power, oil, gas and auto companies to analyze the financial impact of climate change. "It's time for the rest of the industry to provide shareholders with a thorough analysis of both the risks and opportunities, so that long-term investors can make informed decisions."

"Shareholders need to know if the companies they own are going down the prudent path by adopting strategies that will enable them to survive or thrive in a world of increasing environmental concern and regulation, or whether they are taking the path of denial, risk, liability and cost," added Phil Angelides, a board member of the California Public Employees' Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS), the nation's largest and third-largest public pension funds, respectively, with about $311 billion of assets. "Ignoring the impact of carbon on the environment and on corporate bottom lines would be fiscally irresponsible and a disservice to investors, taxpayers and the environment."

"Electric power companies must act sooner rather than later to preserve shareholder value. Assessing this risk is a smart, strategic, common sense action that any responsible business leader should take to succeed in the emerging carbon-constrained world," added Steve Westly, controller of the state of California and another trustee of CalPERS and CalSTRS.

The Ceres investor coalition has convened a group of investors, environmentalists and industry representatives that will recommend best practice guidelines for analysis and disclosure on climate risk issues this summer. The results will immediately be shared with power sector companies and Wall Street firms.

Four companies -- AEP, TXU, Cinergy and Southern -- agreed last year to prepare reports and several more have agreed this year to do the same, including FirstEnergy, Progress Energy and DTE Energy, according to Ceres.

Ceres was formed in 1989 as a partnership between leading environmental groups and institutional investors seeking ways to align investment dollars with social and environmental responsibility.

(Source: Ceres news release, 4/13/05)