Shareholders Pressure Utilities: Ameren Corp (AEE), FirstEnergy Corp. (FE), SCANA Corporation (SCG)

Sustainability-related shareholder resolutions in context
Shareholders are filing an increasing number of resolutions on sustainability-related topics every year. According to the Sustainable Investments Institute, investor activists now file about 50% more shareholder proposals on social and environmental issues than they did 10 years ago. There has not been as dramatic an increase in the number of proposals voted on, although this is partly because proponents have withdrawn an increasing number of their proposals, usually after reaching agreements with management. All of this points to the growing influence of sustainability-related investor activism.

An excellent Bloomberg article covering this trend quotes Allie Rutherford, associate director of the corporate governance group at Ernst & Young LLP, as saying that “environmental and social resolutions accounted for more than 40 percent of all shareholder resolutions submitted in 2012, up from 30 percent in 2011.” Although sustainability-related shareholder resolutions rarely receive a majority vote, they can and do prompt action at targeted companies .

Risk reduction for utilities
If this trend continues, then it’s just one more reason why companies should take such non-traditional risks as climate change into account. The mechanisms for doing so are not a mystery. In 2012, Ceres issued “Practicing Risk-Aware Electricity Regulation,” a report analyzing the costs and risks of meeting the power needs of the U.S. through various strategies. The report concludes that the cheapest energy option with the lowest level of risk is energy efficiency. Other cheap, lower-risk energy options include onshore wind, geothermal, and biomass co-firing.

As regulators are increasingly pressed to reduce greenhouse gas emissions, I’m looking for companies that are excelling at shifting away from energy mixes that generate high emissions. I think 2013 is the year for renewables, and I’m not the only one: Warren Buffett is moving strongly in that direction too. Resilient companies and investors should do the same.

The article Shareholders Pressure Utilities originally appeared on Fool.com and is written by Sara E. Murphy.

Sara E. Murphy has no position in any stocks mentioned. You can follow her on Twitter @SMurphSmiles. The Motley Fool has no position in any of the stocks mentioned.

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