Thursday, April 21, 2011

On to the General Electric Annual Meeting--"We'd Rather not Disclose Our Climate Change Regulatory and Business Risks" (GE)

This is hilarious. And sooo predictable. Here's one example why,
GE, with all their "Ecoimagination" greenwashing, stalled the cleanup of their PCB's from the Hudson River for thirty years before exhausting their legal maneuverings.
To this day though they wear their greener-than-thou halo as they go about their rentseeking ways.
Links on the disclosure hubbub below.

From the 2011 proxy:
Shareowner Proposal No. 4—Climate Change Risk Disclosure
The National Center for Public Policy Research, 501 Capital Court, N.E., Suite 200, Washington, DC 20002, has notified us that its representative intends to present the following proposal at this year’s meeting:
Resolved: The shareholders request that the Board of Directors prepare by October 2011, at reasonable expense and omitting proprietary information, a report disclosing the business risk related to developments in the scientific, political, legislative and regulatory landscape regarding climate change.

Supporting Statement
In 2010, the Securities and Exchange Commission (SEC) issued interpretive guidance on disclosure requirements regarding developments relating to climate change. Codifying SEC guidance would fully comply with the candid disclosure of business risks that is embedded in SEC policy and it would serve in the best interest of the company and shareholders.

GE will be materially affected by developments concerning climate change. Demand for the company’s renewable energy products is significantly driven by government action based on the hypothesis that industrial activity principally through the emissions of greenhouse gases are responsible for global warming.
Changes in the climate science and the prospects for related government action will affect our company.

The quality, integrity and accuracy of global warming science has been called into question:
Documents and emails released from the Climatic Research Unit (CRU) of the University of East Anglia in late 2009 exposed vulnerabilities in the reliability and objectivity of key information provided to the United Nations’ influential Intergovernmental Panel on Climate Change (IPCC).
In 2010, the IPCC acknowledged its Nobel Prize-winning 2007 report on which significant government initiatives rely included inaccuracies and exaggerated claims based on questionable data sources.

Changes in the political landscape bring uncertainty to business plans based on government action on climate change:
GE relies on government action such as the Waxman-Markey cap-and-trade legislation to obtain certain financial advantages from climate change-related investments. A company document highlighting the importance of the legislation stated, “On climate change, we were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses.”

The pending transfer of the U.S. House of Representatives from Democrat to Republican control in January 2011 reduces the likelihood that any cap-and-trade legislation will be adopted by Congress. Failure of cap-and-trade to become law constitutes a business risk.

Government fiscal considerations can affect business plans:
Demand for the company’s renewable energy products is affected by government subsidies but this source of
funding can suddenly be reduced or eliminated. For instance, budget deficits in European countries resulted in subsidy cuts for wind and solar energy, creating uncertainty for investors.

Shareholders need transparency and full disclosure to be able to fully evaluate the business risk associated with developments in the scientific, political, legislative and regulatory landscape regarding climate change.

Your Board of Directors recommends a vote AGAINST this proposal.
The prospect of climate change poses challenges to the world. GE’s response to these challenges includes its
ecomagination initiative, which focuses on developing new and better energy-efficient products and services for our customers, helping to implement responsible energy policy around the world, and using resources wisely in our operations. In support of ecomagination, we monitor political, legislative and regulatory developments related to climate change. We disclose on our website our perspective on the effect that climate change, and the political, legislative and regulatory responses to it, have on our business.

We also disclose information about our approach to environmental policy issues in the GE Citizenship Report ( and on the “Our Viewpoints” webpage ( /our_viewpoints/index.html). Further, GE provides information about our ecomagination efforts in the GE ecomagination report. In view of the constantly changing political, legislative and regulatory landscape regarding climate change, and GE’s many ongoing and transparent initiatives and engagement with respect to climate change, as well as GE’s existing reports and disclosure practices, we do not believe that the report requested by the Proposal is necessary or an appropriate use of resources. Therefore, the Board of Directors recommends that shareowners vote AGAINST this proposal.
We followed the political effort to enlist the SEC in forcing companies to achieve some folks' political ends.
The SEC's position was not at all what the promoters wanted. *

From January 2010:
SEC Issues Interpretive Guidance on Disclosure Related to Business or Legal Developments Regarding Climate Change
This "guidance" is vague enough to open almost any reporting corporation to legal action under the disclosure provisions of the '33 Act.
Let the good times roll (for the plaintiffs bar).
February 2010
"Should energy companies be worried about the SEC's climate change disclosure rule with EPA regulation on the horizon?" (CVX; XOM)
Those big public employee pension plans* who lobbied for this decision have a fiduciary duty to do their own due diligence and dump those positions that are at risk.

For example CalPERS largest equity poition as of their last annual report was XOM, around a Billion bucks worth.
The seventh largest position was CVX, $400Mil. or so....
...So yeah, the investment professionals at CalPERS had better do all that Prudent Man/fiduciary stuff that they get paid for.
*October 2010
Muni's: "Water Scarcity a Bond Risk, Study Warns"
CERES is made up of the behemoth public employee pension funds, CalPERS, CALSTRS, the New York Common Fund (via the Office of the Comptroller) New York State Teachers Retirement System, New York City Teachers Retirement System, Illinois State Board of Retirement and a half dozen others. Other investor members include the SEIU and AFSCME.
The Environmental and Public Interest members number over 60 organizations.

A few years ago CERES decided to use regulatory pressure on publicly traded companies to press their climate change thinking. They petitioned the SEC to require climate change disclosure in corporate filings.
In January of this year the SEC issued  interpretive guidance. The SEC focused on the impact of regulations, legislation and international accords.
There was one sentence on the physical impacts of climate change:

...Specifically, the SEC's interpretative guidance highlights the following areas as examples of where climate change may trigger disclosure requirements:
  • Impact of Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.
  • Impact of International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.
  • Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.
  • Physical Impacts of Climate Change: Companies should also evaluate for disclosure purposes the actual and potential material impacts of environmental matters on their business.
* * *
This wasn't at all what CERES wanted.
Ya win some, lose some.