Investor Group Pushes Automakers for Action on Climate Change
20 May 2006
California State Controller Steve Westly and the Investor Network on Climate Risk called on the world’s largest automakers to address their role in global climate change and the effects it could have on their profits.
On Friday, the investor group—which manages more than $465 billion in invested assets—sent letters to Toyota, Honda, DaimlerChrysler, Volkswagen, BMW, Nissan, and General Motors pushing for an increase in environmentally sound practices and resulting performance for shareholders.
A similar effort in 2004 resulted in action by Ford. Current dialogue between General Motors and investors shows promise of similar positive results, according to Westly’s office.
Ford has taken the lead with its Climate Risk Disclosure Report. We expect the other companies we invest in to do the same. Taking action will give investors confidence that auto manufacturers are prepared to operate in a carbon constrained economy. Protecting the environment is good for California and good for business.—Steve Westly
The letter outlined six factors that should impel automakers to shift production to cars that are more fuel-efficient, burn clean fuels, and emit less pollution:
Volatile gas prices. High and volatile gas prices as a result of Hurricane Katrina coupled with limited supply and rapidly rising world-wide demand.
Energy Security. Dramatic revisions to both the International Energy Agency’s and the Energy Information Administration’s oil price forecasts, predicting rising oil prices and increasing dependence on five or six middle eastern countries.
Energy Independence. New energy independence measures, including enactment of the 2005 US Energy Bill, to accelerate introduction of fuel-efficient technologies and biofuels.
New Regulations. New policies globally ensure that the world’s major auto markets are covered by carbon or fuel economy standards. In the US, 11 states have adopted or are close to adopting tailpipe emission standards that would affect 33% of passenger vehicles sold in the US
Alternative Technologies. The clear emergence of hybrids as an important mid-term auto technology to produce cleaner, more fuel-efficient vehicles.
New Fuels. The emergence of biofuels as the alternative fuel of choice.
Signing the letter were Westly; the Adrian Dominican Sisters; Phil Angelides, Treasurer, State of California; California Public Employees’ Retirement System; California State Teachers’ Retirement System; Denise Nappier, Treasurer, State of Connecticut; Jeb Spaulding, Treasurer, State of Vermont; William C. Thompson, Jr., Comptroller, City of New York; and the Tri-State Coalition for Responsible Investment.
A growing number of companies and investors are recognizing the financial risks and opportunities of climate change, and these are especially relevant to the auto sector. It’s important that automakers disclose the implications of climate change for their business, and we look forward to collaborating with them on this issue.—Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk
The day before, Westly and the INCR made a similar call on ExxonMobil.
While the state of California and other oil companies are moving ahead to reduce the risks of climate change, ExxonMobil is stubbornly refusing to meet with shareholders. We demand a meeting with ExxonMobil’s board of directors to map out a new direction for the company. Exxon Mobil must limit the risks of climate change and ensure the company is positioned to capture opportunities in alternative energy technologies.—Steve Westly
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