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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

NYS Comptroller DiNapoli: One of Largest U.S. Carbon Emitters Commits to Lower GHG Emissions

American Electric Power Adopts Targets for Long-Term Reductions

February 9, 2018

New York State Comptroller Thomas P. DiNapoli today announced that American Electric Power (AEP), one of the largest carbon emitters in the country, has adopted new, long-term targets for lowering greenhouse gas (GHG) emissions consistent with the Paris Agreement's goals. As a result, the New York State Common Retirement Fund's (Fund) has withdrawn the shareholder request it had filed with the company.

"The utilities sector should pay close attention to AEP's commitment to decarbonize its operations," DiNapoli said. "Reducing emissions and mitigating climate risk are vital to the company's own survival. Despite President Trump's plan to rescind the Clean Power Plan, corporations know a transition to a lower carbon economy is not just inevitable, it's already underway. We will continue to monitor and engage with AEP as it moves to cleaner operations."

The Fund's shareholder resolution called on the company to adopt and report on targets for the long-term reduction of its GHG emissions, taking into consideration the global GHG reduction needs defined by the Paris Climate Agreement. While AEP previously described its practices and plans to add renewable energy, energy efficiency, and grid modernization initiatives, those emissions reduction targets only extended to 2020 and did not show how or whether its long-term emissions were aligned with the 2°C goal. Among the new steps the company has said it will take is investment in renewable resources and advanced technologies to make its power grid more efficient and decentralized.

In its American Electric Power: Strategic Vision For a Clean Energy Future 2018 report, AEP outlines a business strategy that will lead to reductions in carbon dioxide emissions, measured against its 2000 levels, of 60 percent by 2030 and 80 percent by 2050. AEP also wrote that "these goals are consistent with the intent to limit the global average temperature rise to less than 2°C above pre-industrial times. Although the United States is not a party to the Paris Climate Agreement, stakeholders continue to use the 2 degree target as a framework for evaluating carbon reduction plans. A combination of factors gives us confidence in our ability to achieve these reductions, including an aging coal fleet, resource plans that are increasingly more diverse, our growing investments in clean energy and the potential of new and emerging."

DiNapoli recently announced a $2 billion increase to the Fund's low emissions index, doubling its investment. The low emission index underweights stock ownership in some of the worst GHG emitters based on independent emissions data reported to the CDP (Carbon Disclosure Project) and increases investments in companies with lower carbon emissions with returns closely tracking the Russell 1000 index. The carbon footprint of the low emissions index is 75 percent lower than its benchmark. In conjunction with the index, the Fund established an active shareholder engagement program, urging the substantial GHG emitters in the portfolio to further decarbonize their business operations.

AEP ranks among one of the largest electricity producers in the United States. The company is among the top five GHG emitters of the Fund's US equity holdings, and is also listed as one of the largest corporate GHG emitters in the world by Climate Action 100+, a global investor initiative to engage with the global largest corporate GHG emitters.

About the New York State Common Retirement Fund

The New York State Common Retirement Fund is the third largest public pension fund in the United States, with an estimated $201.3 billion in assets under management as of Sept. 30, 2017. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.

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