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

DiNapoli: State Pension Fund Calls on Corporations to Address Environmental and Climate Risks

Shareholder Proposals Seek Lower GHG Emissions and Greater Disclosure on Climate Change’s Impact on Business
Fund Will Vote Against Company Directors for Failing to Manage Climate Risks

April 20, 2022

New York State Comptroller Thomas P. DiNapoli today announced that, as a result of recent shareholder proposals he has filed on behalf of the New York State Common Retirement Fund (Fund), companies are taking action to address investment risks posed by climate change and impacts of environmental justice.

“The climate emergency presents enormous risks and opportunities for investors, but corporate America has to step up, adapt and address the challenges they’re facing,” DiNapoli said. “As the state pension fund’s trustee, it’s my responsibility to protect and strengthen our investments. Making sure our investments—and the retirement security of our 1.1 million members, retirees and beneficiaries—are protected from the impact of climate change is a top priority.”

The Fund engages with portfolio companies on a range of issues to address investment risks and opportunities, including climate issues. It encourages companies to adopt robust climate policies, practices, and disclosures. Shareholder proposals can be an effective way to directly communicate with portfolio companies, their boards and fellow shareholders about transitioning to the low-carbon economy and protecting shareholder value. When filing a shareholder proposal, the Fund seeks a productive dialogue with the company. If the company agrees to implement the proposal’s request, it is withdrawn by the Fund.

Climate Risk Shareholder Proposals in 2022

GHG Reduction Targets

DiNapoli filed proposals seeking lower greenhouse gas (GHG) emission targets at five companies: Antero Midstream, Eastman Chemical, Eversource Energy, Carnival Corp. and Vulcan Materials. The companies were selected based on their relative high carbon emissions and all have agreed to DiNapoli’s request that they set targets for lowering them. For example, Antero Midstream, an energy midstream company focusing on natural gas, announced its net-zero by 2050 emissions target. Vulcan Materials, a construction material manufacturer, has committed to adopting science based GHG targets in line with a 1.5 C degree future.

DiNapoli’s proposals seeking GHG emissions reductions from corporations have resulted in agreements with numerous companies over the years, including General Dynamics Corporation, Domino's Pizza, Inc, and American Electric Power Company, Inc.

Environmental Justice Reporting

In his new shareholder proposals, DiNapoli asked global chemical companies Chemours and conglomerate 3M to issue an annual environmental justice report detailing—above and beyond legal requirements—what they are doing to identify and reduce their negative impact on the environment and health in low-income communities and communities of color. 3M and Chemours have since agreed to expand their reporting around environmental justice.

Climate Change Physical Risks Reporting

DiNapoli and the Fund joined Impax Asset Management in pioneering a new type of shareholder proposal that calls on Alphabet and The J.M. Smucker Company to assess the risks their physical operations and facilities face from rising sea levels, flooding and other climate change impacts. Alphabet’s San Francisco Bay Area headquarters, for example, is reportedly vulnerable to extreme weather and rising sea levels. The proposals ask these companies to publish periodic reports that detail what steps they have taken to address these risks.

Accounting for Climate Change Business Impact

DiNapoli joined with CalSTRS to file a proposal asking Duke Energy for a report assessing how the expected reduction in use of fossil fuels will impact its business in light of the International Energy Agency’s (IEA) Net Zero Emissions (NZE) by 2050 scenario, which estimates a 55% drop in natural gas demand from 2020 levels. The report would give the company and investors greater insight into Duke’s readiness to adapt to a lower carbon economy. The proposal has since been withdrawn due to Duke’s commitment to publishing an IEA NZE scenario analysis of both Duke Energy’s electric and natural gas distribution businesses by the end of 2022.

Voting Against Directors at Companies That Fail to Address Climate Change

DiNapoli also announced today the adoption of updated Proxy Voting Guidelines that will expand the Fund’s scrutiny of board directors at companies that fail to address climate risks. The amended Guidelines incorporate the Fund’s expectations related to alignment with net zero and the Paris Agreement goals. These guidelines build on how the Fund evaluates a company's climate performance, including climate transition targets, strategies, capex alignment, and the international Financial Stability Board’s Task Force on Climate-Related Financial Disclosures.

This year, the Fund will announce key votes against directors at companies that fail to address climate risks in advance of those companies’ annual meetings. It will also pre-announce its support for important climate proposals, such as those calling on banks in the U.S. and Canada to mitigate climate-related risks by ensuring that their financing is consistent with the IEA net-zero 1.5°C scenario.

In 2021, the Fund voted against 404 individual directors at 88 companies, including Berkshire Hathaway, Chevron Corporation, Phillips 66, Reliance Steel and Caterpillar Inc. In addition, the Fund supported Engine No.1’s slate of directors at Exxon Mobil, where three of the four challengers were elected to the board.

DiNapoli is recognized as a global leader among institutional investors for his efforts to protect the Fund’s investments, address material risks from climate change and pursue sustainable investment opportunities for the Fund. DiNapoli’s Climate Action Plan, released in 2019, is a multi-faceted approach that includes engagement with corporations, a $20 billion commitment to sustainable investments and climate solutions, and a net zero target by 2040 for the overall portfolio.

Since 2007, the Fund has filed more than 160 climate-change-related shareholder resolutions and reached 81 agreements with portfolio companies to analyze climate risks, set GHG reduction targets and renewable energy and energy efficiency goals, prevent deforestation, publish sustainability reports and appoint directors with environmental expertise.

About the New York State Common Retirement Fund

The New York State Common Retirement Fund is one of the largest public pension funds in the United States with assets of approximately $279.7 billion as of Dec. 31, 2021. 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 consistently been ranked as one of the best managed and best funded plans in the nation.