Will BlackRock keep ignoring its own advice on climate change?
This week BlackRock voted for the status quo at Duke Energy’s shareholder meeting over both the climate and the interests of long-term investors. BlackRock has called upon investors to wake up to the dangers of climate change to businesses, yet continues to use their voting power irresponsibly.
At Dominion Energy’s shareholder meeting next week, will BlackRock continue to disregard its own advice and torpedo a resolution that could actually help address the climate risks to Dominion shareholders?
Majority Action and Mothers Out Front are calling on shareholders to vote for independent oversight of the board of directors of Dominion Energy, one of the largest US, investor-owned utilities and a significant contributor to greenhouse gas emissions. We urge shareholders to create an independent chair of the board, given strong concerns about the qualifications of the board’s leadership as well as corporate governance practices around the long-term risks related to climate change. Proxy adviser Institutional Shareholder Services has also recommended that investors support this proposal, citing the company’s lackluster shareholder returns.
Shareholders and grassroots activists plan to attend Dominion’s shareholder meeting to present the proposal and call for accountability from Dominion’s board. Nearly 130,000 grassroots activists have called on BlackRock and Vanguard, Dominion’s largest investors, to support this and other critical climate shareholder votes this season.
Where will BlackRock and Vanguard land in the vote?
Dominion’s shareholder meeting comes as the US energy policy landscape is shifting rapidly, as states are adopting ambitious targets for complete decarbonization of electricity within their jurisdictions. The falling costs of renewable energy sources and systems are rapidly upending fundamental assumptions underlying utility investments in fossil fuel-based infrastructure. Through our Climate Majority Project, we partnered with New York City Comptroller to launch a $1.8 trillion investor coalition calling for top US utilities including Dominion to commit this year to full decarbonization by 2050 at the latest.
In response to this pressure, Dominion’s recently announced emissions reduction targets. But based on research from the Energy and Policy Institute, these targets actually represent a significant slowdown of its decarbonization rate. According to Dominion’s data, the company reduced its carbon emissions at an average rate of 4% per year from 2005 to 2017, mostly by retiring coal plants in the later years of that period. That reduction rate plummets to 1% per year between now and 2030 under Dominion’s new goal.
In addition, Dominion faces significant community backlash against its construction of the Atlantic Coast Pipeline, with concerns that the siting of the Union Hill-Atlantic Coast Pipeline compressor station is a controversial example of environmental racism given its potential to cause disproportionate harm from toxic air pollution on communities of color. Analysts from the Institute for Energy Economics and Financial Analysis have warned that the financial viability of the Atlantic Coast Pipeline depends on unrealistic expectations of demand for natural gas.
The Dominion board is not positioned to provide necessary independent oversight over CEO/Chair Thomas Farrell to manage these business and shareholder risks.
The four longest serving directors other than Farrell control key committee chair positions on the board. The lead independent director, John Harris, has served on the Dominion board since 1999 and chairs its powerful Corporate Governance and Nominating committee. His only other recent public company board experience was at Piedmont Gas, which is also invested in the controversial Atlantic Coast Pipeline venture. Two of those four committee chairs, director Helen Dragas and Mark Kington, have no outside experience serving on boards or in executive leadership of publicly-traded companies — though both led the University of Virginia Board of Visitors through a failed attempt to remove UVA’s president, resulting to Kingston’s resignation.
As BlackRock has said, climate change is a risk that investors cannot afford to ignore. But unfortunately, BlackRock failed to back that rhetoric with action at Duke Energy’s shareholder meeting, voting to re-elect an outright climate denier to the company’s board to a position overseeing Duke’s sustainability and political activities. Let’s see if BlackRock wakes up to its complicity in the shareholder risk created by electric utilities’ insufficient response to climate change.
