Strong Vote — Shareholders Condemn Sempra Energy’s Anti-Climate Lobbying
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Stefanie Spear, [email protected], 216-387-1609
BERKELEY, CALIFORNIA—MAY 14, 2021—Thirty-seven percent of investors voted to support a climate lobbying shareholder resolution at Sempra’s annual meeting today, according to preliminary vote numbers. The resolution focuses on the company’s anti-climate lobbying in California, asking for a report on the alignment of its lobbying activities with the Paris Agreement’s goal to limit global warming to 1.5 degrees Celsius to avoid the worst impacts of the climate crisis. The resolution was filed by shareholder representative As You Sow, Calvert Research and Management, and the Office of the Illinois State Treasurer.
“This proposal underscores shareholder concern about anti-climate lobbying activities, whether done directly by a company or by its trade association,” said Lila Holzman, senior energy program manager of As You Sow. “Shareholders want companies to ensure their lobbying is aligned with Paris goals.”
“Fulfilling the resolution will give investors a clearer understanding of the company’s climate lobbying actions—both direct lobbying and indirect lobbying by trade associations,” said Illinois State Treasurer Michael Frerichs. “We hope to see Sempra finally change course and rise to meet the expectations of investors who want to ensure their companies are transitioning business plans to succeed in a low carbon world. Stalling progress on decarbonization poses serious risk to the future value of portfolios which will be increasingly impacted by the more intense nature of storms, heat waves, floods, fires, droughts, and diseases — the harms associated with a warming climate.”
Sempra’s concerted anti-climate lobbying has received sustained negative attention in recent years. The California Public Utilities Commission’s Public Advocate’s Office recently investigated Sempra subsidiary Southern California Gas (SoCalGas) for its use of ratepayer funds to promote natural gas and ordered the company to return those funds. Federal legislators have also taken note and sent a public letter condemning Sempra’s efforts to “systematically undermine greenhouse gas reduction targets in California.”
“While Sempra claims to support the Paris Agreement, its anti-climate lobbying tells another story,” said Holzman. “With this strong vote, investors are demanding answers as to how Sempra will resolve the apparent disconnect between its lobbying activities and the need to align its enterprise with the ongoing net-zero energy transition.”
Sempra’s board opposed the resolution and filed a motion with the SEC to keep it from being considered at the Company’s Annual General Meeting. The SEC denied Sempra’s request, signaling the importance of the issue and the inadequacy of Sempra’s existing reporting. In responding to Sempra’s motion, investors pointed to clear deficiencies in Sempra’s lobbying disclosures, as well as their misleading context.
“While peer utilities are setting enterprise-wide climate ambitions and plans, Sempra is challenging California’s policies to reduce greenhouse gas emissions through increased electrification, among others,” said Kimberly Stokes of Calvert Research and Management. “Over time, this misalignment with climate goals could increase regulatory risk and negatively impact financial performance.”
If the world is to meet the 1.5 degree Paris climate target, fossil-fuel based natural gas, like coal, must be vastly reduced. States like California are taking the lead in adopting policy solutions to help the state adopt low-carbon energy sources. In early 2020, the California Public Service Commission launched a rulemaking related to managing “the state’s transition away from natural gas-fueled technologies.” New York and Massachusetts have since followed suit with similar investigations. Cities in California (and across the country) have already banned gas hookups for new construction, a trend likely to continue.
“The goal for Sempra cannot be to simply impede climate progress, and hope the world isn’t serious about the clean energy transition,” said Daniel Stewart, senior research associate at As You Sow. “This is a losing proposition. Instead it should focus on what policies and technologies are needed to decarbonize the economy and how it can provide them.”
Investors representing $6.5 trillion in assets under management wrote letters in 2019 and 2020 calling on companies in the U.S. to align their lobbying with the Paris Agreement’s goals. Similar climate lobbying proposals have been filed by shareholders this year at United Airlines Holdings, Delta Airlines, ExxonMobil, Phillips 66, and Norfolk Southern.
To learn more about As You Sow’s work on climate change, click here.
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As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. See our resolutions here.