3M – Renewable Energy (2015)
Outcome: Successfully withdrawn following a commitment from the company that it will set quantitative goals for the sourcing and/or production of renewable energy.
Shareholders request 3M senior management, with oversight from the Board of Directors, set company-wide quantitative targets by October 2015 to increase renewable energy sourcing and/or production
Sourcing renewable energy will make our company more responsive to a global business environment characterized by heightened public expectations and volatile energy prices. The transition to a low-carbon economy necessary to prevent the most harmful effects of climate change requires companies dramatically reduce their direct and indirect greenhouse gas (GHG) emissions. We believe investing in renewable energy reduces the company’s exposure to fluctuating energy prices and will move it closer to achieving GHG reductions.
In order to mitigate the worst impacts of climate change, the IPCC estimates a U.S. GHG reduction of 80 percent.
Sustainability practices matter to investors, as effective sustainability management and value creation are strongly linked.
Companies have the opportunity to drive significant change in the demand and consumption of clean energy. There is now a stronger emphasis on the need for companies to diversify their energy sources. Although energy efficiency is crucial for reducing emissions, there is a limit to how far operational efficiencies can carry a company relative to the reductions needed to mitigate the worst impacts of climate change. Sourcing renewable energy is essential to achieve the greatest emissions reductions.
Companies are increasingly turning to renewable energy to power their operations. Setting strong greenhouse gas reduction targets has also compelled them to invest in renewable energy. Eric Schmidt of Google recently stated: “Much of corporate America is buying renewable energy in some form or another, not just to be sustainable, because it makes business sense, helping companies diversify their power supply, hedge against fuel risks, and support innovation in an increasingly cost-competitive way.”
Renewable energy investment is good for companies and for its shareholders. A report by the Carbon Disclosure Project found that four out of five companies earn a higher return on carbon reduction investments than on their overall corporate capital expenditures. While generating savings, investing in renewable energy enhances a company’s role as a corporate citizen and strengthens its license to operate – a proactive response to reputational risk.
3M does not currently have greenhouse gas or renewable energy targets that demonstrate a proactive approach to reducing exposure to volatile energy prices, enhancing U.S. energy security, reducing reputational risk, and meeting the global need for cleaner energy.
We are concerned 3M may be lagging behind peers with renewable energy goals. For example, Johnson & Johnson will increase onsite renewable energy to 50MW by 2015, Caterpillar will use renewable sources to meet 20% of energy needs by 2020, and Procter & Gamble will source 30% of its energy needs from renewable by 2020. These companies have already demonstrated the feasibility of investing in renewable energy to reduce emissions and power their businesses. By setting renewable energy commitments, the company can strengthen its current inadequate climate change strategy.