Greenhouse Gas Emissions – Valmont Industries (2014)
Outcome: Successfully withdrawn following commitments from the company to improve disclosures of measurement around greenhouse gas reduction initiatives.
Shareholders request that Valmont Industries, Inc. issue a comprehensive report for reducing total greenhouse gas emissions from its products and operations based on current technologies and considering Intergovernmental Panel on Climate Change (IPCC) guidance. The report should include a review of the company’s plans and progress towards reducing total greenhouse gas emissions, be prepared at reasonable cost, omit proprietary information, and be made available to shareholders by November 2014
Reporting and rigorously managing environmental, social, and governance (ESG) business practices helps companies compete in a global business environment characterized by finite natural resources, changing legislation, and heightened public expectations. Reporting allows companies to publicize and gain strategic value from existing sustainability efforts and identify emerging risks and opportunities. ESG issues can pose significant risks to businesses, and without sufficient disclosure, stakeholders and analysts cannot ascertain whether the company is managing its ESG exposure.
A 2012 Deutsche Bank review of over 150 studies on sustainable investing found 89% of studies demonstrate that companies with high ESG ratings show market-based outperformance.
More than 1,200 institutional investors managing over $33 trillion have joined The Principles for Responsible Investment, and publicly commit to seek comprehensive corporate ESG disclosure and incorporate it into investment decisions.
Strong company-wide emission reduction goals can drive innovation and enhance shareholder value. A six-year Carbon Disclosure Project (CDP) study of 386 U.S. companies in the S&P 500 found that 79% of companies “earn a higher return on their carbon-reduction investments than on their overall corporate capital investments.” The study found that, “Those companies that set ‘stretch’ targets often reach and exceed them because the targets spur innovation and more profitable reductions than anticipated.” It concluded that those with “ambitious carbon reduction targets deliver larger emission reductions with higher financial returns than companies without such targets.”
Companies are increasingly sourcing renewable energy as a way to reduce their greenhouse gas emissions and limit their exposure to fluctuations in energy costs. 59% of Fortune 100 companies and almost two-thirds of Global 100 companies have set greenhouse gas emission reduction targets, renewable energy procurement targets, or both.
In order to stabilize global temperatures and mitigate the worst impacts of climate change, the IPCC, the world’s leading scientific authority on climate change, estimates that a 50% reduction in greenhouse gas (GHG) emissions globally is needed by 2050 (relative to 1990 levels).
Valmont Industries, Inc.’s overall ESG disclosure and related emission reduction initiatives are inadequate.
In preparation of the report, we recommend the company consider using the Carbon Disclosure Project (CDP) to disclose climate change data. Over 4,600 companies responded to the CDP questionnaire in 2013, including 71% of the Global 500 and 67% of the S&P 500. Currently Valmont Industries, Inc. does not respond to the CDP questionnaire. The questionnaire is sent on behalf of 722 institutional investors representing $87 trillion assets.