Proxy advisory firms Glass Lewis, ISS and others are increasingly advising their large shareholder clients to turn America’s boardrooms into a battleground over climate change. In the process, they are undermining the financial stability of traditional energy companies by attempting to force directors to invest in renewable energy instead of fossil fuels.
Shareholders are, of course, within their rights to propose resolutions and pursue changes to the way corporations are governed. But, increasingly, the aim of these resolutions has shifted from securing better returns to achieving political change when our political leaders have disagreed with the direction these activists wish to go.
From the perspective of corporate leaders, this new frontier of so-called social responsibility looks more like the age of proxy pirates, who unfurl the Jolly Roger and swing aboard the boardroom deck intent on striking fear in the hearts of the captains of industry.
These attacks on corporate governance and fiduciary responsibility were once rare but are growing in frequency. In the early 2000s during the era of “peak oil” – when many believed our oil supplies were running out on their own – less than 200 shareholder proposals each year focused on environmental or social factors, according to Proxy Preview.
Over the past decade, the number of shareholder proposals motivated purely by political aims has increased in lockstep with our growing energy security. And the trend is growing. According to the Institutional Shareholder Services, more than two-thirds of the proposals filed this year were related to social or environmental pet causes.
The rising prevalence of climate-risk resolutions threatens to destabilize America’s energy sector, reversing the benefits of energy dominance and forcing change regardless of the economic and security costs to society.
The efforts of investment firms like BlackRock, Vanguard and State Street are distorting the market and scaring off investment that will, if allowed to continue unanswered, result in future supply shortages and higher prices for consumers.
Oil and gas projects take years, sometimes decades, to develop. If companies don’t invest today, consumers may find themselves paying more for imported energy.