Thursday, December 22, 2016

Favorite EOM Story Of 2016 Is Immodestly Our Own: My Shareholder Resolution to NextEra Energy (FPL) on Sea Level Rise ... by gimleteye

My favorite story of the year was lightly reported. It was mine. About a year ago, my wife and I proposed a shareholder resolution to FPL's corporate parent, NextEra Energy; requiring NEE to report on the risks to markets and infrastructure through a range of sea-level rise scenarios. We pointed out that in its plan for new nuclear reactors at Turkey Point, NEE has already failed to take into account current estimates of sea level rise during the operating lifetime of the planned reactors.

NextEra Energy had an eventful year. Its stock price was as high as $130 in July. It is now at close to $118.

Our shareholder proposal deserves a place in the mix of FPL news.

It was the first in the history of shareholder resolutions to focus on sea level rise risk. (There have been many, on climate change generally.) Of course, NEE strongly opposed the proposal -- its DC attorney wrote a 30 plus page brief to the Securities Exchange Commission why it should be thrown out. The SEC approved our proposal.

As recorded by the annual meeting in May, 35% of responding NEE shareholders approved our non-binding resolution. Although we lost, we didn't lose. According to knowledgable insiders, a 35% positive response was extraordinary for a first-time shareholder resolution.

The best news, though, came in a lightly reported event last week: the Financial Stability Board announced the creation of The Task Force on Climate-related Financial Disclosures, chaired by Michael R. Bloomberg. "The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries. The work and recommendations of the Task Force will help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs."

In other words, the Financial Stability Board -- that reports to the G20 world leaders on economic risk -- basically endorsed exactly the point of our shareholder resolution to FPL/ NextEra Energy.

There is no evidence our modest resolution had any connection to the FSB consideration beyond our shared anxiety about the greatest threat to civilization (irrespective of what Trump and his pack believe). It is likely we just found ourselves on the same path of concern; living in Miami and direct evidence of sea level rise; a trillion dollar threat to coastal real estate and corporate profits.

FPL might not like it, but that's how it is, and it's not just a blogger who says so. For that reason, we are (immodestly) the blog's best story of 2016.

TCFD - Michael R. Bloomberg Recommendations Report Launch Video Message from Secretariat TCFD on Vimeo.

1 comment:

Anonymous said...

Thank you for doing this work. And it is a lot of work.