AEP, Cinergy agree to report to shareholders on reduction of greenhouse gas, other emissions

NEW YORK, N.Y., Feb. 19, 2004 — In response to shareholder proposals for greater transparency on how companies are planning for potential constraints on carbon dioxide and other emissions, electric power giants American Electric Power and Cinergy have agreed to report publicly about on how they are responding to growing pressure to reduce greenhouse gas and other emissions.

The company reports will assess the impacts of and potential responses to a number of policy scenarios, including various proposals in Congress and existing state legislation to limit carbon dioxide and other emissions.

Both companies agreed to the shareholders’ request that a committee of independent directors oversee the report. As a result, shareholders will withdraw resolutions facing the two companies.

The resolutions focus on the potential risks to shareholders posed by the company’s CO2 emissions, the primary greenhouse gas linked to global warming.

They were filed at American Electric Power [NYSE:AEP] by Connecticut Retirement Plans and Trust Funds and co-filed by Christian Brothers Investment Services, Trillium Asset Management, Board of Pensions of the Evangelical Lutheran Church in America, The Pension Boards – United Church of Christ, and the United Church Foundation, and at Cinergy Corp. [NYSE:CIN] by the Presbyterian Church (USA).

Similar resolutions have been filed at additional electric utilities and other companies by shareholders associated with the Interfaith Center on Corporate Responsibility (ICCR), a coalition of 275 religious institutional investors and CERES, a coalition of investors and environmental groups.

The resolutions’ proponents believe that the public reports to shareholders, which were agreed to by AEP and Cinergy following discussions with the investors, will raise the benchmark for disclosure of and action on climate change risks, and heralded the decisions as precedent-setting.

Denise Nappier, Treasurer, State of Connecticut, said: “These landmark agreements are an important milestone for shareholders, one that we hope will be emulated by corporate leaders across this industry, and across many industries. The consequences for companies that do not act responsibly and take steps to assess and mitigate risks posed by climate change can be just as devastating to shareholders as the corporate scandals of the past few years. We look forward to reports that will provide shareholders with essential information we need to make informed investment decisions.”

Bill Somplatsky-Jarman, Associate for Mission Responsibility Through Investment, Presbyterian Church, said: “Shareholders have been raising this issue since the early 1990s, so it’s significant that we’re working together to cooperate on an action plan. Cinergy made a forward-looking announcement last year with their pledge to reduce emissions; we’re hoping that this report will also be a leading example of risk assessment and disclosure that can be taken up by other companies.”

Both companies expressed their willingness to work collaboratively with the shareholders on addressing the emissions issue.

American Electric Power agreed to print the resolution in its proxy, with a statement describing the company’s decision to “accept and comply” with the resolution. The proxy statement will also outline the parameters of the company’s report. Cinergy will describe the collaborative effort on the report in the Letter to Shareholders in its 2003 Annual Report.

Dale Heydlauff, Senior Vice President, Governmental and Environmental Affairs, AEP, said: “We reviewed their proposal and concluded that their request for an emissions assessment and report was reasonable. We view it as consistent with the hard work we are doing to make environmental improvements while keeping our power plants competitive.”

Jim Rogers, CEO, Cinergy, said: “Cinergy has undertaken several initiatives to establish its leadership in social and environmental policy. We are partnering with Environmental Defense on our greenhouse gas emissions reduction pledge and we are delighted to join with the Mission Responsibility Through Investment to produce another effective collaborative process on these crucial public policy matters.”

The agreements come on the heels of increasing pressure on the electric power industry to address the issue of coming carbon constraints. Similar resolutions last year garnered the support of Institutional Shareholder Services, a group that advises institutional investors on proxy voting, resulting in record high votes – an average 23% vote in favor- with 27% of shareholders voting for such disclosure at American Electric Power.

Although last year’s resolution was successfully challenged at the SEC, Cinergy announced in September, 2002 that it would reduce its greenhouse gas emissions five percent below 2000 levels by 2010 and freeze them through 2012.

Mindy Lubber, Executive Director, CERES, said: “This is an historic breakthrough for shareholders who care about corporate governance and good disclosure of long-term risks to their investments. The agreement opens the door for a discussion about the best corporate strategy in creating certainty for companies who will surely be affected by the growing world consensus to limit carbon dioxide emissions.”

She continued: “We look forward to working with these and other companies to provide leadership to the electric power and other industries in learning to assess, and mitigate, the enormous challenge of climate change and its associated economic risks.”

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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