US pensions demand change on energy boards

One of America’s biggest pension fund groups has submitted shareholder proposals to three leading utility companies urging them to appoint an independent director as chairman.

New York City Retirement Systems, which comprises five pension funds with around $208bn in assets, has filed shareholder proposals with Dominion Energy, the Southern Company, and Duke Energy requiring that the chair of the board of directors be an independent director.

Comptroller Scott M. Stringer, custodian and trustee of the pension group, said an independent board chair would provide stronger oversight and help spur these companies to decarbonise to prevent “catastrophic climate change”.

Stringer explained that the shareholder proposals were filed at companies with a long history of failing to have independent board chairs.

Except for brief transitionary periods, all three of the utility companies’ boards have been chaired by current or former CEOs for at least 20 years.

The companies also stand out because of their continued use of coal, planned expenditures on natural gas, and their below-average use of renewable energy.

“Climate change is the fight of our lives and the power utilities that have played an outsized role in polluting our planet must step up to protect it,” Stringer said.

“Our country’s power utilities must commit to decarbonize now, and independence on the board will put us on a path to get there. This is about ensuring sustainable growth for these companies and for our pension system,” Stringer added.

New York City Retirement Systems has around $125m worth of shares in Dominion Energy, $183m in Duke Energy, and $146m in Southern Company as of August 2019.

Elsewhere in the energy sector, Exxon – which has been the focus for considerable shareholder activism – has seen its credit rating brought down a notch by Moody’s.

The rating agency said its current method of burning through cash to spur growth was not an encouraging sign for investors in the company.

Reducing its Aaa debt rating to negative from stable, was a reflection of the company's "substantial negative free cash flow and expected reliance on debt to fund its large growth capital spending program", Moody’s said.