Published on Thursday, December 12, 2002 by the Inter Press Service
Shareholders Press Car Makers to Cut Greenhouse Gases
by Jim Lobe
WASHINGTON - A coalition of religious bodies and other concerned investors is calling on the world's two biggest carmakers, U.S-based General Motors (GM) and Ford, to take more aggressive steps to cut greenhouse gas emissions from their plants and products by 2012.
The group, led by the Interfaith Center for Corporate Responsibility (ICCR), has filed resolutions with both companies to be taken up at their annual shareholder meetings next spring. ICCR represents more than 275 faith-based institutional investors with about 120 billion dollars in total investment assets.
A number of other major institutional investors, including California's largest public employee pension fund CALPERS - which has about 150 billion dollars in assets - are expected to back the resolutions, according to Sister Patricia Daly, the head of ICCR and the Tri-State Coalition for Responsible Investment. ''We'll be reaching out to CALPERS,'' she said.
Institutional investors' support for resolutions on global warming has shot up in the past several years from an average of only about three percent of companies' shares in 1999 to 18 percent in 2002. Such strong showings have historically been taken very seriously by corporate managers, particularly at a time when investors are worried about the stock market's performance.
''We believe that both General Motors and Ford face material and reputational risk,'' Daly said Wednesday, ''in their current failure to address and reduce carbon dioxide emissions'', which are believed by most scientists to be responsible for global warming.
''The high greenhouse gas intensity of U.S. vehicle manufacturers undermines the competitive positioning of U.S. automakers both here and abroad as the world, including their competitors, moves forward to address climate change. This is not only about what is good for the environment; it is about what is good for GM and Ford shareholders,'' she added.
Greenhouse gas emissions from trucks, vans and cars currently make up about 20 percent of total U.S. emissions, which contribute 25 percent of annual emissions worldwide.
While most of the industrialized world has signed on to the 1997 Kyoto Protocol, which requires wealthy countries to reduce their emissions to around seven percent below 1990 levels, the administration of U.S. President George W. Bush has refused to do so, insisting that substantial reductions in greenhouse emissions would do too much harm to the U.S. economy.
At the same time, the administration has moved to ease existing laws and regulations designed to curb emissions and has aggressively sought out new sources of oil and gas in the United States, including environmentally sensitive areas in Alaska and elsewhere. It is also searching for fuel sources abroad, particularly in Russia, Central Asia, and West Africa.
The result is that U.S. automobile companies, which would have been under pressure to sharply improve fuel efficiency had Washington ratified the Kyoto Protocol, lack government incentives to move in that direction.
As a result, the carmakers are falling further and further behind competitors, particularly Japanese manufacturers, in developing new, energy-efficient automobile technology, a trend which could well diminish the long-term value of the U.S. companies in an increasingly globalized world, say engineers and environmentalists.
''Shareholders have a right to expect GM and Ford to shed their environmental liability by selling cleaner-running vehicles - instead of being stuck in the mud with yesterday's technology while the Japanese step boldly ahead,'' said Kevin Knobloch, director of the Boston-based Union of Concerned Scientists (UCS).
''Using available and emerging improvements to conventional technologies, Ford and GM can build a fleet of vehicles that average 40 miles per gallon by 2012. Hybrid vehicles can boost that average to at least 55 miles per gallon by 2020 without sacrificing safety, comfort or utility for customers,'' he added.
The resolutions filed with each company ask them to report to shareholders by August 2003 on: estimated current annual greenhouse gas emissions from their plants and products; how they can significantly reduce such emissions from vehicles by 2012 and 2020; and an evaluation of what new public policies would enable the company to achieve those results.
This is not the first time that Ford and GM have faced challenges from the ICCR and other investors concerned about their inaction on global warming.
In 1998, shareholder resolutions called on the two firms to withdraw from the Global Climate Coalition (GCC), a group of powerful U.S. oil, coal, gas, chemical and automobile companies that actively lobbied against Kyoto and tried to debunk claims that greenhouse emissions were contributing to global warming.
Although those resolutions received only three or four percent support from the two companies' shareholders, both giants decided to leave the GCC in 2000, leading an exodus of other firms that ultimately resulted in the GCC's collapse earlier this year.
''They were the key domino,'' noted Doug Cogan, deputy director of the social issues service of the Investor Responsibility Research Center (IRRC), an independent firm that tracks proxy voting.
Cogan noted that support for global-warming resolutions has mushroomed over the past three years and predicted that the Ford and GM resolutions will be approved by well over 10 percent of the shares.
The recent performance of global-warming resolutions, he said, ''demonstrates much greater institutional backing of these proposals than in years past, and ranks them among the top vote-getting issues on social and environmental topics''.
Last spring, support for a resolution that called for ExxonMobil to invest more in renewable energy drew more than 20 percent support, including from such heavyweight institutional investors as CALPERS.
Daly stressed that the new resolutions' supporters are eager to engage management in both companies about these issues, as they did in the late 1990s over their membership in the GCC. ''This is going to take a real collaborative effort, and we're prepared to do what it takes,'' she stressed.
The Canadian parliament's ratification of the Kyoto Protocol on Monday is expected to bolster the insurgents' case, particularly because Canada is not only a major market for the two manufacturers, but also because it is home to many GM and Ford plants.
''The companies would do very well to take note of that vote,'' said UCS's Knobloch.
Copyright 2002 IPS