Siemens wind turbines operate on a wind farm in Marshalltown, Iowa, where Berkshire’s first major renewable investments were made last decade as the former MidAmerican Energy under now-Berkshire Energy is well into one of the country’s top wind corridors. Was situated.
Timothy Fadek | Corbis News | getty images
With annual meeting season soon upon us, Warren Buffett’s climate record is in the news again – and activists still aren’t happy.
Buffett’s Berkshire Hathaway The group will face three different shareholder proposals at its annual “Woodstock for Capitalism” on May 6. While no one expects either proposal to pass — Buffett’s opposition and a 32% voting stake would likely prevent it — they are attracting support from high-profile investors like CalPERS, California’s $445 billion pension company. And in recent years Berkshire’s growing base of shareholders has seen an increase in vote totals against Buffett’s clearly stated wishes.
The proposals call for better disclosures of the climate risks Berkshire faces from a mix of investments in utilities, reinsurance companies, coal shipping on the Burlington Northern Railroad and investments in oil stocks that it has been increasing recently, particularly one through large stakes westerner,
Buffett’s climate metrics are getting better
Berkshire is a climate paradox: Many of its climate metrics are improving rapidly, if not as fast as some competitors. The biggest: Its utilities’ renewable energy projects completed or under construction are on track to double the recent national average for electricity production from renewable sources, and its revenues from coal shipping have declined steadily over the past decade. But Berkshire both removes and absorbs climate risk – through its investments in emissions from power plants and, beam and Occidental, gasoline-powered cars; And its insurance covers the risks of floods and wildfires, which are expected to worsen as global temperatures rise.
“It’s fair to say that because of the size, scale and complexity of their business, their approach to climate change lags behind their peers,” said CFRA Research analyst Kathy Seifert. “They could be front and center, but I don’t think they will be.”
Any discussion of Berkshire and climate necessarily starts with its utility business, as electricity generation accounts for a quarter of U.S. greenhouse gas emissions. Berkshire Hathaway Energy, whose CEO Greg Abel is 92-year-old Buffett’s successor as chief executive of the parent company, will be If it were independent it would be the fifth largest US utility holding company.,
Berkshire Energy spokesman Brandon Zero said the company would not comment.
BHE is moving rapidly to shift its electricity mix to wind and solar energy. Counting plants under construction, Berkshire will soon get 45% of its electricity from wind, solar, geothermal energy and hydropower, up from 21.5% the government reports in 2022, according to Berkshire Hathaway Energy’s annual report. All utilities will actually be generated. Berkshire will get 31% of its power capacity from natural gas upon completion of its upcoming plants, which is less than the 40% national share. But it still uses more coal, the dirtiest major electricity fuel – coal represents 23% of Berkshire’s electricity mix – more than the national average of 20%.
That’s a dramatic change from as recently as 2014, when Berkshire got about a quarter of its electricity from renewable energy. At the time, Berkshire’s Oregon-based utility PacificCorp generated 60% of its electricity from coal; It now stands at 43%, all produced in plants opened by 1986. Iowa-based Mid-American Energy fell from 55% to 21%. Along the way, Mid-American built or expanded more than 30 wind plants exploiting Midwestern natural resources, while PacifiCorp added or expanded 14.
Overall, the utility group has closed 16 coal-fired plants and reduced its carbon emissions by 27% since 2005, according to its annual report, putting it on track to meet its target of a 50% reduction by 2030. is well on track for, which has been helped by the announced closure. 16 more coal plants planned. Railroad emissions are also on track to fall 30 percent below 2018 levels by 2030, the company says.
That’s still not as much as some other utilities have done, and Berkshire has been either less aggressive or less specific in its commitments to reduce carbon emissions, according to As You Sow, a shareholder-advisory group. said Daniel Stewart, climate program manager. Sponsoring a resolution at a Berkshire meeting.
“At a high level, there are encouraging signs on the utility side,” Stewart said, although the Minneapolis-based climate leader Excel Energy Cutting emissions by 80 percent by 2030 and phasing out coal faster than Berkshire. He said emerging science should let utilities change the date they will reach net zero emissions to 2035 or 2040 rather than 2050. “”What (also) jumps out at me is how bad the reveal is.”
Warren Buffett (front passenger) and Bill Gates (behind driver) arrive on stage at the nationwide launching ceremony of the electric vehicle BYD M6 in Beijing on September 29, 2010. Berkshire Hathaway first invested in the Chinese renewable energy and EV giant 15 years ago and still retains a large ownership stake in BYD today.
Frederick J. Brown | AFP | getty images
Disclosure issues are the focus of shareholder resolutions, which have become an annual thing for Berkshire.
Three resolutions – each sponsored by the Pension Plan of California, the Pension Plan of Illinois and As You Sow – cover the topic.
As You Sow specifically seeks data about Berkshire’s insurance businesses, and plans to measure and mitigate the climate impact of the businesses the entity invests in or insures. Supporters point to rising expenses on losses in natural disasters, including the $3.4 billion in claims Berkshire paid out last year related to Hurricane Ian, according to Berkshire’s proxy statement.
The Illinois proposal seeks details on how the company’s audit committee weighs climate risks, including whether climate issues will play a role in Berkshire’s closely watched succession planning.
And CalPERS asked for “an annual assessment of how the company manages physical and transitional climate-related risks and opportunities,” the proxy says. The giant pension fund has also voted against management nominees on the board’s audit committee, citing climate-related issues.
“When I talk to investors, they’re really focused on transparency,” said Kirsten Spalding, vice president of Ceres Investor Network, a liberal-minded investor advisory group. “It’s a matter of good governance to know what are the plans? What are the risks?”
Regulators, investors can tell future balance
Berkshire’s hand also may soon be forced by upcoming state regulations on insurance disclosures and federal securities disclosure rules that require climate risk audits, Seifert said.
The company argues that it has already disclosed a lot. In the proxy, Berkshire points to its energy division’s annual report that discloses its direct emissions, and argues that its executives and board manage climate risk through stress testing of its coverage portfolio.
Buffett has called Previous requests from shareholders for more climate-related disclosures are “unworkable”,
“I don’t think I’ve received three letters from shareholders in the last year,” Buffett said at the 2021 annual meeting. When climate impacts are concentrated in utilities, railroads, and insurance units. “By and large the people who bought Berkshire with their own money voted against those proposals.”
But losses have narrowed in recent years, as large index funds own more of Berkshire, and new generations among Berkshire shareholders within families have changing values from their parents. In 2021, the votes against Berkshire management were higher than ever before – 75% with the board still in power, but about 25% of the votes in favor of the proposals, and this was the highest ever vote against Berkshire’s management on a percentage basis. Were. Last year, a measure by As You Sow on greenhouse gas emissions disclosures received support from 47% of independent shareholders (26.5% overall). Over the past decade, many climate proposals never received even 10% support from shareholders.
Spalding and Stewart argue that the loss is worth taking in a shareholder vote, believing that if the percentage of pro-climate disclosure votes from shareholders other than Buffett and his close associates reaches 50 percent, pressure for change will build and ultimately get results.
“Things change,” Stewart said. “Because there is education.”
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