May 16, 2013
First Carbon Bubble Resolution Wins Strong Support at CONSOL Energy
by Robert Kropp
Twenty percent of shareowners support an As You Sow request that the company report on the
financial risks associated with having to leave most of its coal reserves in the ground.
Securities and Exchange Commission (SEC) rules permit a first-time shareowner resolution to be
returned to the next year's proxy ballot if it wins three percent of shareowner votes at a
company's annual general meeting. And it was not so very long ago that sustainable investors would
be satisfied with enough votes on environmental, social, and corporate governance (ESG) resolutions
to pass the three percent threshold.
As Laura Berry of the Interfaith Center on Corporate Responsibility
(ICCR) told SocialFunds.com last year, "It used to be we'd get excited if we got three or five
percent of the vote." In recent years, however, the number of mainstream investors supporting
resolutions addressing sustainability issues "has been going up in orders of magnitude," Berry
This week, As You Sow
announced the vote results for a first-time shareowner resolution the organization filed with
CONSOL Energy, a coal and natural gas company whose 4.5 billion tons of proven and recoverable coal
reserves are the largest in the US. Those coal reserves are treated as assets by the company and
the financial markets.
However, as recent reports from the International Energy Agency
(IEA) and Carbon Tracker
conclude, up to 80% of all fossil fuel reserves accounted for at present must remain unburned if
the effects of climate change are to mitigated in a meaningful way.
"If laws and
regulations are adjusted to recognize this limitation, the vast majority of fossil fuel companies
will be left with stranded assets in the form of unburnable reserves and underused infrastructure,"
As You Sow stated. The resolution requests that CONSOL report to shareowners on "various scenarios
the company deems likely, or reasonably possible, in which a portion of its reserves or
infrastructure become stranded due to carbon regulation."
The issue of unburnable reserves
gained additional prominence thanks to a widely-cited article in Rolling Stone authored by Bill McKibben of 350.org. McKibben's article is credited with launching the campaign
by college students across the country to pressure their institutions' endowments to divest their
holdings in fossil fuel companies.
'The fossil fuel industry is a rogue industry,"
McKibben said. "The fossil fuel industry has bought one party in Washington DC and scared the other
into silence. Unless we can weaken the power of this industry, we’ll never see the sort of climate
progress we need."
The results of a survey released today by First Affirmative Financial Network
reveals that the overwhelming majority of respondents expect that risks associated with fossil fuel
holdings will increase. Almost two-thirds say that large-scale divestment will occur within the
next ten years.
As You Sow's resolution attracted significant support, especially for a
first-time filing, at CONSOL Energy's annual meeting last week as 20% of shareowners supported it.
"The global overvaluation of fossil fuel-based energy companies creates the risk of a
'carbon bubble' that is estimated to be an order of magnitude larger than the housing bubble that
devastated the US economy," said Danielle Fugere, President and Chief Counsel of As You Sow. "This
vote underscores that shareholders are becoming increasingly jittery about the financial risks
climate change poses to unprepared companies. They are demanding to be fully informed of how, or
if, their company is responding."
Andrew Behar, As You Sow's CEO, added, "Overvalued
fossil fuel reserves, if not acknowledged, could create chaos in the global marketplace. Energy
companies must acknowledge this issue and give shareholders a chance to adjust their investment
A similar resolution, filed by the Unitarian Universalist Association (UUA), will be voted on by shareowners at the annual
meeting of Alpha Natural Resources, the nation's third-largest coal producer, on May 22nd.
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