Its a Crucial Year to Address Climate Change in Our Portfolios

By Markets Fool.com

Climate change wake-up calls have been becoming steadily more persistent. For starters, it's official: 2015 was the hottest year on record, beating out 2014, which had previously held the dubious honor. The record-breaking heat continues, too: This past February was the hottest month on record, beating out, well, the month before.

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Within just the past week, icy Greenland warmed up to the types of temperatures that would be typical for months from now, climbing at one point to a balmy 64 degrees; the accompanying crazy spike in ice melt inspired perplexed scientists to double-check their models for mistakes.

NASA's Jet Propulsion Laboratory also released some weird intelligence to ponder, too. Climate change is causing a polar shift, changing the Earth's "wobble" -- in other words, altering how the planet moves on its axis. This relates to melting ice at the poles, redistributing weight to the middle of the planet. Although this shift apparently won't itself cause problems, there's no doubt it's a jarring and dramatic thought.

Such a dire string of very recent news adds urgency -- and a reminder that climate change is going to impact businesses far and wide, probably sooner than many investors think.

Meanwhile, 2015 yielded high-profile movement in environmental and climate change awareness, including the COP21 climate change agreement in Paris. The U.S. and China have already committed to signing on April 22, which is Earth Day -- mere days away.

It's long past the time for dismissing such issues. It's also particularly timely that this year, some concerned shareholders are using proxy season to demand more when it comes to companies' relationships with climate change and how they're approaching the risks and opportunities in addressing it.

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And, of course, that means other shareholders can vote on this issue and more using their proxy ballots prior to their companies' annual meetings, so that's where we individual investors can share our opinions, too.

For some, an uncomfortably warm proxy season forecast
Proxy Preview 2016 (registration required) -- an annual, comprehensive report on shareholder resolutions filed at public companies compiled and published by As You Sow, Sustainable Investments Institute, and Proxy Impact -- reveals increased shareholder interest in climate change risks and disclosure. This year, 94 out of 370 total shareholder proposals seek to address climate change, compared to 82 climate change-related proposals in 2015.

ExxonMobil may be the most high-profile and dramatic target this year given ongoing, headline-grabbing investigations from the attorneys general of New York and California. In fact, in late March, more than a dozen states' attorneys general gathered in New York and committed to "collectively, collaboratively, and aggressively" digging into fossil fuels companies' knowledge of climate change and whether they have misled investors and the public about it, and Exxon has particularly landed in the crosshairs.

Not surprisingly, Exxon alone faces multiple shareholder proposals aimed at environmental factors and climate change, which will be subject to a vote in May. It's by no means alone, though: plenty of other major energy companies like Chevron and Occidental Petroleum have also been targeted with shareholder proposals.

The pressure is rising, too. The California Public Employees Retirement System (CalPERS), the largest pension fund in the U.S. representing $289 billion, has just announced a campaign through which it will encourage shareholders to vote for climate-related shareholder proposals at Exxon, as well as ask them to support similar proposals at 11 other energy and mining companies.

Obviously the fossil fuels industry faces a significant year in addressing shareholder pressure on this topic, and of course, many politicians and members of the general public are bound to be even less understanding than your typical investors.

It stands to reason that Big Energy isn't the only industry that's being asked for more, though, and given the high number of shareholder proposals, Proxy Preview illustrates that concern extends beyond industries like energy and mining -- an array of companies in other industries should also be feeling increased heat.

For example, Proxy Preview's data names 20 companies that are subject to proposals regarding greenhouse gas (GHG) emissions targets alone, and the collection includes such divergent names as McDonald's, Fluor, Deere,and MasterCard.

Two of these companies' annual meetings have already occurred this year; 7% of Apple shareholders voted for such a proposal and in a more significant showing, 37% of Emerson Electricshareholders voted in favor of the company adopting GHG targets.

Busting out of business as usual
The world is always changing and evolving, and to succeed (or in some cases, to even survive), marketplace participants must always recognize when "what always worked before" is no longer sustainable and the status quo simply isn't good enough (or it's even downright dangerous).

In the case of a changing climate, risks go far beyond investors losing their shirts due to, say, companies failing to innovate for a competitive landscape. It's about the entire landscape itself: weather, agriculture, natural resources, entire ecosystems, political stability, economies, and, last but not least, human beings and their livelihoods themselves.

Investors, be sure to check your proxy statements for shareholder proposals. As you read your fellow shareholders' resolutions and managements' responses, think long and hard about whether your companies are doing enough, and use your proxy ballot to add your two cents and even vote your conscience.

And, needless to say, if companies fail to adjust to signs of a very new, risky reality, there's the possibility of losing one's investment -- and, ultimately, we could all lose a lot more than that.

Check back at Fool.com for Alyce Lomax's columns on environmental, social, and governance issues.

The article Its a Crucial Year to Address Climate Change in Our Portfolios originally appeared on Fool.com.

Alyce Lomax has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple, Chevron, and MasterCard. The Motley Fool owns shares of ExxonMobil and Fluor. The Motley Fool is short Deere & Company, and recommends Emerson Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.