Investors Turn Up Heat over Carbon Emissions ; One Investor Group Labels 10 Companies as 'Laggards' in Responding to Climate Change

Article excerpt

In the Wells Fargo logo, a stagecoach races in front of a pristine blue sky. Bed Bath & Beyond, meanwhile, is touting the "environmentally friendly" nature of many of the products it sells. And ExxonMobil, in its guiding principles, lists running an "environmentally responsible operation."

But Tuesday, a group of investors put these companies, as well as seven others, on a new "climate watch list," labeling them as laggards in their response to climate change.

This is just one example of how global warming is starting to hit corporate America between its pinstripes. This year at corporate annual meetings, shareholders will present a record 42 resolutions asking for more disclosure of company carbon emissions and potential financial exposure to new regulations. Some companies are finding themselves named as defendants in class-action lawsuits accusing them of heating up the planet. This week, Congress will begin hearings on global warming and is expected to hear from companies such as General Electric and Nucor Steel.

"A lot of people are wondering if [climate change] will be the calamity du jour," says Sam Stovall, director of investment strategy at Standard & Poor's in New York. "It could end up having a very severe impact on economies and fortunes."

Environmental groups maintain that corporate America should begin preparing for some form of restraints on carbon emissions. "Most are betting it will be some form of cap," says Andrew Aulisi, director for US climate policy at the Earth Resources Institute in Washington.

Business would be better off getting the new rules defined sooner rather than later, Mr. Aulisi argues. "If I am a power company and I have to spend $10 billion over the next few years to build capacity and I know that over the next five to 10 years there will be some emissions caps, it's better to define the rules now so I have the ability to plan accordingly."

Even before Congress acts with potential legislation, corporate lawyers will be watching a number of class-action lawsuits that have accused companies of causing global warming.

"It's not surprising that some groups would take that approach of class action to address a large issue of public interest," says Chris Murphy, head of the class-action practice group for the law firm McDermott Will & Emery in Chicago.

In fact, boards of directors may face lawsuits from shareholders if they don't start planning for carbon-emission changes, some analysts say. "At some point, there will be shareholders who say, 'You didn't get it when everyone else did, and your stock is down when everyone else's is up,' " says Rodney Taylor, managing director of the environmental services group at Aon, an Chicago-based insurance broker. …