The REP Wrap: Energy company sues ex- directors over coal plant
Your weekly summary of corporate sustainability news.
The management of an energy company in Poland are suing its former directors and insurer for around $160m, over a failed investment into a coal plant. Nearly 90% of Enea’s shareholders have supported the decision. Purpose-driven law firm ClientEarth mounted a successful legal case in 2019, arguing that Enea’s investment into the plant breached fiduciary duties because it would damage shareholder value. The project was ditched in 2020, mid-construction. A year later, Poland’s Supreme Audit Office recommended action against Enea’s former board members for their approach to risk management. ClientEarth lawyer Marcin Stoczkiewicz said: “We will be watching keenly to see how the judge deals with the question of directors’ due diligence obligations in the context of clear climate-related risks: rising carbon prices, competition from renewables, tightening energy policy and financiers’ withdrawal from coal. Companies and financial institutions should be watching too. Fossil fuel litigation risk is not theoretical – and directors are being held accountable.”
Exxon has said it will continue pursuing a lawsuit against two activist investor groups over a shareholder resolution the pair filed ahead of this year’s AGM. Arjuna Capital and Follow This submitted a proposal asking Exxon to strengthen its commitment to decarbonisation. In response, the oil major filed a suit in Texas, asking for the proposal to be voided, and seeking to have its legal fees paid by the duo. It’s an unusual move – US companies usually go through the Securities and Exchange Commission to get a resolution removed from the ballot. Arjuna and Follow This have since withdrawn the proposal, but Exxon told Reuters “there are still important issues for the court to resolve” so “the suit is continuing”.
Meanwhile, a judge in Delaware has sided with a Tesla shareholder who wants to scrap CEO Elon Musk’s $55.8bn compensation package. In 2018, the company’s board agreed to pay the sum if Musk hit 12 targets, which he has done ahead of schedule. Shareholder Richard Tornetta, who owned just nine of the carmaker’s shares, argued in a lawsuit that the figure was excessive and the board had not behaved independently. On Wednesday, Judge Kathaleen McCormick published her opinion, saying “the board never asked the $55.8bn question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” Tesla must now submit a revised pay package to be approved by McCormick.
Elsewhere in the world of carmakers, a joint study by think tanks Nomisma and Carbon Tracker has found that leading automotive companies are amongst the world’s biggest polluters, and are significantly underreporting their greenhouse gas emissions. The report, titled Oil Companies in Disguise 2024, looks at Toyota, Volkswagen, Stellantis, Hyundai-Kia, Renault-Nissan-Mitsubishi, Ford, Honda, Mercedes-Benz and BMW. It warns investors that in many instances firms in the sector are more carbon intensive than major oil companies.
The price of UK carbon allowances has fallen to its lowest point since the country split from the EU Emissions Trading System after Brexit. Prices for futures contracts that track the carbon price to December tumbled to £31.48 per tonne on Monday, compared with nearly double that under the EU ETS.
Financial services giant Macquarie has warned that many of its Australian corporate clients “will face a greater carbon liability in the years ahead” on the back of revisions to the country’s compliance market. Reforms introduced last summer will see emissions baselines reduced and Macquarie said that, while significant oversupply of credits will keep prices down initially, they could still pass AU$40/t over the coming year.
The Thompson Reuters Foundation will take charge of a database of information about companies’ performance on labour and workforce management. The Workforce Disclosure Initiative, which has been run by NGO ShareAction for the past eight years, holds data voluntarily disclosed by firms on topics ranging from pay and gender diversity to supply chain management. The Foundation said it would become “a core component” of its work on inclusive economies, and will enable it to enter into dialogue with companies.