A Maryland-based mutual fund announced that The Hartford Financial Services Group Inc. and Prudential Financial Inc. said they would improve their reporting and disclosure of potential financial risks they face from climate change.
Calvert–a Bethesda, Md.-based entity that describes itself as a socially responsible" mutual fund–said that as a result of that agreement, it has withdrawn climate change shareholder resolutions it had filed with the insurers.
The fund also filed the resolution with ACE Ltd. in Bermuda, which managed to keep it off their proxy by challenging it with the Securities and Exchange Commission arguing that the issue of climate change disclosure is not an appropriate subject for a shareholder proposal..
The fund said that in addition to improving reporting on climate risks, The Hartford and Prudential would report on strategies for mitigating those risks. Previous requests for information did not get a satisfactory response, according to the resolutions.
"As a responsible corporate citizen and as a major underwriter of risk, it's appropriate for The Hartford to address the issue of climate change rigorously and comprehensively," said Neal S. Wolin, Hartford's executive vice president and general counsel.
He added that the carrier appreciates "Calvert's commitment to the issue, and look forward to participating in the Carbon Disclosure Project and to articulating The Hartford's views on the challenges and opportunities related to climate change."
The fund said that Calvert and Ceres–a coalition of investors, environmental groups and public interest organizations that helped coordinate the resolutions–are doing continuing work to encourage companies to address "the climate change crisis."
Calvert said both insurers have agreed to respond to a climate risk disclosure questionnaire sent to companies each year by the Carbon Disclosure Project (CDP). In addition, both companies have committed to disclose their assessment of the business impact of climate change.
The London-based CDP provides what it calls a "secretariat" for institutional investor collaboration on climate change business implications. CDP provides a process for institutional investors to sign a single global request for disclosure of information on greenhouse gas emissions. According to CDP, more than 1,000 large corporations report emissions on the CDP Web site.
"Prudential Financial recognizes the importance of addressing the business impact of climate change," said Kathleen Gibson, Prudential vice president and corporate governance officer.
She noted that Prudential is not a property-casualty insurer, "nor does the company have high greenhouse gas emissions. Nevertheless, we will be including on our Web site a section that addresses Prudential's policies, programs and performance on the environment generally, and inform shareholders that we are and will continue to analyze the risks that environmental issues such as climate change may have on our business."
Calvert commented that climate change has the potential to affect virtually all segments of the insurance business, including coverage of damage to property, crops, business interruption, life and health. Insurers, the fund said, could also be affected through the large investment portfolios managed by insurance companies.
"Insurance is the world's largest industry, with core competencies in risk management and loss prevention," noted Baljit Wadhwa, Calvert social research analyst, "so it is crucial that insurance companies disclose their exposure to climate change impact and also explore the significant business opportunities becoming available."
Ms. Wadhwa said that with insurers making early identification of climate change, "our portfolios can benefit."
The resolutions that were withdrawn noted statements by science academies and Lloyd's concerning climate change, and said "investors believe that there is an intersection between climate change and corporate financial performance."
It asked the insurers' boards for a report by Dec. 31 describing company strategy and actions relative to climate change, addressing topics such as climate change science, public policy and legislation, the effect it might have on the companies, and steps being taken in response to climate change.
The resolutions noted that the insurers had not responded "in a meaningful and comprehensive manner" to a CDP request for climate change information.
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