Investors urge SEC to review filings by Dominion Resources, Southern Co., Covanta Holding for misleading statements about biomass energy benefits, failing to disclose information about environmental impacts, expected regulations, financial risks
November 20, 2013
– Investors With $100 Billion in Assets Complain to SEC of Misleading and Incomplete Statements About Climate Benefits, Carbon Neutrality, and Risk of Regulatory Action.
A group of investors is urging the U.S. Securities and Exchange Commission (SEC) to review filings by three leading U.S. companies – Dominion Resources, Inc. (D), Southern Company (SO), and Covanta Holding Corp. (CVA) – for misleading statements about the benefits of biomass energy and failing to disclose key information about environmental impacts, expected regulations, and financial risks. The 15 investors – including Domini Funds, Boston Common Asset Management, Green Century Investments, and several faith-based institutions – represent more than $100 billion in assets under management.
Dominion, Southern, and Covanta are publicly traded companies that operate wood-burning biomass power plants in the U.S. The nonprofit Partnership for Policy Integrity (PFPI) reviewed corporate disclosures by the three companies to determine whether disclosures regarding environmental and investment risks associated with biomass energy complied with SEC disclosure requirements, including guidelines provided by the SEC Climate Guidance issued in 2010. The findings are summarized in a report submitted today to the SEC, accompanied by the letter from investment groups requesting SEC analysis. The investor letter and PFPI report are available online at http://www.pfpi.net/investors-to-sec-please-scrutinize-bioenergy-claims.
The investors' letter to the SEC states: "[T]he industry appears to have failed to live up to its obligations for accurate and nonmisleading disclosure … Bioenergy should be required by the SEC to compete for investment dollars without materially exaggerating its value to the environment, or concealing its weaknesses and uncertainties." The letter requests that the SEC clarify what companies are allowed to claim in relation to the climate benefits and "carbon neutrality" of biomass energy.
"Burning wood in power plants emits more greenhouse gases than fossil fuels on a day to day basis, as well as air pollutants that degrade air quality and threaten health," said Mary Booth, PhD, director of PFPI. "Companies that present bioenergy as 'clean' and 'carbon neutral' are likely to be misleading investors, because bioenergy carbon neutrality, if it occurs at all, may only occur years to decades into the future."
Leslie Samuelson, president of Green Century Investments, one of the investment firms sending the letter, said: "For those of us who actively invest in renewable energy, it is essential to have a honest disclosure of the relative climate benefits of biomass energy compared to wind and solar energy. The SEC needs to take action here to compel nonmisleading disclosure by biomass companies that provides clear guidance as to what constitutes clean and low-carbon renewable energy."
Dominion, Southern, and Covanta have presented biomass energy as a key strategy for reducing greenhouse gas emissions from the power sector. Emerging wood demand by the companies is several million tons a year. Burning a ton of wood emits about one ton of carbon dioxide, along with "conventional" air pollutants including particulate matter, nitrogen oxides (smog precursors) and carbon monoxide.
The PFPI report identifies key concerns about how companies have characterized biomass energy to investors:
The Securities Exchange Act requires publicly traded companies to disclose certain information to assist investors in making informed investment decisions. The SEC formally recognized the importance of climate change-related information in its 2010 Climate Guidance. The Guidance explains that the physical effects of global climate change, and the legislation, regulations and policies developed to address it, could all have a material effect on companies.
The 15 investors signing on to the letter to the SEC are:
The Partnership for Policy Integrity (PFPI) provides science and legal support so that citizen groups, environmental organizations, and policymakers can better understand energy development impacts on air quality, ecosystems, and the climate. Go to www.pfpi.net on the Web.
MEDIA CONTACT: Ailis Aaron Wolf, (703) 276-3265 or email@example.com.
EDITOR'S NOTE: The investor letter to the SEC and the related PFPI report will be available as of 11 a.m. EST on November 20, 2013. To get a copies of these documents, contact Ailis Aaron Wolf, (703) 276-3265 or firstname.lastname@example.org.
SOURCE Partnership for Policy Integrity, Amherst, Mass.