Shareholders Push Berkshire Hathaway to Report on Climate Change Impacts

April 28, 2016, 6:45 a.m. ·

Warren Buffett of Berkshire Hathaway at the Fortune Most Powerful Women Summit in Laguna Niguel, Calif. (Photo credit Fortune Live Media via Flickr Creative Commons)

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Berkshire Hathaway, Warren Buffett's investment company, will hold its annual shareholder meeting Saturday in Omaha. Shareholders with a Nebraska nonprofit have introduced a resolution asking the company to report on the risks posed to its insurance businesses by climate change. NET News spoke with reporter Nicholas Kusnetz, who wrote an article on the climate change pressures Warren Buffet is facing.

NET NEWS: The story that you wrote for Inside Climate News focuses on Warren Buffett and his investments in energy and climate-related issues. Can you explain why you chose Warren Buffett?

NICHOLAS KUSNETZ: Well I think there are a few different reasons. First of all, he is among the most famous and influential investors in the world. His company, Berkshire Hathaway, has more than $500 billion in assets, so there's a ton of money that it controls. But beyond that, he's a celebrity in the investor world, and people really look to him for guidance on where to invest money and how to invest money. Another reason is that in a lot of ways he has sent mixed messages on climate. His company owns four different U.S. utilities. And those utilities have on the one hand invested billions of dollars in wind and solar energy, and have really been leaders in renewable energy, but on the other have fought against rooftop solar in states like Nevada and Utah and have also continued to invest a lot of money in old coal plants. Unlike the Koch brothers, for example, who have funded a lot of climate denial science, and have opposed a lot of environmental regulations, some people see him as a potential ally. So a few different groups of activists over the last year or so have been looking to see if he might take a different role.

NET NEWS: And he's faced criticism from some of his shareholders around this seeming contradiction. But as you point out in the article, he's really kind of motivated by profit, right? And he says it's sort of whatever will make the most sense for his shareholders?

NICHOLAS KUSNETZ: Yes, and I think his defenders would say he's in the right in that because this is a company that does have shareholders, those shareholders have expectations that they'll get good returns, and so that is the primary goal. But I think what a lot of the activists see is that more and more companies and institutional investors like pension funds trying to look ahead into the future and say we need to stop investing in coal, for example. And we need to take climate change into account in our investments and what we do with our money.

NET NEWS: And his personal views on this have been a bit unclear, right?

NICHOLAS KUSNETZ: He's spoken about the issue a few times publicly over the years. Most recently, part of what spurred our article is there is a shareholder resolution that's up at Berkshire Hathaway's annual meeting that asks the company to report on the climate risks to its insurance division. Now he addressed that proposal in a letter he sent to shareholders earlier in the year. And in the letter he said that climate change very likely does pose a serious risk to humanity, so you know, he acknowledges that. But on the other hand, he said, for various specific reasons, this does not pose a threat to our profits in the short term. And so as an investor, you shouldn't be worried about this, and our company should not be reporting on that.

NET NEWS: At the meeting coming up in Omaha, the annual shareholders meeting, James Hansen, who's a former NASA scientist is going to be speaking. Can you talk about the significance of his participation in the shareholder event?

NICHOLAS KUSNETZ: I think it's a big deal that he'll be there. He's arguably the most famous climate scientist in the world right now. He was one of the earliest to start calling on the need to act on climate change decades ago. And of course over the last several years he's become a big advocate for action on this.

NET NEWS: Nebraska has a few different groups that have been involved in this proposal, in pushing Berkshire Hathaway to consider this climate resolution. Can you talk about which groups are involved?

NICHOLAS KUSNETZ: The resolution was sponsored by something called the Nebraska Peace Foundation, which is a foundation run by a small social justice and peace group in Nebraska [Nebraskans for Peace]. A couple years ago they got together $180,000 to buy one Class A share of Berkshire Hathaway, because you need to own a share in order to sponsor a resolution. So they are the sole sponsors of the resolution. But another Nebraska group called Bold Nebraska, which was really active in fighting against the Keystone XL pipeline, they'll be organizing a rally outside. Of course James Hansen is now going to be there.

NET NEWS: With the invitation of James Hansen to the annual meeting and the response to the resolution that Buffett sent out earlier this year, do you think those signal any kind of shift or any future directions that Warren Buffett might take in terms of his holdings within the energy industry?

NICHOLAS KUSNETZ: I don't know if it's a shift. But when I was talking to the people from the Nebraska Peace Foundation who sponsored this resolution, I think this is sort of what they're hoping for. They know the resolution is not going to pass. Buffett has advised against it, the board of directors has advised against voting for it and they effectively control enough votes to defeat it. But I think what they want to do is just start a conversation and hopefully get the company and Warren Buffett and others involved in looking at what role should companies like Berkshire Hathaway be playing in things like climate change.

Kusnetz reported the article, "Warren Buffett Faces Pressure to Invest for the Climate, Not Just for Profit" for Inside Climate News.