Honest Climate Policy is Hard

Recognizing Unacknowledged Risks, Possibilities & Value Judgments

Part II: The Fatal Flaws in AYS Coalition Climate-Related Policy Claims

The second in a series analyzing claims by proponents of Environment, Social, and Governance (ESG) and stakeholder primacy policies about the feasibility and value of their proposals.


One of the major efforts by the As You Sow Coalition of left-wing shareholder activists has been to push corporations into adopting plans that would require them to reduce carbon emissions to zero by 2050 or before.  While that day seems a long way off, the plans would have significant effects on current spending on physical plant and on product development. 

The arguments that the Coalition advances in support of its proposals, however, are so flawed that corporate leaders would breach their fiduciary duty were they to rely on them.  The central flaw in these arguments is that the Coalition supporters effectively assume their conclusion:  they assume that all investments that would result in carbon emissions after 2050 will be stranded (i.e., lost) because carbon emissions after 2050 will be prohibited starting then.  But they do not – and cannot – prove that this prohibition will then be in effect, either de jure or de facto.  A torrent of factors suggest that not only is the prohibition not a given, but it may not even be very likely, or even possible.

This national policy analysis addresses this and other debilitating flaws in the AYS Coalition’s support for its various zero-carbon and other climate-related proposals.  We consider a wide array of additional factors that competent corporate leaders would have to analyze in order to determine whether a current commitment to end investment in carbon-producing endeavors comports with the corporations’ duties to their shareholders.  And we provide evidence and reference sources that raise serious concern that it does not.


Until this year, certainly, the ESG[1] factor that earned proponents the highest amount of public interest and attention was the environmental factor, as those proponents pushed proposals that were ostensibly designed to achieve environmental goals, such as the reduction of greenhouse-gas emissions, the production of plastic and waste, and related results.  The specific proposals have been presented by the As You Sow organization and allied groups (collectively, the “AYS Coalition”) as impelled by both neutral moral sentiment and conclusive scientific research, and designed to maximize corporate value upon adoption.  In fact, the proposals were usually designed to enact left-wing political policy under the guise of achieving purportedly neutral benefits, while the support offered by the AYS Coalition has been so fundamentally flawed that it can provide no basis upon which any decisions can reasonably (and with legal fidelity) be made.

As we considered in the first installment of this on-going series of national policy analyses,[2] corporate leaders (the CEO, directors and top management) have a legal obligation to make decisions that, in their best estimation and after fully informed consideration, will result in the maximization of shareholder value.[3]  In this piece, we will focus specifically, within the “environmental” arena, on the AYS Coalition’s climate-related proposals, and on a panoply of ways in which the Coalition’s support for these proposals not only fails to provide a basis upon which to determine that they will be in the best interest of the corporations to which they are presented, but in fact underscore how much additional research must be undertaken in order to make such a determination, and how unlikely it is that legally competent research would recommend favorable action on the proposals or their underlying goals.  We will further consider the additional inquiries that would have to be undertaken in order to satisfy corporate leaders’ fiduciary duties of loyalty and care before the actions sought by the AYS Coalition could be undertaken.

In 2020 alone, the AYS Coalition submitted at least 64 formal proposals to American corporations pushing for change in policies in order to reduce the companies’ contributions to greenhouse-gas emissions.[4]  Often, those proposals sought to push the companies toward radical reductions in those emissions, and to adoption of policies that would require no emissions by 2050.[5]  Coalition members also pressured corporations by informal means to adopt the same policies.[6]

The Coalition’s primary support for its claim that these policies are both sensible and will maximize shareholder value arises in its 2020 publication Natural Gas:  A Bridge to Climate Breakdown.[7]  We conducted a partial critique of this document in the Free Enterprise Project’s (FEP’s) 2020 Investor Value Voter Guide.[8]  There we noted significant flaws in the Coalition’s analysis.  The relevant portion of that discussion reprinted below.[9]


*           *           *


A representative example of AYS Coalition proposals aimed at reducing corporations’ carbon production is the proposal submitted to General Electric for its 2020 annual meeting. It asked the company to “issue a report … describing if, and how, it will modify its operations and investments to reduce its total carbon footprint at a rate and scope necessary to align with the Paris Agreement’s goals.”[10]

The “Paris Agreement” to which the resolution refers is the Paris Agreement Under the United Nations Framework Convention on Climate Change, which was negotiated in 2015.[11] The Agreement entered into diplomatic force in November of 2016.[12]

Diplomatic agreement in principle, however, is far different from actual execution or technological possibility. The United States began its withdrawal from the Agreement on November 4, 2019, with that withdrawal to be completed on November 4, 2020,[13] noting that the United States is making significant progress in lowering its carbon emissions outside of the Paris Agreement.[14] Other countries remain signatories to the Agreement, but few have come anywhere close to meeting the Agreement’s goals.[15] A 2018 United Nations Environment Program (UNEP) report, for instance, went through G-20 member nations one by one, listing which ones are failing to live up to the promises they made in Paris three years ago (promises that themselves are, according to the United Nations (U.N.) itself, too little to keep the planet’s warming in check).

Together, the G-20 countries account for 78 percent of the globe’s emissions.

Seven of these countries – Argentina, Australia, Canada, the Republic of Korea, Saudi Arabia, South Africa and the United States – are off track to meet their Paris promises for the year 2030, the UNEP report finds. So is the entire European Union.

Several other G-20 countries – Russia, India and Turkey – are already on course to exceed their Paris promises by a good measure, but the report questions whether this may in part be because they have set their ambitions too low.

For two more G-20 countries – Mexico and Indonesia – it just is not clear where they are with respect to their goals. And even for those few countries that are on target – Brazil, China, Japan – there is plenty to worry about.[16]

But even that last somewhat “hopeful” note is misleading, because China, for instance, only committed to stop increasing its total carbon emissions in 2030.[17] And as the quotation above suggests, reports sponsored by the U.N. have suggested that even if all initial signatories were fully meeting their Paris Agreement goals, global temperatures would still in 2100 far surpass what the U.N. represents to be the point beyond which irreparable and catastrophic effects will be triggered.[18]

It also appears that the Agreement’s goals may be effectively impossible to reach, given technological and geopolitical constraints.[19] As the current coronavirus crisis is revealing, fairly complete shutdowns of national economies do significantly and quickly reduce the levels of carbon dioxide they produce.[20] Such shutdowns are hardly sustainable for very long, however, nor are they desirable from a macroeconomic perspective.

The As You Sow Coalition’s proposal to General Electric recognizes none of these realities. (Nor do its other climate-related proposals.) Rather, it just assumes that the Paris Agreement goals are in force in the United States, being respected in practice around the globe, are sufficient to their purpose, and are reasonably achievable without creating any hardships worth considering. The preamble of the proposal simply asserts that the Agreement “instructs that net emissions of carbon dioxide must fall by 45 percent by 2030 and reach ‘net zero’ by 2050,” and seeks the corporation’s compliance with those goals.

A recent report from the AYS Coalition reveals in significantly greater detail the Coalition’s failure to account for reality. In the report, Coalition authors reject out of hand the move toward natural gas as a cleaner-carbon “bridge” to an eventually carbon-free economy. The authors admit that U.S. emissions have been falling every year but one for more than a decade, and that natural gas is estimated by the federal government to create half the carbon emissions for energy produced as coal.[21] They then cite a study produced by a fellow-traveling research organization to suggest that the real carbon-benefit of natural gas might be somewhat smaller, while acknowledging that even under these skeptical estimates, natural gas is still 25 percent more carbon-efficient than coal.

The Coalition authors, though, judge these improvements woefully inadequate. Rather, in developing a business case for pushing corporations to divest from carbon-producing activities altogether, as by the proposal we now consider, the authors adopt wholesale every claim included in the Paris Agreement and its underlying “science,” and simply presume their economic and technological feasibility.[22] (Revealingly, the AYS Coalition authors direct no skepticism of the type it levied against federal government claims about the carbon efficiency of natural gas energy production at any assertion made in the Paris Agreement or in the underlying United Nations Climate Committee analysis. Their credulity survives despite the fact that predictions about the cumulative effects of anthropogenic global warming, the range of potential responses, the expected effect of those responses, and all of the other assumptions that underlie the Paris Agreement and its goals are far more speculative and open to doubt than is the comparatively simple question of how much carbon is produced by coal and natural-gas energy generation.)

The authors then presume that any investments made in carbon-producing assets such as natural-gas plants will be “stranded” and lost because governments will inevitably require industry to comply with the Paris Agreement and shut down any carbon-producing assets by 2050 at the latest.[23] They further claim that this migration will even improve businesses’ financial condition, as “in almost all jurisdictions, utility scale wind and solar now offer the cheapest source of new electricity, without subsidies.”[24]

The National Association of Manufacturers (NAM) ably critiqued most of these arguments as they appeared in earlier AYS Coalition publications and shareholder proposals.[25] In a 2018 study commissioned by NAM, the authors reviewed the unsupported and counterfactual assumptions built into As You Sow shareholder proposals related to climate change.[26] They noted that “each of [these proposals] has also endorsed the use of a scenario consistent with limiting global warming to no more than 2 degrees,”[27] and in fact, in the most recent proposal considered here, to 1.5 degrees. This, though, is unwarranted from the outset, because “such a scenario by definition rests on a number of strong assumptions as to the effectiveness of international cooperation on the global reduction in greenhouse gasses”[28] that do not stand up to analysis.

Given th[e] framework [of the Paris Agreement], success in meeting the goals of the agreement requires that: (1) signatories collectively set through their own individual actions a worldwide target of [reductions] that will restrict global emissions to a level that limits climate change to 2 degrees; (2) signatories develop and enact a global regulatory and enforcement regime capable of achieving their [reductions] (at least on average), including punishing of defectors or otherwise compensating actions on the part of the remaining signatories for any such violations; and (3) the economic, social and distributional impact of meeting the [reductions] be acceptable to the populace of each country, otherwise, they will take action to change their 0government’s policy—e.g., by electing new leaders willing to reverse the objectionable policies. If one or more of these conditions fails to hold, global emissions and demand for fossil fuels and other relatively carbon intensive products will be higher than they would be under a 2-degree scenario.[29]

As we have demonstrated above, and as the NAM report establishes in further detail,[30] there is no valid reason to accept that these assumptions are true. Very few countries are complying with their Paris Agreement commitments even if they have not, as the United States has, withdrawn from the Agreement. There is no evidence to suggest that they are going to start now, or soon. And even that, according to the U.N., won’t be enough. What AYS Coalition climate-change proposals are pushing companies to do, then, is to tie their corporate future to an already failed goal – to expend vast corporate resources and diminish shareholder value in aid of targets that are never going to be achieved.

Another fundamental, and fatal, contradiction appears on the face of the AYS Coalition’s logic in these matters. As we noted above, the Coalition authors asserted in their recent defense of their climate-related and carbon-divestiture proposals that “utility scale” wind and solar energy are now cheaper than carbon-based energy without government subsidies.[31] But if this is true, then the AYS climate proposals are pointless expenses, as corporations – and everyone else – will migrate as soon as possible to wind and solar power. But if, as is suggested by the very corporate attachment to natural-gas energy development to which AYS objects, it is not true that wind and solar can replace natural gas at competitive rates (or worse, cannot at foreseeable levels of technology replace carbon-based energy generation at all in the required volume),[32] then there is (again, by the As You Sow Coalition’s own logic) no way for the world to keep climate change within the Paris Agreement-desired bounds. If this is true, then AYS is pushing these corporations to bankrupt themselves and their suppliers, and (insofar as the proposals are aimed at power companies) cripple the American economy for a pipe dream.

Consider a thought experiment. Accept as true, for the sake of this exercise, all of the AYS and Paris Agreement assumptions about what the global failure to meet 1.5 or 2 degree-increase targets will mean for the world: radically metastasizing and incredibly expensive climate change. Now recognize, as we have established, that the Paris Agreement goals are not, under any reasonable recognition of current technological and geopolitical realities, going to be met. Given these two assumptions, the result of AYS Coalition climate proposals, were they ratified by shareholders, would be to cripple the ratifying corporations financially without achieving the desired climate goals. And this crippling would occur exactly when those same corporations will need to be as financially vigorous and technologically innovative as possible in order to meet the disaster that will arise from the world’s failure to meet those climate targets. The only conclusion that can be reached, under the AYS Coalition’s own climate assumptions, is that their proposals should be firmly rejected – unless the Coalition can demonstrate conclusively that the Paris Agreement is being honored and that its goals can and will, technologically and politically, be achieved. But rather than rigorously demonstrate this vital proposition, the Coalition simply assumes it away. It would undermine the fiduciary obligations of both corporate boards and institutional shareholder proxy voters to vote for proposals advanced on such premises.


*           *           *


Some additional flaws in the Coalition’s analysis have been brought into stark relief in recent months.  The report holds out California and Pacific Gas & Electric Company (PG&E) as models to be emulated in the move toward renewables.[33]  Hard evidence from California and from PG&E, however, illustrates that it is certainly too soon now to shift significant resources into the development and production of carbon-free resources.  California has long prided itself for being on the cutting edge of abandoning or rejecting cleaner-carbon fuels such as natural gas and genuine, always-on renewables such as nuclear in favor of unreliable renewables such as wind and solar.[34]  They are now reaping the (fiery) whirlwind for their hubris.[35]  As the Golden State faces an entirely predictable hot-and-dry spell, PG&E has been forced to effect rolling blackouts that endanger the state.[36]  The blackouts are necessary in part because so many resources have been diverted from keeping the state’s powerlines and rights-of-way up to date and in good repair that hot and dry conditions themselves trigger a reductions in energy production and transmission.[37]  As a result, the state has been forced to buy “dirty” power from out of state even while failing to keep its citizens in reasonably modern, first-world conditions and sparking fires that themselves create massive carbon emissions.[38]  All the while it reduces carbon-based energy production not by developing renewables more cheaply than carbon-based energy, but by prohibiting the installation of new natural-gas and other carbon-based facilities, as with the ban on new natural-gas hookups in Berkeley and San Francisco.[39]

Older evidence from Texas further undermines the case for irreversible, significant rejection of carbon-based energy, or pledges of zero-carbon emissions at some fixed point in a profoundly unpredictable future.  In 2014, the city of Georgetown, Texas switched to 100 renewable energy from a more Texas-style mix of sources, including carbon-emitting sources.[40]  As a result, power bills rose precipitously, more than $1,200 per year, to more than 50 percent higher than many similarly-situated Texas municipalities.[41]  But spiraling cost alone is not the only lesson to be learned from Georgetown.  The city did not build new renewable plant, but merely bought renewable-energy credits, the volume of which is and will always be limited.  If purchases by a single city resulted in such massive price increases, what would become of a whole world attempting the same thing?[42]  Supporters of abrupt and complete shifts to renewables attempt to explain away the Georgetown disaster by noting that natural-gas prices have fallen significantly,[43] but that is in truth a strong caution against ill-considered, politics-driven early shifts to renewables rather than market-driven, cautious and thoughtful migrations toward more advanced and cleaner energy technologies as supply/demand signals warrant them.  Likewise, the fact that the city misjudged its future needs, especially in reliance on government forecasts, must again counsel caution and avoidance of similar strategies.

Georgetown’s case is hardly unique.  Just this summer Connecticut’s energy prices rose considerably, before state public-utility commission authorization for the price increase was withdrawn in the face of ratepayer outrage.[44]  More than an average $125 per year of that increase arose from “a legislatively mandated charge to support carbon free generation to help the state meet its regional greenhouse gas emissions standards.”[45]

Further evidence that renewables are not yet cost competitive arises from the frantic efforts of developers and providers of renewables to get themselves continued subsidies, incentives, minimum-purchase requirements and other market and price supports that make a mockery of the Coalition’s claim that “in almost all jurisdictions, utility scale wind and solar now offer the cheapest source of new electricity, without subsidies.”[46]  Instead, the renewable energy trade group itself admitted that its future depended on extending current subsidies so that the COVID crisis wouldn’t block their members from taking full advantage of them.[47]  Industry players work just as hard to secure and retain state-government subsidies.

Meanwhile, claims of renewable sustainability without supportive government intervention are also severely undermined by the continuing importance of state renewable portfolio standards (RPS).[48]  These require utilities to buy some fixed percentage of the energy they purchase from renewable sources.  Twenty-nine states and the District of Columbia have established these minimum-purchase guarantees – which would be unnecessary or irrelevant were renewable energy really competitive with natural gas and other cleaner-energy sources.[49]  These RPS mandates play an enormous role in subsidizing the development and production of renewable energy,[50] but are not factored in when analysts attempt to ascertain whether renewables are cost-effective without subsidies.[51]  This thus distorts those calculations – including the calculations and studies relied on by the AYS Coalition – profoundly, and in ways directly relevant to the considerations of corporate actors considering zero-carbon and related initiatives.  Such corporations will not have government’s ability to hide the true cost of reliance on renewable energy or the risks that arise from such reliance, and so must in considering a shift to renewables consider how RPS distort studies and analysis suggesting that renewables are viable and economical.

All of this makes plain that corporate leaders attentive to their fiduciary duty could not rely to any meaningful extent on AYS Coalition assertions or claims of evidence in deciding whether to adopt plans to zero out their carbon emissions by any specific date certain, or even to scale down their investments in carbon-producing facilities or activities at all.  Rather, those leaders would have to answer, in reaching a decision, a daunting series of questions on the basis of firm, objective, and falsifiable evidence.

To see just how heavy is the burden of research and analysis on the corporate actor, consider first the complications that arise in a logically prior, and simpler, deliberation.  Imagine that you are a national legislator trying to make the best-possible energy and environmental policy for your country based on all available evidence and with the purpose of making your country as successful as possible, both now and in the future, while having as little overall negative effect on other nations as possible within that parameter.  You and your fellow legislators are confronted by the recommendation from the United Nations that you set policy to require that your country produce no carbon whatever (or perhaps no net carbon, though the AYS Coalition in its proposals and its supporting materials rejects that as a bad half-way option[52]) by 2050.  Assume further that you accept the proposition that greenhouse gasses do have some effect on global temperature, and that their reduction, all other things being equal, will be a positive good.

The questions that you would ask yourself, and conduct research to try to answer would include at least these:

  • How much do greenhouse gasses contribute to climate change? What other forces are at work?  How does current greenhouse gas production, and its climate effects, interact with other effects on climate, including sun spot activity and other factors that have led to significant swings in global temperature just in the past 20 centuries, to say nothing of the longer term?
  • Does the world really face a climate catastrophe if carbon emissions aren’t eliminated by 2050 that will be avoided if carbon emissions are eliminated by 2050? Why those very specific and apparently arbitrary metrics – zero emissions by 2050.  Why not emissions cut in half by 2060?  What’s the risk that the UN is wrong in its choice of deadlines, and what are the implications of those risks?  Meanwhile, what makes the UN’s 1.5-degree Celsius warming cap non-arbitrary?  Just a few years ago it was 2 degrees.  Is it going to change further?  What, specifically, about the science changed to justify this change in targets?  If there is nothing, or not much, that can be specifically pointed to, does this suggest that the UN’s calls and claims arise more from considerations of power and politics than hard science, contra the claims of those pushing zero-carbon agendas hardest, including the AYS Coalition?
  • For that matter, the public discussion of climate-change appears to have been one long series of false (or, at all events, apparently wrong) claims of incipient collapse. Since the late 1980s those who support maximalist carbon-elimination positions have asserted that we are only 10 or 12 or 20 years, or fewer, away from the precipice.  Have all of these claims indeed been wrong?  If so, why should we have any more faith in the current crop of claims, including the still-changing UN claims?  What is the exact science that makes the current claims not just propaganda or a vague possibility, but a truth on which the whole world must immediately act?  Does science as complicated as climate science, and models as complicated as those required by climate science, usually produce 100 percent certainties about how the future will unfold with very specific dates certain and other deadlines?  Why then are climate models treated by zero-carbon advocates as though they do provide such certainties?  What does that illustrate about their knowledge, their veracity, and the value of their pronouncements?
  • On the other hand, given the long string of ever changing warnings of doom if we don’t eliminate carbon emissions by 1998 or 2006 or 2012 and so on, what is the risk that we have already passed the point of no return? If we have, then doesn’t wisdom counsel maximizing human productive capacity in order to deal with the ramifications of the coming climate changes rather than potentially eviscerating our productive capacity in order to achieve goals that don’t matter anymore?
  • How capable are humans, at current levels of technology, of eliminating carbon production entirely? If it is possible, what will be the countervailing effects for humanity?  What are the odds that carbon-elimination would result in mass starvation, especially in poorer countries, as human productive capacity falls?  Or that it would lead to massive pestilence if reduced productivity leaves the world population less able to respond to pandemics such as the one to which we have now responded by shutting down great swathes of the world economy.  This wasn’t done in 1918 or 1957 in part because the world could not afford to do it.  Will we be able to do it again if we cripple our global economy by zeroing out emissions, or zeroing them out too soon?
  • What are the odds that the environmental damage that will arise from supposedly pure renewable sources might be as high or higher than those of ever-cleaner carbon-producing sources? Even if the total damage is lower, is it still so significant that, when combined with the economic ramifications of early transition, it will make that early transition the wrong call?
  • How much does our (fictive) country contribute to the world’s carbon production? How much effect would our zeroing out carbon production have on the world’s climate?  What happens if we zero out but other countries – especially the big emitters – do not?  Will we have hobbled our economy to no benefit?  What are the odds that everyone is going to act along with us?

As this incomplete list illustrates, the research and analysis challenge facing a legislator grappling with this problem is vast.  But the one facing corporate actors asked to adopt concrete zero-carbon or other related, long-term environmental policies with current real-world implications is far larger.  First, while legislators can act on whim or political impulse, corporate actors cannot; they are strictly legally bound to undertake their analysis based on significant research of available reliable sources and including real-world, objective risk and reward determinations that are unclouded by political considerations.  Moreover, in undertaking this analysis, corporate actors are first faced by a central question:  what is the likelihood that relevant law will incorporate the zero-carbon-by-2050 standard, and if it is adopted, what is the likelihood that it will be able to be honored, and will actually be retained and honored through 2050.  This means that corporate actors have to start their analysis by undertaking, with objective rigor, all of the analysis that the virtuous legislator whom we posited above would have to undertake.  Then the corporate actor has to take on another set of queries, including:

  • What is the risk that political considerations will cause a different policy result than the one our analysis would advise?
  • If we start making plans, and taking actions on the basis of those plans, to zero out our carbon emissions by 2050 (or take other similar action) without a legal mandate to do so, what is the likelihood that all of our current and potential future competitors, nationally and internationally, will follow suit?
  • If they don’t, or if fewer than all of them do, what are the implications for our business?
  • If fewer than all corporate actors worldwide adopt and act on this policy, what will the practical effects of our action be on future climate development? Will it have been worth the costs and consequences that we expect will arise?
  • If we do adopt and start to implement this policy, what are the odds that we even have, or will in time have, the technological capacity to see out the policy, without regard to other considerations? What are the odds that we won’t?  What will be our contingency plan in that eventuality?

The above analysis takes as true the central legal fact facing corporate actors:  the continuing legal validity of the shareholder-primacy rule.  Some ESG proponents, especially when discussing climate-related proposals, seem to suggest that corporate actors might in some circumstances (presumably upon the adoption of the stakeholder-primacy model) be able to make decisions solely on the basis of “systemic considerations,” such as the effect of carbon-emissions on the world economy, without any consideration at all of firm-specific facts.[53]  Even were stakeholder-primacy to be adopted, though, corporate actors still presumably could not allow unmoored political preferences to outweigh their fiduciary duties to their stakeholders – which would necessarily require them to undertake, with fiduciary care, honesty, and completeness, the searching inquiry we ascribed to our virtuous legislator above.  The corporate actor under the stakeholder-primacy rule still could not just make political-preference motivated decisions supported only by proponent boosterism.  Unless, that is, the true purpose of the stakeholder-primacy model is to free corporate actors from even a veneer of responsibility to the owners of the company (the shareholders).  If this is the true purpose of stakeholder-primacy, though, then the result of that doctrine will not long be to free corporate actors from all constraint, but to invite increasingly holistic government interference in corporate management and control.  If corporate actors turn themselves into unconstrained political amateurs, it won’t be long before the political professionals move in to take over the job.  Senator Warren’s proposals to federalize American for-profit corporations,[54] radically alter their missions, and radically increase government oversight and interference, prefigures that future.

A corporation considering adoption of climate-related policies of the sort advanced by the AYS Coalition will face the responsibility of addressing in good faith and with detailed research a long string of questions about the propriety of the proposed policy and its expected impact on the corporation.  This will require a very substantial commitment of corporate resources, which itself illustrates why American corporate law has focused the attention of corporate actors on maximizing aggregate corporate value without requiring (or even permitting) them to set aside those interests in favor of tilting at global-policy windmills.


Scott Shepard is a fellow at the National Center as well as the deputy director of the National Center’s Free Enterprise Project, the conservative movement’s only full-service shareholder activism and education program.


[1] ESG stands for “Environmental, Social & Governance,” and ESG proposals are proposals either submitted formally by shareholders for a potential shareholder vote, or are raised informally by advocates or corporate leaders.  While some of the proposals are relatively politically neutral, and a few are submitted every year by the Free Enterprise Project of the National Center for Public Policy Research (that is, the organization that has produced this policy-paper series), most proposals are designed to achieve leftwing political goals.  See, e.g., Scott Shepard, The Policized Corporation Trap,  682 FEP National Policy Analysis (Sept. 3, 2020) (“Corporation Trap”), available at https://nationalcenter.org/ncppr/2020/09/03/the-politicized-corporation-trap/ (last accessed Sept. 24, 2020); Heidi Welsh & Michael Passoff, Proxy Preview 2020 (March 2020) (“Proxy Preview”), available at https://www.proxypreview.org/ (last accessed July 30, 2020); Free Enterprise Project, Investor Value Voter Guide 2020, at 28-32 (April 2020) (“IVVG”), available at http://nationalcenter.org/IVVG/ (last accessed July 30, 2020). Arguably, given developments in 2020, AYS efforts to institute surface-characteristic quotas at American corporations have garnered more recent attention.  Cf. Will Johnson, Exclusive poll: Amid COVID-19, Americans don’t care about climate change anymore, Fortune (Aug. 10, 2020), available at https://fortune.com/2020/08/10/climate-change-global-warming-coronavirus/ (last accessed Sept. 2, 2020); but cf. John Schwartz, Climate Is Taking On a Growing Role for Voters, Research Suggests, New York Times (Aug. 24, 2020), available at https://www.nytimes.com/2020/08/24/climate/climate-change-survey-voters.html (last accessed Sept. 2, 2020).

[2] See Corporation Trap, supra note 1.

[3] See id.

[4] See Proxy Preview, supra note 1, at 5.

[5] See id.

[6] See id.

[7] See Lila Holzman, et al. Natural Gas: A Bridge to Climate Breakdown (2020) (“Natural Gas”), available at https://www.asyousow.org/report-page/natural-gas-bridge-to-climate-breakdown (last accessed August 24, 2020).

[8] See IVVG, supra note 1.

[9] Id. at pp. 12-15.

[10] The complete resolution of the proposal reads: “Shareholders request that the company issue a report (at reasonable cost, omitting proprietary information) describing if, and how, it will modify its operations and investments to reduce its total carbon footprint at the rate and scope necessary to align with the Paris Agreement’s goals.” See As You Sow – Resolution, “General Electric: Climate Change Risk Reporting” (Dec. 6, 2019), available at https://www.asyousow.org/resolutions/2019/12/06/general-electric-climate-change-risk-reporting (last accessed April 7th, 2020). This resolution, as well as many others, contains certain boilerplate provisions, such as “at reasonable cost, omitting proprietary information.” These are included because the SEC has in the past allowed corporations to withhold from shareholders proposals that would potentially have been excessively expensive, released proprietary corporate information to the public, or implicated one of the other grounds upon which the SEC staff grants letters declaring that it will take no action should the company refuse to lay a proposal before its shareholders. A complete list of the grounds for issuing such letters appears at Division of Corporation Finance, “Staff Legal Bulletin No. 14” (June 13, 2001), available at https://www.sec.gov/interps/legal/cfslb14.htm (last accessed April 7th, 2020). The boilerplate language is included in an effort to eliminate these grounds for exclusion. Similarly, proposals are often crafted to seek “reports” from corporate boards about the goals sought by the proposers because while shareholders are understood by the SEC to enjoy the power to ask the board to undertake studies and prepare reports for shareholders, the SEC has often held that proposals that would directly mandate some change in a corporation’s operations may be excluded because they inappropriately impinge on the management’s conduct of the ordinary business operations of the company. See id.

[11] See Paris Agreement (2015), available at https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf (last accessed April 7th, 2020). See also Paris Agreement: Essential Elements, The Paris Agreement, United Nations Climate Change (“Essential Elements”), available at https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement (last accessed April 7th, 2020).

[12] See Essential Elements, supra note 11.

[13] See Michael R. Pompeo, On the U.S. Withdrawal from the Paris Agreement, U.S. Department of State (Nov. 4, 2019), available at https://www.state.gov/on-the-u-s-withdrawal-from-the-paris-agreement/ (last accessed April 7th, 2020).

[14] See id.

[15] See, e.g., A.J. Dellinger, The Paris Climate Agreement in 2019: Where Countries Stand on Curbing Emissions, MIC (Sept. 24, 2019), available at https://www.mic.com/p/the-paris-climate-agreement-in-2019-where-countries-stand-on-curbing-emissions-18798245 (last accessed April 7th, 2020); Chris Mooney, 7 Major Countries Are Massively Behind Paris Agreement Goals. Also, We Don’t Have a Planet B, People, ScienceAlert (Nov. 28, 2018) (“Massively Behind”), available at https://www.sciencealert.com/seven-major-countries-aren-teven-close-to-their-paris-agreement-goals (last accessed April 7th, 2020).

[16] Massively Behind, supra note 15.

[17] See Enhanced Action on Climate Change: China’s Intended Nationally Determined Contributions, United Nations Framework Convention on Climate Change (Sept. 3, 2016), available at https://www4.unfccc.int/sites/submissions/indc/Submission%20Pages/submissions.aspx (last accessed April 7th, 2020).

[18] See, e.g., Massively Behind, supra note 15.

[19] See, e.g., American Geophysical Union, New Studies Highlight Challenge of Meeting Paris Agreement Climate Goals, Phys.org (April 23, 2019), available at https://phys.org/news/2019-04-highlight-parisagreement-climate-goals.html (last accessed April 7th, 2020); University of California – Santa Barbara, Temperatures Rising: Achieving the Global Temperature Goals Laid out in the Paris Climate Agreement Is Unlikely, According to Research, ScienceDaily (Aug. 4, 2017), available at https://www.sciencedaily.com/releases/2017/08/170804082229.htm (last accessed April 7th, 2020); Amar Battacharya, Can the Ambitions of the Paris Climate Agreement Be Met?, Brookings Institution (Oct. 5, 2016), available at https://www.brookings.edu/research/can-the-ambitions-of-the-paris-climate-agreement-be-met/ (last accessed April 7th, 2020).

[20] See, e.g., Trevor Nace, Coronavirus: NASA Reveals How China’s Lockdown Drastically Reduced Pollution, Forbes (March 3, 2020), available at https://www.forbes.com/sites/trevornace/2020/03/03/coronavirus-nasa-reveals-how-cinas-lockdown-drastically-reduced-pollution/ (last accessed April 7th, 2020).

[21] See Natural Gas, supra note 7, at 5-6.

[22] See id., passim.

[23] See id. at 6, 11, 13 and passim.

[24] Id. at 14.

[25] See Joseph P. Kalt, et al., Political, Social, and Environmental Shareholder Resolutions: Do They Create or Destroy Shareholder Value?, National Association of Manufacturers (June 2018) (“Create or Destroy”), available at https://corpgov.law.harvard.edu/2018/06/17/political-social-and-environmental-shareholder-resolutions-do-they-create-or-destroy-shareholder-value/ (last accessed April 7th, 2020).

[26] See id. at 30-34.

[27] Id. at 30.

[28] Id.

[29] Id. at 32.

[30] Id. at 32-34 and passim.

[31] See Natural Gas, supra note 7, at 14.

[32] See, e.g., James Temple, The $2.5 Trillion Reason We Can’t Rely on Batteries to Clean up the Grid, MIT Technology Review (July 27, 2018), available at https://www.technologyreview.com/s/611683/the-25-trillion-reason-we-cant-rely-on-batteries-to-clean-up-the-grid/ (last accessed April 7th, 2020); Richard Martin, Paris Climate Agreement Rests on Shaky Technological Foundations, MIT Technology Review (Dec. 15, 2015), available at https://www.technologyreview.com/s/544551/paris-climate-agreement-rests-on-shakytechnological-foundations/ (last accessed April 7th, 2020).

[33] See Natural Gas, supra note 7, at 7, 20, 24.

[34] See, e.g., April Glaser, The Hopelessness of Wildfire Season, Slate (Oct. 29, 2019) https://slate.com/business/2019/10/california-wildfire-season-pge-liability-new-normal-hopeless.html (last accessed Sept. 2, 2020)Timothy Cama, California approves closure of last nuclear power plant, The Hill (Jan. 11, 2018), available at https://thehill.com/policy/energy-environment/368581-california-approves-closure-of-last-nuclear-power-plant (last accessed Sept. 2, 2020).

[35] See, e.g., Tsvetana Paraskova, California’s Renewable Energy Conundrum, OilPrice.com (August 23, 2020), available at https://oilprice.com/Alternative-Energy/Renewable-Energy/Californias-Renewable-Energy-Conundrum.html (last accessed Sept. 2, 2020); Valerie Richardson, ‘Forcing Americans in the dark’: Green energy push blamed in California’s rolling blackouts, Washington Times (Aug. 18, 2020) (“Green energy push blamed”), available at https://www.washingtontimes.com/news/2020/aug/18/california-rolling-blackouts-caused-green-energy-p/ (last accessed Sept. 2, 2020); Katherine Blunt, California Blackouts a Warning for States Ramping Up Green Power, Wall St. J. (Aug. 17, 2020) (“California Blackouts a Warning”), available at https://www.wsj.com/articles/california-blackouts-a-warning-for-states-ramping-up-green-power-11597706934 (last accessed Sept. 2, 2020); Rob Nikolewski, Have California’s renewable energy mandates hampered wildfire prevention efforts? San Diego Union Tribune (Nov. 4, 2019) https://www.sandiegouniontribune.com/business/energy-green/story/2019-11-04/have-californias-renewable-energy-mandates-slowed-progress-on-wildfire-prevention (last accessed Sept. 2, 2020).

[36] See, e.g., Green energy push blamed, supra note 35; California Blackouts a Warning, supra note 35.

[37] See, e.g., Green energy push blamed, supra note 35; California Blackouts a Warning, supra note 35; Adi Robertson, Investigators confirm that PG&E power lines started the deadly Camp Fire, The Verge (May 15, 2019), available at https://www.theverge.com/2019/5/15/18626819/cal-fire-pacific-gas-and-electric-camp-fire-power-lines-cause (last accessed Sept. 2, 2020); Russell Gold, et al., PG&E Sparked at Least 1,500 California Fires. Now the Utility Faces Collapse, Wall St. J. (Jan. 13, 2019), available at https://www.wsj.com/articles/pg-e-sparked-at-least-1-500-california-fires-now-the-utility-faces-collapse-11547410768 (last accessed Sept. 2, 2020).

[38] See, e.g., Rob Nikolewski, A lesson from the blackouts: California may be too reliant on out-of-state energy imports, San Diego Union Tribune (Aug. 25, 2018), available at https://www.sandiegouniontribune.com/business/energy-green/story/2020-08-25/a-lesson-from-the-blackouts-california-is-too-reliant-on-out-of-state-energy-imports-and-the-problem-will-get-worse (last accessed Sept. 2, 2020); Chuck DeVore, California’s Deadliest Fires Could Have Been Mitigated By Prevention, Forbes (Nov. 16, 2018), available at https://www.forbes.com/sites/chuckdevore/2018/11/16/californias-deadliest-fires-could-have-been-mitigated-by-prevention/#579c7c7341ba (last accessed Sept. 2, 2020).

[39] Sammy Roth, California to let gas plants stay open as time runs low for climate action, Los Angeles Times (Sept. 1, 2020), available at https://www.msn.com/en-us/news/us/california-to-let-gas-plants-stay-open-as-time-runs-low-for-climate-action/ar-BB18C6S2 (last accessed Sept. 2, 2020); Tom DiChristopher, San Francisco advances new building gas ban, S&P Global Market Intelligence (June 30, 2020), available at https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/san-francisco-advances-new-building-gas-ban-59264305 (last accessed Sept. 2, 2020).

[40] See, e.g., Edward Klump, How 100% renewables backfired on a Texas town, Energy News (Nov. 8, 2019),  available at https://energynews.us/2019/11/05/southeast/how-100-renewables-backfired-on-a-texas-town/ (last accessed August 28, 2020); Chuck DeVore, Texas Town That Went 100% Renewable Stuck With Massive Power Bill (But Al Gore’s Happy), Climate Change Dispatch (Jan. 30, 2019), available at https://climatechangedispatch.com/texan-town-facing-huge-costs-from-100-percent-renewables/ (last accessed August 28, 2020).

[41] See id.

[42] See, e.g., David R. Baker, et al., Sometimes, a Greener Grid Means a 40,000% Spike in Power Prices, Bloomberg (Aug. 26, 2019) (“The road to a world powered by renewable energy is littered with unintended consequences. Like a 40,000% surge in electricity prices. Texas power prices jumped from less than $15 to as much as $9,000 a megawatt-hour this month as coal plant retirements and weak winds left the region on the brink of blackouts during a heat wave. It’s a phenomenon playing out worldwide.”), available at https://www.bloomberg.com/news/articles/2019-08-26/sometimes-a-greener-grid-means-a-40-000-spike-in-power-prices (last accessed August 28, 2020).

[43] See, e.g., Asher Price & Claire Osborn, Why Georgetown’s green energy gamble didn’t pay off, The Statesman (March 4, 2019) available at https://www.statesman.com/news/20190223/why-georgetowns-green-energy-gamble-didnt-pay-off (last accessed August 28, 2020); Lessons from Georgetown and the Future of Renewable Energy in Texas, Lone Star Chapter, Sierra Club (Feb. 28, 2020), available at https://www.sierraclub.org/texas/blog/2020/02/lessons-georgetown-and-future-renewable-energy-texas (last accessed August 28, 2020).

[44] See, e.g., Public Utilities Regulatory Authority Tells Eversource to Suspend Rate Increase Amid Investigation, NBC Connecticut (July 31, 2020), available at https://www.nbcconnecticut.com/news/local/public-utilities-regulatory-authority-tells-eversource-to-suspend-rate-increase-amid-investigation/2311342/ (last accessed August 28, 2020).

[45] Id.

[46] Natural Gas, supra note 7, at 14.

[47] See, e.g., U.S. clean energy sector seeks subsidy help to confront slowdown, Reuters (March 19, 2020) (“The American Wind Energy Association, which signed the letter, said disruptions caused by the spread of the virus could put 35,000 jobs at risk and jeopardize $43 billion in investment.”), available at https://www.reuters.com/article/us-usa-renewables/u-s-clean-energy-sector-seeks-subsidy-help-to-confront-slowdown-idUSKBN21643G (last accessed Aug. 31, 2020); Jeff St. John, Solar, Wind and Storage Industries Seek Relief in Coronavirus Stimulus Package, GreenTechMedia (March 19, 2020), available at https://www.greentechmedia.com/articles/read/clean-energy-groups-seek-tax-credit-extensions-direct-pay-provisions-in-coronavirus-stimulus-package (last accessed Aug. 31, 2020); Renewable Energy Sector Letter to Congress on the COVID-19 Pandemic (March 19, 2020), available at https://acore.org/renewable-energy-sector-letter-to-congress-on-the-covid-19-pandemic/?utm_source=ACORE+Master+Press+List&utm_campaign=00c13241d1-EMAIL_CAMPAIGN_PR_2020_03_19&utm_medium=email&utm_term=0_106f720bd1-00c13241d1-59414829&mc_cid=00c13241d1&mc_eid=a92398016e (last accessed Aug. 31, 2020); Daniel Oberhaus, A Tax Credit Fueled the Solar Energy Boom. Now It’s in Limbo, Wired (Aug. 14, 2019), available at https://www.wired.com/story/a-tax-credit-fueled-the-solar-energy-boom-now-its-in-limbo/ (last accessed Aug. 31, 2020).

[48] See, e.g., State Renewable Portfolio Standards and Goals, National Conference of State Legislatures (April 17, 2020) (“Standards and Goals”), available at https://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx (last accessed Aug. 31, 2020); Renewable energy explained Portfolio standards, United States Energy Information Agency (Nov. 18, 2019),  available at https://www.eia.gov/energyexplained/renewable-sources/portfolio-standards.php (last accessed Aug. 31, 2020).

[49] See id.

[50] See Standards and Goals, supra note 48 (“Roughly half of the growth in U.S. renewable energy generation since the beginning of the 2000’s can be attributed to state renewable energy requirements.”).

[51] See, e.g., Jessica McDonald, Does Wind ‘Work’ Without Subsidies?, FactCheck.org (July 16, 2019) , available at https://www.factcheck.org/2019/07/does-wind-work-without-subsidies/ (last accessed Aug. 31, 2020) (“Outside of federal subsidies, wind benefits from a bevy of state policies and incentives, most notably through renewable portfolio standards, which require a certain amount of electricity to be generated by renewable sources. While the standards are not subsidies in the traditional sense, multiple experts said they function like subsidies and have driven wind development in areas where it otherwise would not have happened. As the tax credit goes away, these standards are likely to play an even bigger role.”)  Though the author is clearly partial to renewables and their subsidization, she also recognizes that some sources cast serious doubt on both the analysis of the sort the AYS Coalition relies on to makes its affordability claims, and the metrics that underlie that analysis.  See id.

[52] See Natural Gas, supra note 1, at 16.

[53] See, e.g., Comment Letter in response to proposed rule RIN 1210-AB95, Financial Factors in Selecting   Plan Investments, Mindy S. Lubber, President and CEO, Ceres, Inc., to Assistant Secretary Wilson, Office of Regulations and Interpretation, United States Department of Labor, https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/rules-and-regulations/public-comments/1210-AB95/00567.pdf (last accessed Sept. 2, 2020).

[54] Senator Elizabeth Warren – One-Pager, Accountable Capitalism Act, available at https://www.warren.senate.gov/imo/media/doc/Accountable%20Capitalism%20Act%20One-Pager.pdf (last accessed Sept. 24, 2020); Milton Ezrati, Senator Warren’s Accountable Capitalism Bill Has Big Problems, Forbes (Feb. 5, 2019), available at https://www.forbes.com/sites/miltonezrati/2019/02/05/senator-warrens-accountable-capitalism-bill-has-big-problems/#648d1f59471b (last accessed Sept. 24, 2020).

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.