Berkshire Hathaway management ignores systemic risks posed by climate crisis in voting against proposal seeking disclosures

By opposing a popular shareholder resolution seeking a yearly detailed report on the climate risks and opportunities the diversified company faces, Berkshire Hathaway management ignores a systemic risk looming over all  businesses, said Dan Bakal, Senior Director of Electric Power at Ceres, the sustainability nonprofit.

“Climate change poses fundamental risks for businesses and the economy and in opposing this resolution, Berkshire Hathaway fails to address them,” Bakal, said. “The company’s executives and directors control more than a third of the voting power at Berkshire, but the more than 38% of remaining shareholders that voted in support of the resolution sent the company a strong message about the importance of acknowledging climate risk.”

At Berkshire Hathaway’s annual meeting of shareholders Saturday, 25.1% of shares voted - including 38.8% of independently held shares - voted in favor of a proposal filed by Climate Action 100+ signatories Hermes Investment Management and co-filers Caisse de dépôt et placement du Québec (CDPQ) and the California Public Employees Retirement System (CalPERS) seeking assessment of climate risks and opportunities the company faces. “In order to promote the long-term success of Berkshire Hathaway, Inc. and so investors can understand and manage risk more effectively, shareowners request that the board of the Company publish an annual assessment addressing how the Company manages physical and transitional climate-related risks and opportunities,” it reads, including details for each subsidiary “that the board believes could be materially impacted by or significantly contributing to climate change.” The resolution also asks management for a report on the feasibility of Berkshire Hathaway targeting a science-based reduction of its greenhouse gases to a level consistent with keeping global temperature increase well below 2 Celsius .

“Berkshire’s previous climate commitments already lack teeth,” Bakal of Ceres added. “In the Climate Action 100+ Net-Zero Company Benchmark of corporate emitters, the company failed to meet even one criterion under the benchmark’s 10 disclosure and performance indicators. Warren Buffett may favor a hands-off management approach, but without a unified approach to climate risk management, Berkshire’s diverse holding companies could end up with business plans at odds with one another, potentially damaging future shareholder value.”

Ceres is a sustainability nonprofit and a founding partner of Climate Action 100+, the largest investor engagement initiative on climate change with 570 investor signatories managing a combined $54 trillion in assets. 

Tim Youmans, engagement lead for North America at EOS Federated Hermes, said in a speech at the Berkshire Hathaway annual meeting that investors have been asking the company for more than a year “to discuss the parent company’s lack of climate-related financial disclosures.” In order to have a dialogue on these issues Hermes and the co-filers filed the proposal, he said. Even a diversified company with many subsidiaries must ascertain the risks and opportunities the climate crisis presents. 

Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and equitable workplaces. For more information, visit www.ceres.org and follow @CeresNews.