Online Extra: Denise Nappier's Green Vision
By Adrienne Carter
These days, Denise Nappier's $220 million investment in ExxonMobil (XOM ) is doing pretty well. With oil prices soaring past $75 a barrel, the corporation's stock has risen more than 40% in the past two years. Yet the Connecticut State Treasurer, who oversees the state's $23 billion pension fund, has a bone to pick with the oil giant. "ExxonMobil is a company that's being penny-wise and pound-foolish," says Nappier.
Connecticut, along with 16 other major public and private investors with a total of $658 billion in assets, wrote a letter to Exxon's board requesting a meeting to discuss climate-related risk. The company has so far ignored the appeal. Exxon had agreed only to a briefing with senior managers.
PIONEER OF SORTS
ExxonMobil is just the latest target of Nappier, who for years has been pushing companies to address the business risks associated with climate change. Yet unlike many green crusaders, Nappier has never focused on the ethical or social implications of protecting the environment. "My primary job is to grow the pension fund," says Nappier. "Being green is about the money."
It was a bold statement back in 2001, when she first filed a shareholder resolution with American Electric Power (AEP ), the nation's largest utility. It took three resolutions and a management change before AEP heeded the message. But, ultimately, it commissioned a study to look at climate-related risks. The Columbus (Ohio) utility has plans to invest up to $15 billion in eco-friendly projects like making its plants more energy-efficient and developing cleaner-burning coal technologies.
Today, Nappier—who in 1999 became the first African American female state treasurer in the U.S. and the first female to hold that position in Connecticut—is also taking on the insurance industry and auto manufacturers.
Last year, she hosted the first-ever summit on climate risk for insurance companies. Plus, she plans to put up to $50 million in private equity firms that invest in so-called "clean-tech" companies and additional assets into companies producing green technologies.
"She has chosen issues in her corporate governance and environmental discussion that might not have yielded instantaneous results but recognized the long-term value these things would create," says Jack Ehnes, CEO of the $130 billion California State Teachers' Retirement System, who has worked closely with Nappier on such initiatives. "She is a pioneer."
Exxon aside, says Nappier, it's easier being green today. It helps that she's no longer a lone wolf among pension fund investors. In 2003, Nappier—along with former Colorado Senator Timothy Wirth, who has served as president of the U.N. Foundation since 1998—convened the first Institutional Investor Summit on Climate Risk. Held at the U.N., the summit helped educate major investors about global warming, emphasizing that it is not only an environmental issue but also an economic one.
PART OF GOVERNANCE
During the conference, participants formed the Investor Network on Climate Risk, a group of large investors that now commands $3 trillion in assets. It has used that massive financial clout to file more than two dozen shareholder resolutions in the latest proxy season and write a letter in June to lobby the Securities & Exchange Commission to require companies to disclose those risks.
"Climate change and other sustainability issues are now considered mainstream corporate governance," says Nappier. "The pushback is not as severe."
Carter is a correspondent in BusinessWeek's Chicago bureau