Shareholder in Sempra are due to vote at the firm’s May 9 AGM on a proposal seeking information about the energy infrastructure company’s efforts to lower environmental and safety risks in the business.
The Utility Workers Union of America (UWUA) has filed a resolution urging Sempra’s board or its safety, sustainability and technology committee to report to shareholders by next year’s AGM on the steps the company ‘has taken to reduce the risks of significant environmental hazards or life-threatening safety incidents involving the operations of Sempra and its subsidiaries.’
UWUA says the report should explain the board’s oversight of Sempra’s performance in terms of environmental and safety risks and include an analysis of the ‘underlying causes of any significant environmental incidents endangering public safety or life-threatening safety incidents during the preceding 10 years.’
The union writes in its supporting statement: ‘Safe operation of Sempra’s utilities is of great importance to shareholders, and yet the company has experienced catastrophic incidents in recent years endangering public safety and resulting in substantial damages and regulatory penalties.’
UWUA points to a 2015 methane gas leak at the Aliso Canyon gas storage field owned by Southern California Gas, a Sempra subsidiary, which it states led to serious legal and financial outcomes for the company. It also states that regulators have cited Sempra for other ‘significant safety violations’.
‘We believe shareholders would benefit from a report by the board or the committee on the steps Sempra has taken to analyze the underlying causes of these sorts of incidents and therefore to help reduce [the] risks of recurrence,’ UWUA writes.
Vote ‘no’, board says
Sempra’s board is calling for shareholders to vote against the measure. The company’s 2024 proxy statement notes that Sempra’s board and the boards of its operating companies ‘are directly, regularly and meaningfully engaged in oversight of our businesses’ safety and environmental practices and performance. The company already provides extensive disclosures on its governance and performance related to safety and environmental matters, rendering this proposal unnecessary.
‘Our operating companies have proven track records of implementing world-class safety systems and programs in response to prior safety and environmental incidents. The company has a practice of deep engagement and information-sharing with shareholders and other stakeholders, including on the topics of operational and public safety and environmental performance.’
The board states that it oversees ‘an extensive range of safety and environmental matters, including, among many others, the matters referenced in the proposal.’ The safety, sustainability and technology committee was created more than a decade ago to help the board oversee management’s implementation of risk management and oversight programs and the company’s performance related to health, safety, safety culture, climate change, environment, sustainability and other related matters, it says.
‘In fulfilling these duties, the committee regularly receives reports from management on safety and environmental topics and incidents affecting our businesses, including related risks and opportunities and the strategies taken by management to address them,’ the board writes. It also says the company has for 16 years published an annual corporate sustainability report discussing Sempra’s targets and key performance metrics for improving workplace and public safety and energy reliability and resilience.
‘In light of our commitment to sustainable business practices, the steps we are taking to invest in and improve our safety and environmental performance, and our robust disclosures and engagement on these matters, the board believes the report requested by this proposal would be redundant and would divert management’s attention from our efforts to achieve world-class safety in our business operations,’ Sempra writes.
The company had unsuccessfully sought SEC no-action relief to omit the proposal on the grounds that it relates to the firm’s ordinary business operations and that ‘[i]mplementation of the proposal would implicate the company’s litigation strategy in and the conduct of ongoing litigation to which the company and one of its subsidiaries are defendants.’ The SEC responded that ‘[i]n our view, the proposal transcends ordinary business matters.’
A Sempra spokesperson declined to comment beyond the proxy statement.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
