Kinder Morgan faces $450M ‘wake-up call’ at shareholder meetings

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[Three of the world’s largest investors are leveraging their combined $450 million in Kinder Morgan Inc. shares to pressure the company to improve its environmental reporting. KM is urging its shareholders to reject their demands, telling them in effect to close their eyes and count their profits. The Sierra Club is accepting donations here for their campaign against the TransMountain pipeline. *RON*]

David P. Ball, Star Metro Vancouver, 8 May 2018

Kinder Morgan’s Houston headquarters will host its AGM Wednesday. (ROY LUCK/FLICKR)

VANCOUVER — Three of the world’s largest investors are leveraging their combined $450 million in Kinder Morgan Inc. shares to pressure the company to improve its environmental reporting.

New York State’s $270-billion pension fund will table a shareholder resolution Wednesday at Kinder Morgan’s annual meetings in Houston, calling for more environmental reporting — a proposal officially opposed by oil company’s management.

The move comes as controversy swirls around the Texas energy giant’s Trans Mountain pipeline expansion in B.C.

“We were initially concerned over the controversy over the pipeline and the potential for the reputational risk it was causing the company, which hurts shareholder value, and legal liability that could end up affecting shareholder value,” said Patrick Doherty, the comptroller’s corporate governance director for New York state.

The state’s comptroller oversees its massive Common Retirement Fund, which holds more than $100 million in Kinder Morgan shares.

The resolution follows a similar one last year that gained more than 34 percent support among shareholders, something observers said is unusually high for such votes.

“Even having 10, 20 or 30 percent of your investors telling you something is important to them is a message most CEOs will heed in one form or another,” said Peter Chapman, executive director of the Shareholder Association for Research and Education.

“The social and environmental issues around Kinder Morgan’s social license are incredibly important — that has become a major issue with pipeline construction across North America.”

But Wednesday’s vote could exceed last year’s 34.1 percent support, Doherty said. That’s because it’s being backed by two even larger investors: the $457-billion California Public Employees’ Retirement System — America’s largest public pension fund — and Norway’s $1.3-trillion Government Pension Fund Global.

They are two of the largest institutional investors in the world, and respectively hold $201 million and $146 million in Kinder Morgan shares.

Kinder Morgan declined StarMetro’s interview request Tuesday.

“Sorry, we don’t do interviews about our shareholder meetings,” said spokesperson Dave Conover in an email.

The company’s board issued a lengthy response in its shareholder handout urging rejection of the resolution.

“Our board unanimously opposes this proposal,” the document said, raising concerns about the millions a yearly cost to improve its reporting and insisting its current environmental disclosure is sufficient.

Less than two weeks remain until the Texas firm’s deadline by which it will abandon its $7.4-billion twinning of its Trans Mountain pipeline unless the province abandons its efforts to stymie the project with environmental regulations.

The plan will nearly triple the flow of diluted bitumen from Alberta’s oilsands to a Burnaby, B.C. terminal.

The expansion will increase oil tanker traffic sevenfold, sparking opposition from Burnaby, Vancouver and other coastal municipalities, the provincial government, and several First Nations along its route.

But Kinder Morgan boasts more than 30 benefit agreements signed with other First Nations, the list of whom is not publicly available.

Two years ago, New York state comptroller Thomas DiNapoli invited a delegation from Trans Mountain’s most prominent B.C. opponent, Tsleil-Waututh Nation, to his New York offices.

His resolution will be presented by Chief Judy Wilson, of Neskonlith Indian Band, which also opposes the pipeline through its territory near Kamloops, B.C.

“We’re not just day-traders buying a stock and selling it a couple months later,” Doherty said. “We’re hoping this resolution will function as a wake-up call for management and the board.”

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