Promoting clean energy and consumer protection

Shareholder advocacy |

Electric utilities encouraged to incorporate sustainability in long-term planning

Praxis Mutual Funds® has begun shareholder engagements with electric utilities to promote clean energy and consumer protection. The engagements aim to influence the electric utility industry to increase its use of low-carbon electricity generation as a way to reduce greenhouse gas emissions and protect long-term shareholder value.

These engagements coincide with fundamental shifts within the electric utility industry:

  • The cost of renewable energy has dropped dramatically, particularly for solar and wind.
  • Distributed generation is increasing, with more power being generated at the point of consumption, such as solar panels on roofs of houses and businesses.
  • The anticipated rise in national and international regulation of greenhouse gas, making investments in carbon-heavy and polluting electricity sources increasingly difficult to justify.
  • Growth in global electricity demand, which has been relatively flat for several years, due to increases in energy efficiency – a trend that is expected to continue.

Many utilities feel threatened by the changes, in part because they have invested significant capital in long-term assets like power plants that are expected to operate for more than 30 years. Some utilities are fighting the changes by requesting large, fixed-fee increases to subsidize aging, carbon-intensive power plants that are no longer cost-competitive. Increasing the monthly fee discourages energy efficiency and takes control and choice away from consumers, while disproportionately increasing costs to the poorest customers.

Praxis is part of a recently formed leadership team that is assessing the unique role investors can play in this transformational situation. The group is convened by Ceres, a nonprofit organization advocating for sustainability leadership. Through comprehensive planning, emissions reductions and low-carbon electricity generation, the group believes utilities can limit their risk and stand to benefit from the changes sweeping the industry.

Disclosure

The Fund’s stewardship investing strategy could cause the fund to sell or avoid securities that may subsequently perform well, and the application of social screens may cause the fund to lag the performance of its index.