Meet the climate investor who challenged Warren Buffett
For decades, Freeda Cathcart was a passive owner of utility company stock, content with annual dividend checks and confident that regulators were watching her.
But that all changed in 2017 when Donald Trump became president, promising to scrap federal oversight of the industry.
“I was like, I better start paying attention to these annual reports on what’s going on,” said Cathcart, who the following year submitted its first climate-related shareholder resolution to the energy conglomerate. and Berkshire Hathaway Insurance Inc. “I can’t trust the government to monitor what’s going on, so I’m going to be responsible.
Now Cathcart, a 61-year-old former reinsurance specialist, is asking Dominion Energy Inc. to release a report on the potential that its natural gas investments could become worthless amid the global transition to zero-emissions energy. .
The stranded assets resolution is one of two climate-related proposals Dominion shareholders will decide tomorrow at the company’s annual meeting in Norfolk, Virginia. The other asks Dominion to set mid-range targets for reducing emissions from the use of its electricity and natural gas. , but Cathcart’s proposal has a better chance of passing because the Dominion board decided not to oppose it.
The resolution also represents the culmination of Cathcart’s transformation from an environmentally conscious mother – who homeschooled her four sons and helped conserve an ancient forest – to a forceful advocate for sustainable investing who managed to take on some of the most powerful companies in the country.
Cathcart first became interested in conservation when she was a student at Roanoke College in southwestern Virginia. She received a Sierra Club calendar for Christmas, along with a subscription to the environmental group’s program Sierra magazine.
“That’s where I heard about the Clean Water Act, and I think I sent a postcard or something to the reps supporting this act,” she said. “That’s about when I was activated.”
After finishing college, Cathcart worked briefly for reinsurance brokerage firm Lloyd’s of London in the UK. But she wasn’t happy living in the big city, or being an ocean away from her college sweetheart and future husband.
“I missed the trees and the nature and all that stuff, so I came back to Roanoke,” Cathcart said last week during an impromptu video interview from his home. She has wavy salt and pepper hair and wore a bright green T-shirt.
While raising their boys, Cathcart put his interests in finance and the environment to good use, protecting a nearby ancient forest. With the help of several business partners, she established a land trust to purchase the woodlot and created a private company to responsibly develop the farmland adjacent to it.
When Trump’s regulatory rollbacks began, Cathcart took a closer look at his investment in Berkshire, one of America’s most valuable companies.
Cathcart was surprised to see the board oppose “these really cool environmental resolutions,” she said.
Undeterred, Cathcart traveled to the conglomerate’s upcoming annual meeting in Omaha, Neb., to present a resolution calling on the board to “encourage more Berkshire subsidiaries to publish annual sustainability reports”.
Although CEO Warren Buffett voted against the proposal and encouraged others to do the same, he told Cathcart at the 2018 event, “Our managers are listening to you.”
The $690 billion conglomerate finally added a link to its website which compiles the environmental pages of its subsidiaries.
“It was me, that bond,” she laughed.
Gas pipelines and VHS machines
At Dominion, Cathcart has a bigger goal: She wants the company to have what she calls a “come to Jesus moment” on natural gas.
Cathcart believes gas won’t be economically viable for long due to competition from cleaner energy sources and growing pressure to reduce global-warming emissions. And she fears Dominion has a contract to buy gas from the Mountain Valley pipeline, even after taking a multi-billion dollar write-down on the canceled Atlantic Coast pipeline (thread of energyJuly 6, 2020).
“It would be like you placing an order for 100,000 VHS machines back when there were Blockbuster locations and it was held up in court. Then you still have a contract with them and everyone is now streaming Netflix,” she said of the MVP contract. “What I hope my resolution will create is a report dealing with the truth and how are we going to be proactive with that.”
Dominion did not respond to a request for comment.
The public service first fought for its proposal not to be voted on. Dominion told the Securities and Exchange Commission in January that its drive to get the company to disclose more about the risks of the locked-in assets had already “been largely implemented by the company” through other disclosures related to the climate change.
But Cathcart disagreed, and the SEC sided with her. This paved the way for a vote on the resolution of the blocked assets (climate wire, March 22).
There is a separate proposal that Dominion is fighting that calls for it to adopt “mid-term goals” to reduce its so-called scope 3 emissions. Dominion has already set a goal of achieving net zero emissions of by mid-century and 2030 reduction targets for certain greenhouse gases.
Support for traditional investors
Dominion’s opposition to Cathcart’s proposal waned, however.
Although the board still maintains that this is not necessary given all of Dominion’s existing disclosures about its natural gas investments, “the company is prepared to consolidate it into a single report, if shareholders believe that it is necessary,” the utility said in a March 25 securities report. deposit.
Since then, Cathcart’s resolution has garnered support from influential shareholder advisory firms Glass Lewis & Co. LLC and Institutional Shareholder Services Inc. In an April 28 Dominion analysis, ISS urged investors to vote for the proposal because a “unified report would help comprehensively assess all risks related to stranded assets. »
ISS and other analysts already give Dominion high marks for its climate disclosures and decarbonization efforts, which include dramatically reducing the amount of coal-fired electricity in its generation mix from 52% in 2005 to 10 % in 2020.
Whether or not Cathcart’s proposal passes, most observers expect the utility to continue cutting emissions.
“The incentive is there to do it. That’s right, how fast do you do it? said Michael Doyle, analyst at Edward D. Jones & Co. LP. “Perhaps [the resolution] pushes them in that direction to speed up maybe a bit more.