Investors want water use, climate change reports from coal compa - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Investors want water use, climate change reports from coal company

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A small subset of investors has asked Alpha Natural Resources to produce specific and potentially costly plans for how the company is to sustainably manage water resources and confront climate change.

According to the proxy statement filed by Alpha Natural Resources, a set of investors wants two reports conducted. Alpha is urging stockholders to vote no on both proposals, citing high costs and redundancy with other reports on the same topics.

The Unitarian Universalist Association of Congregations proposed the measure as a stockholder with more than $2,000 worth of stock in Alpha for more than a year. As of December, UUA held 314 shares of Alpha Natural Resources.

"The resolution requests that company prepare a report on the its goals and plans to address global concerns regarding fossil fuels and their contribution to climate change, including analysis of long- and short-term financial and operations risks to the company and society," wrote Timothy Brenann, treasurer and CFO of UUA in a letter filed with the Securities Exchange Commission.

The letter also states a representative of UUA will be present at  the stockholders meeting to advance the initiative.

The UUA's concern involves a report from the International Energy Agency that states that if any more than one-third of current provable fossil fuel reserves are burned before 2050, the goal of achieving less than two degrees Celsius of increased global temperatures would be nearly impossible. If global governments seek to impose constrains on carbon emissions as a result, "they could reduce coal asset valuations by as much as 44 percent."

"It is of concern to investors that a portion of Alpha's coal reserves and/or related infrastructure may become unusable, unmarketable, or otherwise not economically viable as a result of greenhouse gas restrictions," UUA wrote.

UUA requests that Alpha provide investors with action plans and risk scenarios beyond only acknowledging potential impact of carbon policy. The plan, the shareholders propose, should include a range of scenarios identifying reserves or infrastructure that could become stranded assets due to potential carbon restrictions.

Alpha attempted to exclude the proposal under a rule that allows companies to not consider a proposal if the proposed practices are already "substantially implemented." The SEC did not find reason to exclude the proposal based on the information Alpha presented.

Alpha claims its sustainability report, Form 10-K filings and other disclosures have already covered the company's exposure to climate change risks. It also states the proposal is "overreaching, unlikely to implement at a reasonable cost and required a report addressing issues outside our experience and purpose."

"Alpha mines and produces coal, and has no particular experience enabling it to assess the risks to society, as a whole, of fossil fuels generally and their contribution to climate change as stated in the proposal," Alpha wrote. "Further, the proposal's request for an analysis of long- and short-term financial and operational risks to society of fossil fuels and their contribution to climate change is vague; Alpha would not be able to determine with any reasonable certainty what such financial and operational risks are to society, as a whole."

The water management proposal would require Alpha Natural Resources to follow Global Reporting Initiative performance indicators such as total water withdrawal by source, documentation of water bodies affected by withdrawal, percentage of water recycled and other factors involving water discharges and wastes. Alpha Natural Resources wrote to investors in Monday's proxy statement that the GRI guidelines would cost "several hundred thousand dollars."

"The board believes that our time, efforts and resources would be better spent focusing on our core business operations while continuing our current environmental and community policies and initiatives, particularly given that we do not believe that a GRI-based sustainability report would provide sufficiently useful information to management, our employees or the communities in which we operate to justify the financial expenditure," the proxy statement states.

Alpha's board further wrote that complying with the GRI guidelines could be not done within "reasonable costs," which was part of the stockholders' request. Alpha says the business is already highly regulated and that a report based on GRI guidelines "would not change the fundamental way we do business."

In addition to doubts about the efficacy of such a report, Alpha claims its 2011 sustainability report already details the company's progress on environmental issues. The company reportedly has spent $33 million in research and development of coal-related technology, including reductions of carbon dioxide emissions and water treatment.

Alpha's proxy statement responds to the request for a water management report with a list of state-level compliance and measures taken beyond what is legally required. The company also points out the report is primarily requested due to surface mining in the Appalachian region, something that represents just under a third of Alpha's active mines.

"Our commitment to this goal (of achieving environmental excellence) at the highest level is evidenced by several items, including our board's creation of a safety, health, environmental and sustainability committee, which focuses on Company-wide environmental efforts," Alpha wrote in the proxy statement. "In addition, our efforts in environmental compliance have been recognized within our industry."

Other proposals stockholders will decide include approval of election of officers; approval of the compensation, bonus and incentive plans; and ratification of Alpha's public accounting firm.