Berkshire Hathaway is set to vote against a shareholder proposal next month that calls for the Nebraska-based holding company to study the risks of severe weather from climate change, a move the company’s leadership says is premature, according to a shareholder filing issued Friday.
The company’s well-known CEO, Warren Buffett, advised that no such study is warranted, as weather events like hurricanes have not significantly intensified as a result of climate change. The board of directors, on his advice, favors a vote against the proposal at its April 30 annual shareholder meeting. The meeting will be the first time the meeting can be viewed by the public via webcast, the company recently said.
“As a citizen, you may understandably find climate change keeping you up at nights. As a homeowner in a low-lying area, you may wish to consider moving. But when you are thinking only as a shareholder of a major insurer, climate change should not be on your list of worries,” the directors state in Friday’s filing, summarizing Buffett’s views from a February letter to shareholders included in Berkshire’s 2015 Annual Report.
“Up to now, climate change has not produced more frequent or more costly hurricanes or other weather-related events covered by insurance,” the filing reads. “As a consequence, U.S. super-cat rates have fallen steadily in recent years, which is why we have backed away from that business.”
“Super-cat” refers to a “super catastrophe” events that far excede the risk of physical harm posed by a normal category storm.
“If super-cats become costlier and more frequent, the likely — though far from certain — effect on Berkshire’s insurance business would be to make it larger and more profitable,” according to the summary of Buffett’s position included in Friday’s filing.
The Nebraska Peace Foundation, which owns one share of Class A Common Stock in the company, presented the proposal to be voted on by the board next month. The foundation supports social activism to combat climate change, nuclear weapons and racism.
“Claims exposure to weather-related events requires that insurance and reinsurance companies take the lead in evaluating and managing the impact of extreme weather,” it’s proposal reads. “Meanwhile, climate change could have unanticipated adverse effects on the investments of insurers.”
“Shareholders request the BH insurance division, within a reasonable period of time, issue a report describing the division’s responses to the risks posed by climate change,” it continued. “The report should include specific initiatives and goals relating to each risk issue identified,” including the physical risks posed by more severe weather, it said.
The group says reporting on climate impacts would complement Berkshire’s renewable energy business. Buffett said in his letter to shareholders last month that the company’s renewable business will continue grow in support of last year’s global climate change deal in Paris.
Nearly 40,000 Berkshire Hathaway shareholders from around the globe are expected to attend the “highly anticipated” shareholders’ meeting next month, according to Yahoo Financial that is hosting the meeting’s first-ever webcast.
