How Can Miller/Howard Be an ESG Manager in the Energy Sector?
Monday, November 18, 2019
- Miller/Howard’s goal is to serve the interests of our clients and to work with energy companies, pushing them to be better corporate citizens and sustainable businesses.
- Engagement moves industry to better practices, increased disclosure, and heightened transparency.
Miller/Howard welcomes this conversation, buoyed by conviction and decades of experience in the engagement space. We focus on engagement, an effective mechanism of change through which we encourage companies to be better corporate citizens.
We speak from the perspective of realists who understand that, at such a critical time in our economy and world, we need all hands on deck. Though we are certainly asset managers in the energy sector, our ESG scope of action sweeps from Capitol Hill to the boardroom.
We effect change now by engaging companies on difficult questions—moving the industry to better practices, increasing disclosure, and heightening transparency faster than regulators can. That happens with engagement.
Miller/Howard has learned that investor voices are powerful in dialogues with companies and in dialogues with regulators.
We ask companies to adhere to identified best practices, look at the long-term picture, utilize resources appropriately (including energy, water, and people), and be efficient and innovative. We work to foster working—not adversarial—relationships with company management, having found through experience and research that such an approach is best, even if the conversations can be difficult and the asks, tough.
In the unique case of Master Limited Partnerships, where traditional avenues for shareholder engagement and proxy voting are unavailable, we’ve gotten creative. Our Open Letter to MLP/Midstream Management Teams calls for management teams to address key issues to become better aligned with investors. Norms are changing in the midstream energy industry as expectations are changing among investors; laggards will fall further behind unless they take action. And our midstream/MLP engagements have had notable impacts (see below).
Miller/Howard has supported the MLP Parity Act/Financing our Energy Future Act since its first introduction in 2012 by issuing statements and talking to lawmakers. The Act supports innovation and seeks to level the playing field by allowing renewable energy companies access to the MLP structure.
Miller/Howard’s goal is to serve the interests of our clients and to work with companies, pushing them to be better corporate citizens and sustainable businesses. We see it less as a question of “How can we be an ESG manager in the energy sector?” and more a question of “How can we not be?”
Shareholder Advocacy & Engagements: Analysis Becomes Action in the Energy Sector
By means of letters, conversations, comparisons to peers, and submitting and/or supporting shareholder proposals, our work over the last year encompassed a variety of environmental, social, and governance issues.
We pushed for more disclosure of environmental management, including policies, practices, and metrics, at a variety of companies, including:
- Atmos Energy
- Energy Transfer Partners
- Enterprise Products Partners
- EQT GP & Midstream Partners
- Kinder Morgan
- Magellan Midstream Partners
- Pembina Pipeline
- Phillips 66 Partners
- Plains All American
- Shell Midstream Partners
- Tallgrass Energy
- Western Midstream Partners
- Williams Energy
Examples of results:
- As a result of our pushing for increased disclosure, Enterprise Products, Magellan Midstream Partners, and Plains All American released inaugural and/or enhanced ESG disclosure on their websites, or committed to doing so in the near term.
- In response to our calls for more granular and material methane-related performance data, ONEOK provided a supplemental update to its sustainability report.
- In 2017, we began pushing Pembina Pipeline to increase its ESG disclosure and in December 2018, the company published its inaugural sustainability report.
- Miller/Howard began filing shareholder proposals and dialoguing with Kinder Morgan in 2015, requesting ESG disclosure and other related performance metrics (e.g., methane emissions). Kinder Morgan released its inaugural sustainability report in October 2018, and a 2ºC scenario report in 2019.
Read more about Miller/Howard’s engagements with energy companies.
The portfolio management team was a driving partner in our MLP/Midstream Energy engagement, and talks about it in the May 2019 edition of the Open Letter to MLP Management Teams, which can be found on our website. All stocks mentioned above were held in a Miller/Howard strategy as of March 31, 2019. There is no assurance that the securities have remained or will remain in the portfolio.
Nicole Lee provides ESG research and support to the investment team and operational leadership within the ESG team. She also writes the firm's biannual Shareholder Advocacy News. Nicole worked for several years as a clinic coordinator and educator for a nonprofit health organization, during which time she also developed and conducted training programs at two local universities. She received her BS in Sociology from Southern Utah University, and studied Public Health at Westminster College.
John R. Cusick, CFA, brings deep knowledge of the MLP sector to the firm's portfolio management team. He was previously senior vice president and research analyst at Wunderlich Securities Inc. in New York, covering energy in North America, including partnerships focused on natural gas, liquids, and exploration & production. Prior to that, John spent more than a decade at Oppenheimer & Co. in New York, where he started his career as a junior analyst working on the energy team, and then as a senior research analyst specializing in the midstream sector. He earned his BA in Finance and Marketing from Temple University, and his MBA in Finance from Fordham University School of Business in New York City.