Berkshire Hathaway: Disclosure Needed of Environmental Risks and Other Sustainability Issues

International Rivers and the International Labor Rights Forum are urging shareholders in Warren Buffett’s Berkshire Hathaway Corp. to support a resolution requesting company management to produce a sustainability report.

See the letter sent today to the leading shareholder advisory services by International Rivers and ILRF. The letter supports a resolution submitted by an individual shareholder, which calls upon Berkshire Hathaway to join the majority of the world’s biggest companies that already file sustainability reports on the economic, environmental, labor, human rights, social and consumer impacts of their businesses. These reports follow guidelines established by the Global Reporting Initiative.

Berkshire Hathaway is majority owner of Mid-American Energy Holdings Company, which in turn owns PacifiCorp, operator of the notorious dams on the Klamath River near the California-Oregon border. Native American tribes, environmentalists and fishermen have long been campaigning for the four PacificCorp dams to be taken out. Click here for an essay by author Jacques Leslie on the plight of the Klamath and its people and the efforts to remove the dams and restore the river.

The dams block migration of salmon, steelhead, and lamprey over 350 miles of spawning habitat. Their reservoirs produce massive blooms of toxic blue-green algae each summer posing a heath risk to the fish and to local communities (and potentially releasing large amounts of the powerful greenhouse gas methane).

Since 2002 PacifiCorp has been seeking the dams’ re-licensing and continued operation, even though studies by the California Energy Commission and the Federal Energy Regulatory Commission have concluded that dam removal would be cheaper than bringing the dams into compliance with environmental laws. Finally, in November 2008, PacifiCorp agreed in principle that it would contribute up to $200 million for the removal of the dams by 2020 -- a dramatic turnaround in company policy, though negotiations for a final agreement on removal are still continuing.

Two years ago, Berkshire CEO Warren Buffett drew headlines with comments that he rejected attempts to rate companies’ social, human rights or environmental practices and would not consider these factors in Berkshire’s investment strategies. Today, Berkshire management says that it “recognize[s] the importance of sustainability considerations to our shareholders and to the future of Berkshire and its subsidiary companies,” but does not believe providing a report would “result in a meaningful additional benefit to our shareholders or otherwise.”   

Every year, Berkshire management’s excuses sound more and more out of date. Not only did 80% of the Global Fortune 250 companies release sustainability reports in 2007 - up from 64% in 2005 - but so did most of the top publicly-traded companies in which Berkshire itself holds stock, companies like Johnson and Johnson, Procter and Gamble, and Swiss Re. Unfortunately, no such reports are available for any of the companies in Berkshire’s own privately-held portfolio, leaving shareholders in the dark on the environmental and social impacts - and risks - of their own investments.

When your company operates dams that are so harmful to the environment and communities that it's cheaper to remove them than get them re-licensed, isn't that something shareholders deserve to know?