According to the most recent annual "Emissions Gap Report" issued by the United Nations Environment Programme (November 26, 2019), critical gaps remain between the commitments national governments have made and the actions required to prevent the worst effects of climate change. Companies have an important and constructive role to play in enabling policymakers to close these gaps.

Corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement present systemic risks to economies, as delays in implementation of the Paris Agreement increase the physical risks of climate change, as well as introduce uncertainty and volatility into investment portfolios. We believe that Paris-aligned climate lobbying helps mitigate these risks and contributes positively to the long-term value of investment portfolios.

As investors, we view fulfillment of the Paris Agreement's agreed goal-to hold the increase in the global average temperature to "well below" 2 degrees Celsius -as imperative in protecting investor assets.

On November 9, 2020, FirstEnergy committed to achieve carbon neutrality by 2050. It stated: "We believe climate change is among the most important issues of our time, and we're committed to doing our part to ensure a bright and sustainable future for the communities we serve."1

However, insufficient information is available to help investors understand whether FirstEnergy works to ensure that its lobbying activities, directly in the company's name and indirectly through trade associations or external organizations, align with the Paris Agreement's goals. Our company does not have a formal political spending disclosure policy to disclose contributions channeled into the political process through trade associations and tax-exempt social welfare groups; groups which generally need not disclose their contributors.

By contrast, global companies like ConocoPhillips, Shell, BP and Total have published reports evaluating the positions that their trade associations are taking on climate change.

On the same day it announced its carbon neutrality commitment, FirstEnergy announced the termination of its chief legal officer and general counsel.2 These separations are linked to allegations of FirstEnergy's involvement in a sixty-one million dollar "dark money" scandal in Ohio. The company's payments to the associated organization, Generation Now, were not captured by FirstEnergy's existing disclosure process.

It is reasonable for investors to be concerned that FirstEnergy's lack of disclosure of its payments to trade associations and social welfare groups for political purposes presents serious management, regulatory, reputational and business risks that may harm shareholder value.