Goodbye to BP
BP? We’re out of it. With the benefit of perfect hindsight, I wish we’d sold before the Deepwater Horizon catastrophe; this wasn’t the first lethal BP disaster in recent years. We could also see the company’s commitment to shareholder engagement on environmental, social and governance matters (ESG) slipping as well, but were hoping that the collective efforts of the social investment community could turn that around. We held out hope because BP is still the oil and gas company with the lowest carbon footprint (it was the first to acknowledge the reality of global warming) and maintains a far better human rights record than the other oil supermajors. CEO Tony Hayward was said to be making progress on safety issues as well.
Divestment isn’t about punishing companies, at least as we practice it. We divest when we’ve lost faith in management’s ability to achieve excellence either financially or in ESG matters. Accidents do happen, but the catastrophe in the Gulf was less an accident than a series of outrageous, stupid, and preventable decisions exacerbated by the failure of the federal government to properly regulate the oil industry. We are sick at the loss of the oil rig workers, the marine life, and the security of those whose livelihoods depend up on it.
Speaking of Big oil, in May I had the dubious pleasure of attending Chevron’s annual stockholder meeting, to present a shareholder proposal filed by Trillium and co-filed by the Pennsylvania Treasury and Amnesty International USA. The proposal called for the company to fill upcoming board vacancies with at least one director who has environmental expertise, a request that seems laughably obvious in the wake of the Deepwater Horizon blowout until (a) you do your research and find out that Chevron’s failure to do so is quite in keeping with its peers’ practices, and (b) only 27% of the votes cast by other shareholders supported you. Twenty-seven percent, on the other hand, is very high support for any proposal opposed by management. In any event, it far exceeds resubmission thresholds, so it’s likely to get the attention of management, and even if it doesn’t, we can keep putting it on the ballot until it gains majority support.
The meeting itself, the first one presided over by new CEO John Watson, was efficient and businesslike for the most part, focusing on such good news as Chevron’s impressive 10.6 percent return on capital for 2009. Only a few angry comments and desperate appeals this year from around the around the world concerning environmental contamination, abuse of human rights or corruption. Something was…different this year…something seemed…missing. Of course! The twenty-seven advocates and community leaders from around the world who had been turned away by security personnel despite having legal proxies and written authorization from shareholders to attend in their place. That’s why it was so peaceful inside the meeting.
I am not sure how peaceful it was in the Houston jail, where seven of those proxy holders who would not take ‘no’ for an answer ended up. One of those dragged away was Mitch Anderson, who bore the proxy for shares owned by Amazon Watch, the leading critic of Chevron for refusing to make full restitution for damage done to the Ecuadorian Amazon by its subsidiary Texaco in the 1970s and ‘80s. Anderson certainly did not come to praise Chevron, but he is a legal proxy holder (as were, it appears, the majority of those turned away). At Mr. Watson’s compensation level (nearly $9 million a year, according to Bloomberg Businessweek), you’d think for one morning a year he would be willing to listen to a little in-your-face criticism. But his enthusiasm is beside the point. For that one morning per year, he is obliged to listen to his shareholders’ representatives whether he likes what they’re saying or not, because Chevron is a publicly traded company, not some mom-and-pop shop selling lotto tickets on the corner. Let’s hope that the Securities and Exchange Commission will step up to the plate and crack down on companies like Chevron that so blatantly disrespect the rules and regulations that govern the proxy process and the spirit behind them.
Now if you’ll excuse me, I must get back to the task of searching for some nice oil company to replace BP in our portfolios. Wish me luck.