Greens to Ratchet Up Shareholder Activism
If you think environmentalist shareholder tactics like those employed by Rockefeller descendants on Exxon – which push their agenda via resolutions at annual meetings rather than promote company profitability – then you haven’t seen anything yet, according to a Marketwatch report yesterday. After the BP oil leak disaster and the Massey Energy coal mining accident that killed 29 workers, green activists are expected to increase pressure on corporate executives next year:
Investors hope in 2011 to build on the strong vote-counts and a record number of proposals that shareholders considered in 2010. More than 100 climate and energy-focused shareholder proposals were put before shareholders of 88 U.S. and Canadian companies this year, almost 50 percent more than in 2009, according to a July report by Ceres, a coalition of investors and environmental groups.
The investor measures tackle a wide variety of issues, including environmental risks associated with coal ash, policies to reduce hazards from extracting oil from shale, and new corporate goals to reduce climate change emissions.
Of course the real risks corporations experience due to climate paranoia are not those that have demonstrable implications for the environment, but instead the needless regulatory burdens that pressure groups have won in the courts and at the state and regional level. The dangers are posed by government, not greenhouse gases.
Nevertheless in fear of the eco-gogues and in pursuit of their own profits from a cap-and-trade scheme, companies like BP and General Electric entered into alliances with legal attack groups like Environmental Defense Fund and Natural Resources Defense Council. Similarly EDF president Fred Krupp wore the right clothes while cozying up to corporations that casual observers would think are their natural en emies.
As Marketwatch noted, “green” investors applied the pressure on corporations from within, which accompanied campaigns like BP’s “Beyond Petroleum.” But after diverting BP’s attention from their core mission, so-called socially responsible investors are bailing out on the company:
Some investors who use environmental, social and corporate-governance considerations in making investment decisions had invested in BP, in part, based on the company's stated commitment to alternative-energy production.
Yet Lowell Miller, chief investment officer of Miller Howard Investments, argues that environmentally focused shareholders understood the environmental risks of the spill when it first hit and quickly sold their stakes while other investment managers hung on.
"While most managers were thinking of pure numbers and assets of the company and whether it could sell some assets to recover, we sold BP immediately because we understood the environmental risks generated by the blowout," Miller said. "Our environmental background gave us perspective. Most managers were buried in their valuation cave."
Seems to me if you invested in a company for the purpose of influencing its environmental decisions, instead of its stock price, then why would you jump ship when ecological risk is highest and the company theoretically is at the height of sensitivity to its public image? It points to the hypocrisy of those who say they invest for reasons other than profits.
But with the Securities and Exchange Commission now requiring companies to disclose certain environmental and climate change risks, and to allow shareholder proposals to address those issues without being dismissed out of hand, expect tension to only grow between green zealots and responsible stakeholders.
It's too bad Marketwatch reporter Ronald Oral did not call NLPC, as we have our own brand of shareholder activism on these issues. This spring, NLPC sponsored a proposal at Goldman Sachs asking for a report on the science behind the company's embrace of global warming. NLPC President Peter Flaherty argued at the Goldman annual meeting that such a report is necessitated by the 'Climategate' scandal.
At PepsiCo, NLPC sponsored a proposal asking the company to report on its lobbying priorities. Flaherty blasted the company's role in the United States Climate Action Partnership (USCAP), which lobbies for cap-and-trade legislation. NLPC sponsored a similar resolution on lobbying priorities at Wal-Mart, and criticized Wal-Mart for its support of cap and trade (and ObamaCare) at the annual meeting in June.
Paul Chesser is an associate fellow for the National Legal and Policy Center.