Why Unitarian Universalists Voted to Divest From Fossil Fuels

Last Saturday, I was proud to speak in favor the fossil fuel divestment resolution at the General Assembly of the Unitarian Universalist Association (UUA).

An overwhelming majority of the General Assembly voted in favor of the resolution.  Following the vote, UUA issued a press release in which UUA President Peter Morales said:

The UUA has a long-standing history of fighting for our environment. I am proud that we are going to put our money where our values are on this issue.

This victory was the result of the hard work of many Unitarian Universalists.  As a member of the UUA Committee on Socially Responsible Investment (CSRI), I have spent almost a year working with UU Divest, the group originally promoting the divestment resolution, my fellow committee members, and UUA staff including the Treasurer and CFO, Tim Brennan.  What we accomplished is unique and worthy of consideration by other religious investors.

The resolution concerns the Unitarian Universalist Common Endowment Fund, a $173 million fund that includes the investments of the Unitarian Universalist Association, affiliated UU organizations, and approximately 300 member congregations.

When the issue of fossil fuel divestment was promoted at last year’s General Assembly, I was largely opposed to it.  The UUA is a leader in shareholder activism to halt climate change.  I felt strongly it made no sense to simply sell our fossil fuel company to another investor that likely did not care about this critical problem.

Over the course of a year of careful negotiation with the divestment proponents, I began to change my position. Key to the success of negotiation was each side’s recognition that we were all part of the movement to halt climate change. Everyone began to realize that this was a discussion between friends and allies and the only real differences were over tactics to reach the common goal of halting climate change.

There was a key shift in the framing of the discussion. When we started the debate, the question was framed as: should the UUA EITHER divest OR continue its shareholder activism against the fossil fuel companies? The turning point came when we changed the frame of the discussion to: how should the UUA BOTH divest AND do shareholder activism?

That brought us to the consensus resolution language in which the UUA both joins the movement to divest from the fossil fuel companies while also retaining a limited, specific, and decreasing number of holdings for the purpose of shareholder activism.  Even more crucial was that the resolution passed UUA legal review through the inclusion of language ensuring that the UU Common Endowment Fund divest stock according the UUA’s fiduciary duty and using sound investment practices.

The UUA resolution should be viewed as model language for other religious institutions that also use shareholder activism on help halt climate change.  This resolution safeguards the UUA’s critical shareholder activism while adding another powerful voice to the fossil fuel divestment movement.

When I spoke in support of the resolution, I remarked how our process in crafting an effective resolution represented the best in the values and democratic practices of Unitarian Universalism.  I have never been more proud of my denomination and fellow UU members.

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Back to Basics in Ecuador (Part 1): What’s the Damage?

When a legal case becomes complicated, it’s important to stick to the basic issues.  In the case of the Ecuadoran Amazon communities versus Chevron, the questions boil down to the following.

  1. What is the extent of the oil pollution?
  2. What damage has the oil pollution had on the health and livelihoods of the people?
  3. To what extent is Chevron responsible and liable for that oil pollution?

These are the key questions that shareholders have continually posed to the management of Chevron.  For part one of this piece, let’s focus on the first two basic questions.

Despite two decades of litigation, there are still no clear answers.  In his ruling in the RICO against the Ecuadoran plaintiffs and their lawyers, U.S. District Court Judge Lewis Kaplan did not dispute the existence of the oil pollution.  According to Kaplan’s judgment:

The Court assumes that there is pollution in the Orienté. On that assumption, Texaco and perhaps even Chevron – though it never drilled for oil in Ecuador – might bear some responsibility.  In any case, improvement of conditions for the residents of the Orienté appears to be both desirable and overdue.

A recent research report backs up the contention that the oil pollution in Ecuador remains extensive and damaging to the health and livelihood of the Amazon rainforest communities.  According to a recent press release by Hinton Communications, a PR firm for the Ecuadoran communities:

A new report prepared by a team of prominent American scientists after the end of the Lago Agrio trial found that Chevron caused “widespread” toxic contamination to indigenous ancestral lands in Ecuador’s rainforest that persists to this day, directly contradicting the company’s defense in the Ecuador environmental litigation and providing a new boost to efforts by villagers to seize Chevron’s assets abroad.

The report – published by the Louis Berger Group (LBG), a consultancy that has worked for several U.S. government agencies – also found that Chevron engaged in an elaborate cover-up to hide the information from the Ecuador court during the Lago Agrio trial, which lasted from 2003 to 2011. The report has the potential to shake up the long-running case in favor of the rainforest villagers as they pursue Chevron’s assets in Canada, Brazil and Argentina to pay for a clean-up.

The LBG scientists who wrote the report spent several weeks in Ecuador in 2013 to inspect 18 of Chevron’s former well sites, which are spread out over a 1,500 sq. mile area of rainforest just south of the Columbia border. The report was prepared at the request of the American law firm Winston & Strawn for a private international arbitration where Chevron is seeking – thus far without success – to shift the clean-up liability to Ecuador’s government.

It is reports of this kind that reinforce the fact that Chevron’s lingering liability in Ecuador is still far from being resolved.  As such, it underscores risks to shareholders that Chevron’s management has downplayed but has still not effectively disclosed or managed.

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Harry Potter and Me

I serve on a number of boards and advisory groups.  But the one that gives me the most joy is my role as advisor to the Harry Potter Alliance.

Over ten years ago, I first received an unsolicited phone call from Andrew Slack.  He explained that he had set up the Harry Potter Alliance as a vehicle for the book fans to do progressive social activism based on themes from the books.  I was intrigued.  The next thing that happened, I was invited in 2005 by Andrew to a benefit for Amnesty International performed by Andrew’s stand-up comedy group and the “wizard rock” band Harry and the Potters.  I was quite impressed with the punk rock (nerd core?) style of the band as well as the enthusiasm of the young crowd.  The event even raised $300.

I quickly became a huge fan of Andrew Slack’s ability to connect young people to social actions through making analogies to the themes of the books and films they love. Andrew is now building the “Imagine Better Network,” that, in his words, seeks to create “an unprecedented movement that goes beyond Harry Potter to all fandoms so that fantasy is no longer an escape from our world, but an invitation to change it for the better.”

Although I’ve read all the Harry Potter books, my main love is Buffy the Vampire Slayer.  As I continued to advise Andrew, he dubbed me as his “Rupert Giles.”  I’m particularly proud of that and specifically my advice for the campaign to press Warner Brothers to use fair trade chocolate in its Harry Potter bars.

After almost ten years, I’m pleased that I’ve finally made the masthead of the Harry Potter Alliance website as a Senior Advisor.  Here’s to another ten years as an advisor to my favorite activist group.

 

 

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Chevron Shareholders’ $55 Billion Dollar Answer

Chevron’s 2014 annual shareholder meeting was remarkable in one respect. It was not marked by what happened. Instead it was notable by what did not happen.

This year, Chevron’s management was clearly hoping for a better reception from its shareholders regarding its legal troubles in Ecuador.  Chevron even showed a new video to shareholders that underscored its narrative that the company was the victim of unscrupulous lawyers trying to perpetrate “the legal fraud of the century.”  CEO John Watson even tried to suggest that shareholders should be angry with the Ecuadoran villagers suing the company and not Chevron’s own management for letting the case continue to drag on hurting the company’s coffers and reputation.

However, shareholders remained demonstrably unimpressed with management.  By large, shareholders continued to vote in significant numbers for resolutions critical of the company’s conduct in Ecuador.

For instance, the shareholder resolution led by the New York Comptroller Thomas DiNapoli calling for a board director with environmental expertise earned essentially the same votes as the previous year.  The resolution won 21.4% of shares voted in 2014 compared to 21.7% for the same resolution in 2013.

There was a drop in support for the resolution led by the Unitarian Universalist Association calling for an independent board chair.  In 2012, this resolution scored 38% but this year it won 22.2%. This drop in support for this resolution was largely due to its losing the support of the proxy advisory service, ISS.

By contrast, the resolution that did win support from ISS saw an increase in shareholder support.  The resolution led by Investor Voice asking for a reduction in the threshold of shareholders needed to call a special shareholder meeting actually increased its vote from 32.6% in 2013 to 34.3% in 2014.

Overall, these results demonstrated continued shareholder support for the resolutions urging corporate governance reform at Chevron citing the company’s mismanagement of its liability for oil pollution in the Ecuadoran Amazon.

Using a Chevron share price of $125, the 440,886,507 shares voted for the resolution on special shareholder meetings are worth over $55 billion.  If Chevron management’s question before the meeting was how many of its investors remained critical of its legal mismanagement in Ecuador, Chevron’s shareholders came back with the clear answer: $55 billion.  Any way you calculate it, it’s significant and sustained shareholder dissent.

This blog was corrected on 7/12/14 to reflect that the shareholder resolution by the Unitarian Universalist Association lost the support of the proxy advisory firm ISS and not Glass Lewis as previously stated.  Glass Lewis did in fact continue to support the resolution.  I regret the error.

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