It seems not everyone agrees with Big Oil that global warming is over-hyped alarmist nonsense. Today’s Houston Chronicle has this story about Exxon’s institutional investors who are demanding a meeting with the Board of Directors over Exxon’s failure to address the threat of global warming:
NEW YORK – A group of pension funds and institutional investors on Thursday accused Exxon Mobil Corp. of failing to act on global warming concerns and demanded a meeting with the company’s board.
In response, Exxon Mobil said it has an ongoing dialogue with members of the group and is setting up a meeting in July to discuss these issues.
Why are these big time investors in such a tizzy when Exxon Mobil is making just obscene amounts of money? Follow me below the fold for the answer. . .
Exxon has agreed to a meeting with the shareholders, but, as currently planned, it will only be with Exxon staffers (whoever that might mean) and not with Exxon’s board. The investor group is adamant that it meet with the board in its entirety and not be fobbed off on low level minions of Exxon’s senior management:
“In part, our position includes the fact that we recognize that the accumulation of greenhouse gases in the Earth’s atmosphere poses risks that may prove significant for society and ecosystems,” Exxon Mobil said in a prepared statement. “We believe that these risks justify actions now, but the selection of actions must consider the uncertainties that remain.”
The group, composed of pension fund trustees and institutional investors, said they were concerned Exxon Mobil’s handling of the climate change issue left it trailing behind its major oil peers, such as BP and Royal Dutch Shell.
Now why are Exxon’s largest investors getting into a snit about the global warming issue? After all, these large pension and mutual funds don’t put their money in Exxon’s stock in order to effect social change or better mankind. They hold Exxon Mobil stock in order to get a share of Exxon’s massive profits for their own investors and pensioners.
The answer can be guessed at when we consider these two words: Big Tobacco. Like the oil companies are doing today, Big Tobacco spent millions of dollars in a disinformation campaign to dissuade people from the clear scientific evidence that smoking was harmful to your health. The upshot of all that corporate fraud and deceit? Billions of dollars paid by Big Tobacco to settle lawsuits brought by smokers and numerous State Attorney Generals.
Is the picture getting clearer? Sure, Exxon’s shareholders may be happy with record profits and dividends, but they have to be concerned about Exxon’s record of lying about the threat global warming poses, especially since Exxon Mobil’s products are the main source of the greenhouse emissions driving that warming trend. So, when these large institutional shareholders see stuff like this . . .
[T]he Competitive Enterprise Institute (CEI) will unveil two 60-second TV ads focusing on what it calls “global warming alarmism and the call by some environmental groups and politicians to reduce fossil fuel and carbon dioxide emissions.” The ad, which will be aired in more than a dozen cities across the country, is being released just a week before the May 24th opening (in LA and NYC) of Al Gore’s new movie on global warming, An Inconvenient Truth.
Who is CEI? The Washington Post explains:
The Competitive Enterprise Institute, which widely publicizes its belief that the earth is not warming cataclysmically because of the burning of coal and oil, says Exxon Mobil Corp. is a “major donor” largely as a result of its effort to push that position.
Exxon documents reveal the company gave $270,000 to CEI in 2004 alone. $180,000 of that was earmarked for “global climate change and global climate change outreach.” Exxon has contributed over $1.6 million to CEI since 1998.
CEI’s general counsel Sam Kazman said, “I think what attracted [Exxon] to us was our position on global warming.” CEI’s position? The Institute believes the dangers of global warming are akin “to that of ‘an alien invasion.’”
Exxon’s spokesperson Tom Cirigliano has explained why the company is so dedicated to funding CEI’s pushback on global warming:
We want to support organizations that are trying to broaden the debate. … There is this whole issue that no one should question the science of global climate change that is ludicrous. That’s the kind of dark-ages thinking that gets you in a lot of trouble.
For the oil industry, Al Gore’s film exposing the truth is perceived as a threat, and they have no shortage of funds to try to distort it.
. . . it doesn’t take much for them to put 2 + 2 together and conclude that massive lawsuits (How many dollars in future losses? Billions? Trillions?) are in Exxon Mobil’s future unless it starts doing something immediately to cover Lee Johnson’s massive jowls inoculate itself against such claims. Exxon’s continuing efforts to muddy the waters of the global warming debate are seen by these investors as a dangerous sign that the value of their Exxon shares in the future will plummet unless management adopts a different strategy regarding climate change, and the sooner the better.
My prediction? The investors won’t get their meeting with the board, not will Exxon back off its campaign to mislead the world about the danger global warming poses. In fact, I wouldn’t be surprised to see a bill presented to Congress (by Republicans, naturally) at some future date proposing to absolve the oil companies from all legal liability arising from greenhouse gas emissions and the effects of global warming. After all, that’s the approach Big Tobacco has taken, time and time again.
But then I’m a pessimist. Let’s hope my crystal ball gazing proves to be a bit clouded, and that these investors force Exxon to change its approach on the environment before it’s too late — for all of us.
Cross-posted at My Left Wing and Daily Kos.
Cross posted at the Orange place.
In CorpSpeak, this means, “They tell us what they think, and we thank them and try not to laugh until after they leave.” The next stage is “frank exchange of views”, which means that they don’t wait before they laugh.
Don’t get me wrong, I have a certain amount of respect for stockholder activists. They’re doing what they can, given the context. But the context is the real problem.
Corporations aren’t evil, but they are by definition amoral. By definition they exist only to accumulate short-term financial wealth. Period, full stop. Management is by law not allowed to do anything that might interfere with that one goal.
These aren’t stockholder activists. These are their biggest investors: pension funds and mutual funds. A little harder to ignore than a few people who buy shares in order to raise a pr stink.
And therein lies the root of the problem. Corporations are legal entities created by the public, through our governments, for our benefit (to increase entreprenurial activity by limiting shareholder risks). They seem to have long ago forgotten that they are our creations and can be dissolved by a simple law if their costs on society outweigh their benefits. All that saves their sorry asses is the lack of education of the public of our inherent rights to restrict their activities however we damn well please. They are not human beings, they are golems endowed by us, their foolish creators, with rights beyond their capacities to use wisely. And the longer we wait to reign them in by amending corporate charters to include respecting social needs beyond shareholder return, the greater the havoc they will wreak. As with governments, we get the corporations we deserve (i.e., are willing to put up with).
I’m not sure if I’d say “corporations are evil,” but many are certainly full of hubris, and that because we let them get away with it.
People will do evil things on behalf of corporations.
But they don’t (with rare exceptions) do evil things for corporations out of loyalty to the corporation.
They dump the toxic waste out back because they’re afraid of getting fired, or because they could use that Christmas bonus to buy little Joey Jr. the GI Joe with the kung-fu grip. Up front, they’re thinking about how they’re gonna go to Vegas, find a hooker, and have a good time. Or embezzle enough to throw that fancy party on the yacht for the wife. Loyalty to the firm as an institution unto itself died out with the IBM man around 1965, if it even existed then.
Change the rules by which corporations do business and keep score, and the behaviors of the staff will be modified to meet the new schema: Make identifying and eliminating waste and corruption a priority, rewarded in cash, and waste and corruption will disappear in time like a corpse being eaten by bacteria.
I think the pension and mutual fund trustees are up in arms for another, far simpler reason. They’re making lots and lots of money today, this is true. Unlike most of the creatures we ironically call “businessmen” in our modern economy, these trustees cannot just make a quick couple million and get out. In order to deliver the big bucks, they have to look at the economy as a whole in the long term.
Only recently has information about the exact economic consequences of global warming really started being spread widely. Yes, if they’d been paying attention, they’d have picked up on it before, but I’ve met some people like this, and they tend to be very focused on finance. Now they’ve found out that global warming has a financial component that they simply can’t ignore. If they do, they lose money. So they’ll now throw their considerable weight behind making sure they don’t lose money.
Exxon-Mobil is about to discover which side its bread is buttered on. Here’s a hint: it’s probably not the board’s.
Exxon is a special case (although not unique). It believes that it is in the oil business. Some companies like BP now think they are in the energy business.
What this means is that their corporate plan is to maximize current value of the stock. They do this by means of several policies. The most important are stock buybacks and limited amount of infrastructure investment.
Exxon is spending $15 billion this year alone on buying back their own stock. This is supposed to increase its value. They have also raised their dividend for the same reason.
The amount of oil exploration is also being minimized. One of the reasons is that there is little new oil to be found and what will be found will be smaller fields with higher extraction costs. The obscene payment to their retired CEO also got them lots of bad publicity.
So the pension funds and the like are worried about the long term value of their investment. They want to see a transition to a sustainable business plan. One of the NY Times columnists recent said that Exxon’s policies looked like they are winding down the business.
and theory. Jealous that we did not think of it! But, it so seems logical. really great job. will also be one of our headlines today when i finally get to posting.