Chevron slams ISS on May 30 AGM advice as $580bn shareholder group presses on Ecuador case

40-investor coalition’s open letter ahead of AGM

A group of 40 institutional investors with combined assets of $580bn (€463bn) has written to oil major Chevron calling on it to settle its long-standing $18bn Ecuador environmental lawsuit.

The intervention comes ahead of the company’s annual meeting tomorrow (May 30) at which the company will resist a slew of shareholder proposals on governance and environmental issues. Chevron’s CEO, John Watson, has taken the unusual step of writing to investors to heavily criticise some of the voting recommendations of ISS, the powerful proxy voting agency.

Signatories to the shareholder letter include New York State Comptroller, Thomas di Napoli, who oversees the New York Common Retirement Fund which owns $713m in Chevron shares.

“Chevron’s actions are hurting shareholders as well as the indigenous people of the rainforest,” di Napoli said. “I urge the company’s leadership to settle the case and put this issue to rest.”
At issue is a judgment against the company handed down by an Ecuadorian court in February last year; the case dates back to 2003 when 30,000 Ecuadorian aboriginal people filed suit over the company’s alleged pollution of the Amazonian rainforest.

Among European institutional investor signatories are Hans Aasnæs, CEO of Norway’s Storebrand, Danske Capital’s Head of SRI and Corporate Governance Thomas Kjærgaard and Faryda Lindeman, Advisor, Responsible Investment and Governance at Dutch asset management giant MN Services.

US investors include the International Brotherhood Teamsters, the Unitarian Universalist Association and the United Steelworkers. Also backing the call are sustainable asset management firms such as Newground Social Investment NorthStar Asset Management and PaxWorld, as well as numerous faith investors.A similar letter last year was backed by 22 investors with $156bn in assets.
“Despite management’s continual assertion that it intends to challenge the judgment at every opportunity, its financial exposure has only grown over time and its options to evade the $18bn judgment have greatly narrowed in recent months,” says the letter.

“Chevron is hurting shareholders as well as indigenous people”

“Over the course of the nearly 20 years of litigation, Chevron has suffered significant reputational damage from its attempts to defend [current subsidiary] Texaco’s record in Ecuador.”

In his letter to shareholders regarding ISS’ advice, Chevron CEO Watson claimed the proxy advisory firm had issued “misleading” information in its advice to investors. ISS supports most of the investor proposals on the agenda.

“We think it is important to respond to the factual errors and poor quality of analysis contained in the report recently released by ISS Proxy Advisory Services,” Watson said.

Meanwhile, Boston-based Green Century Capital Management has also written to Chevron shareholders asking them to vote for its proposal at the meeting calling for disclosure about the risks of hydraulic fracturing (“fracking”). A similar proposal gained 40.5% support in 2011.

And the Amalgamated Bank has similarly sought support from investors for its governance proposal relating to its bylaws governing lawsuits in Delaware.