Chevron. Sustainable. Really?
It’s not every day that one of the world’s biggest corporations files an ethics complaint against a little-known government official–in fact, if it’s happened before, I missed it–but that’s exactly what Chevron did last week in the state of New York.
The company accused Thomas DiNapoli, the state comptroller, who oversees the state’s pension fund, of accepting about $60,000 in campaign contributions from lawyers and supporters of people who are suing Chevron in Ecuador. The campaign donations, it is alleged, influenced DiNapoli to use his power as the trustee of the pension fund, which owns Chevron stock, to push Chevron to settle the long-running, bitterly-fought lawsuit.
Imagine. Politicians being influence by campaign donations.
Chevron would know about that. Last month, the company donated $2.5 million to the Congressional Leadership Fund, a super PAC that supported House Republican candidates. The donation “appears to be the largest contribution from a publicly traded corporation to a political group” since the Supreme Court’s Citizen United ruling, The Washington Post reported. Chevron also spent nearly $15 million on Washington lobbying since the start of 2011, the Post said.
So…evidently, it’s fine for Chevron to lavish money on politicians–the company said it supports candidates who are “committed to economic development, creating affordable energy, strengthening American businesses, and delivering good government”–but unethical for its opponents to do so.
As it happens, Chevron’s complaint against DiNapoli was not even the most surprising news about the company to surface last week. Even more unexpected was the announcement that Chevron was being added to the holdings of the NASDAQ OMX CRD Global Sustainability Index, a “benchmark for stocks of companies that are taking a leadership role in sustainability performance reporting.”
The NASDAQ CRD Index is used to help guide investors seeking companies that are more sustainable. Just a few months ago, at the Rio + 20 confab, NASDAQ and several other stock exchanges promised, along with the UN Global Compact, to “promote long-term, sustainable investment in their markets.”
But what does that mean when an index includes Chevron, America’s second-biggest oil company?
Oil and natural gas companies, it turns out, are routinely included in sustainability indexes, especially those that take a “best-in-class” approach to their portfolios in order to gain exposure to all sectors of the economy, including energy. Shares in fossil fuel companies are also held by many funds that describe themselves as socially-responsible, or say they are concerned about climate change–including such well-known names as Calvert, Domini and Parnassus. I’ll have more to say about this in a day or two.
Chevron has particularly unseemly record when it comes to the environment, and not just because of the lawsuit in Ecuador, which is about as tangled an affair as you can imagine. [If you want to read both sides of the lawsuit story, along with thousands of pages of documents, visit The Amazon Post, which is Chevron's website arguing that the lawsuit is a fraud, and ChevronToxico, the critics' website. Here's the latest on the case from Roger Parloff of Fortune, a respected legal journalist.] A court in Ecuador last year awarded plaintiffs suing Chevron over environmental damages an $18 billion judgment, but a US federal judge has called the verdict tainted.
Set the lawsuit aside for now. There are other good reasons to ask why Chevron would be included in a sustainability index. Among them:
- Chevron has been operating in the tar sands of Alberta since 2006, digging up some of the dirtiest oil to be found on the planet.
- Chevron’s huge Richmond, CA, oil refinery caught fire last summer, sending 15,000 people for treatment for respiratory problems. It’s had a history of air pollution violations.
- Chevron’s investments in alternative energy have been touted in advertising (“Human Energy”) but they represent a small fraction of the the money the company spends exploring for oil and gas.
- Chevron’s climate change policy is weak. The company has opposed, through trade organizations like the American Petroleum Institute, pricing carbon emissions.
- Finally, and most importantly, Chevron is a fossil fuel company. Don’t you get it, people? Burning fossil fuels is not sustainable. In fact, if you believe the numbers compiled by Bill McKibben and the Carbon Tracker Initiative, which remain unchallenged by the oil industry, the global economy can burn no more than about 565 more gigatons of carbon dioxide and stay below 2°C of warming, an climate target agreed-upon by nearly all the world’s nations. But fossil fuel corporations already now have 2,795 gigatons in their reported reserves–five times the safe amount. Exploring for more fossil fuels, which is core to Chevron, is folly if you believe McKibben. [See my blogpost, Do the math: Bill McKibben takes on Big Oil.]
There’s much more to say, enough to fill a 64-page alternative annual report produced by environmental groups that oppose Chevron.
Cary Krosinsky, a founder of the Carbon Tracker Initiative who has just been named executive director of the Network for Sustainable Financial Markets (NSFM), says:
Chevron seems to be a company deeply mired in sustainability controversies around the world from the larger carbon bubble to Ecuador and much more. I wouldn’t want to own a sustainability focused fund that held Chevron without a proper explanation.
Chevron likely puts out lots of data and checks all the right sustainability boxes to boost its sustainability rankings according to this methodology. However, unless a “data-driven” sustainability ranking builds in careful, qualitative judgments about a company’s overall social and environmental record, it will continue to miss the forest for the trees–vacuously patting company’s like oil giant Chevron on the back without taking into account reality on the ground or in our air and water.
I emailed Michael Muyot, president and founder of CRD Analytics, which develops the index for NASDAQ, thinking perhaps that Chevron was included because the index focuses only on disclosure, not performance. No, he told me, the index is powered by a rules based methodology that takes into account both disclosure and relative performance. It employs 141 environmental, social and governance performance metrics…
I understand how some companies like Chevron are very controversial due to News headlines and public statements but we have always looked at sustainable development and investing from a much broader and more holistic perspective.
Hmm. It’s hard for me to imagine how a “broader and more holistic perspective” can ignore the threat that companies like Chevron (and to a lesser degree their customers, i.e., you and me) pose to the planet. The oil industry isn’t moving away from fossil fuels fast enough, and with the occasional exception (Shell), the industry fights against government policies, like a price on carbon or an end to their subsidies, that would make it easier for them to transform themselves. There’s nothing sustainable about that.
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