The sham of ‘share­holder en­gage­ment’

The Washington Post Sunday - - SUNDAY OPINION - BY BILL MCKIBBEN The writer is a dis­tin­guished scholar at Mid­dle­bury Col­lege and a founder of the group

If his­to­ri­ans some­day need to ex­plain how mankind man­aged to blow the fight against cli­mate change, they need only point to last month’s share­holder meet­ing at Exxon Mo­bil head­quar­ters in Dal­las.

The meet­ing came two days af­ter Texas smashed old rain­fall records — al­most dou­bled them, in some cases — and as au­thor­i­ties were still search­ing for fam­i­lies swept away af­ter rivers crested many feet be­yond their pre­vi­ous records. As Exxon Mo­bil’s Rex Tiller­son— the high­est-paid chief ex­ec­u­tive of the rich­est fos­sil fuel firm on the planet — gave his talk, the death toll from In­dia’s heat­wave mounted and pic­tures cir­cu­lated on the In­ter­net of Delhi’s pave­ment lit­er­ally melt­ing. Mean­while, satel­lite images showed Antarc­tica’s Larsen B ice shelf on the edge of dis­in­te­gra­tion.

And how did Tiller­son re­act? By down­play­ing cli­mate change and mock­ing re­new­able en­ergy. To be spe­cific, he said that “in­clement weather” and sea level rise “may or may not be in­duced by cli­mate change,” but in any event tech­nol­ogy could be de­vel­oped to cope with any trou­ble. “Mankind has this enor­mous ca­pac­ity to deal with ad­ver­sity and those so­lu­tions will present them­selves as those chal­lenges be­come clear,” he said.

But ap­par­ently those so­lu­tions don’t in­clude, say, the wind and sun. Exxon Mo­bil wouldn’t in­vest in re­new­able en­ergy, Tiller­son said, be­cause clean tech­nolo­gies don’t make enough money and rely on gov­ern­ment man­dates that were (re­mark­able choice of words) “not sus­tain­able.” He ne­glected to men­tion the re­port a week ear­lier from the not-very-rad­i­cal In­ter­na­tional Mon­e­tary Fund de­tail­ing $5.3 tril­lion a year in sub­si­dies for the fos­sil fuel in­dus­try.

All in all, a sneer­ing and sad per­for­mance by a man paid nearly $100,000 a day, whose com­pany spends $100 mil­lion a day look­ing for new oil and gas even though sci­en­tists say we sim­ply can’t burn most of the fos­sil fuel we’ve al­ready lo­cated with­out dev­as­tat­ing con­se­quences.

If any good can come from Tiller­son’s per­for­mance, it’s that it for­ever breaks the idea that “share­holder en­gage­ment” with com­pa­nies such as Exxon Mo­bil ac­com­plishes any­thing. In the past few years, as the fos­sil fuel di­vest­ment move­ment has gath­ered steam, some col­leges, gov­ern­ments and re­li­gious or­ga­ni­za­tions have bucked the trend to­ward sell­ing off their in­vest­ments in th­ese com­pa­nies and an­nounced that they would per­suade them to do the right thing in­stead. Many of those hop­ing to “en­gage” in this way are lo­cal and state of­fi­cials.

For in­stance, Ver­mont trea­surer Beth Pearce has turned down re­peated calls for di­vest­ment, even as fos­sil fuel stocks have badly un­der­per­formed the broader mar­ket. “I pre­fer con­struc­tive en­gage­ment where we have a seat at the ta­ble,” she said re­cently. “We are mak­ing our voice heard.” Ver­mont Gov. Peter Shumlin (D) has taken the same tack: Di­vest­ment is “not the sharpest tool in the drawer,” he said — even af­ter more so­phis­ti­cated in­vestors from Ox­ford Uni­ver­sity to the Rock­e­feller phi­lan­thropies an­nounced that they had given up on en­gage­ment and were di­vest­ing. ( With the Rock­e­fellers, re­mem­ber, Exxon Mo­bil was once the fam­ily busi­ness; if they couldn’t suc­cess­fully “en­gage,” no one can.)

But Pearce de­cided to take on Exxon Mo­bil any­how. She said in ad­vance of the share­holder meet­ing that the com­pany’s di­ver­si­fi­ca­tion be­yond oil and gas had been “wholly in­ad­e­quate.” Ouch, fight­ing words! Her ef­fort to have the com­pany set green­house-gas emis­sions tar­gets won barely 10 per­cent of the vote.

This kind of ef­fort is not re­ally de­signed to put pres­sure on Exxon Mo­bil. Ev­ery year the same res­o­lu­tions come up and ev­ery year they are voted down— in­fact, they at­tracted a smaller per­cent­age of the vote this year. They’re de­signed in­stead to take pres­sure off of­fi­cials like Pearce and Shumlin, who don’t want to of­fend Wall Street by di­vest­ing.

En­gage­ment can be a sen­si­ble strat­egy for pres­sur­ing cor­po­ra­tions to ad­dress the ways they run their busi­ness — Krispy Kreme, for in­stance, re­cently an­nounced that it would do a bet­ter job of mak­ing sure its palm oil comes from a sus­tain­able source be­cause cam­paign­ers made such a stink about rain forests be­ing cut down. But that’s be­cause Krispy Kreme makes dough­nuts, not palm oil; when it comes to core busi­ness ques­tions, says for­mer Rea­gan-ap­pointed Se­cu­ri­ties and Ex­change Com­mis­sion mem­ber Be­vis Longstreth, such en­gage­ment is like “try­ing to con­vince Philip Mor­ris to give up mak­ing cig­a­rettes or John­nie Walker to aban­don its dis­til­leries.” It will, he said, “most cer­tainly be a fool’s er­rand.” Rex Tiller­son has proved his point.

Hap­pily, more and more in­vestors are giv­ing up this sham theater. Last week, Ge­orge­town Uni­ver­sity’s board voted to sell off its in­vest­ments in coal, and Nor­way’s sovereign wealth fund, the largest pool of in­vest­ment money in the world, an­nounced it would do the same. This came on the heels of an an­nounce­ment by the Uni­ver­sity of Ed­in­burgh that it would di­vest from coal and tar-sands oil. The Uni­ver­sity of Wash­ing­ton did the same, and the Uni­ver­sity of Hawaii went one bet­ter and an­nounced it was sell­ing off all fos­sil fuel shares. Two days later France’s largest in­surer, the AXA Group, said it would get rid of its coal port­fo­lio.

Such steps mat­ter. Di­vest­ment won’t move Exxon Mo­bil di­rectly — that’s im­pos­si­ble; the com­pany is dug in, and some­one else will sim­ply buy the stock when it’s sold. But di­vest­ment will un­der­cut the in­dus­try’s po­lit­i­cal power, just as hap­pened a gen­er­a­tion ago when the is­sue was South Africa and hun­dreds of col­leges, churches, and state and lo­cal gov­ern­ments took ac­tion. In the words of No­bel Peace Prize re­cip­i­ent Des­mond Tutu, who helped spear­head the an­ti­a­partheid drive, “we were not only able to ap­ply eco­nomic pres­sure on the un­just state but also se­ri­ous moral pres­sure.” Di­vest­ment is one tool to change the zeit­geist, so that the day ar­rives more quickly when the rich­est and most pow­er­ful can no longer mock re­new­able en­ergy and play down cli­mate change.

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