Green, Inc.
By Connie Kwong
As You Sow is a nonprofit environmental advocacy organization based in Oakland, California. The organization’s mission is to “promote environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies,” and it works on a variety of issues including waste reduction, energy sustainability, executive compensation, human rights, and environmental health. Recently, As You Sow has garnered attention for its efforts in urging oil giant Exxon Mobil to adopt a shareholder resolution in which the company would increase dividend payments and stock repurchases instead of investing more money to look for new fossil fuel sources.
Most discourse on the relationship between politics and business centers on state intervention versus free market policies. California is famous for its environmentally progressive politics, but it is also notorious for its car culture, and consequently, its dependence on fossil fuels and companies like Exxon. In 2013, the state ranked third in the nation in crude oil production. As of Jan. 2014, the state also ranked third nationwide in refining capacity with almost 2 million barrels per calendar day from its 18 operable refineries. Given our dependence on fossil fuels and their status as a problem child in energy policy, As You Sow’s efforts demonstrate that the environmentalism movement cannot be simplistically summarized as a conflict between regulation and business. Corporations themselves are political, and the influence they exert can and should be evaluated according to their commitment to corporate social responsibility.
Corporate strategy
In 2012, 87 of the world’s top 150 economic entities were corporations – 58%. Being conglomerations of wealth, corporations have a vast array of resources that translate to extensive political power. This is exemplified through campaign finance, candidacy support, lobbying efforts, and also their status as symbols of change and progress, or lack thereof. For instance, in 2014, the oil industry continued its long-running trend of being the top lobbying spender in California, with the Western States Petroleum Association spending $8.9 million.
In a phone interview, Amelia Timbers, Energy Program Manager of As You Sow, summarized,
“Companies obviously have an important role in political activity and they influence political dialogue. If we can get companies more aligned to sustainable business practices, preservation of human rights, and environmental protection in their activities, it will ultimately help move the entire conversation in that direction.”
Already, the group has achieved seemingly small but nonetheless milestone successes. For instance, in 2013, As You Sow filed the first carbon asset risk resolution with Pennsylvania-based CONSOL Energy, which received 20% voting support from shareholders. In May 2014, the organization filed a similar resolution with Anadarko Petroleum Corporation, one of the world’s largest independent oil and natural gas exploration and production companies. This resolution received 30% voting support from shareholders, the highest ever for a carbon asset risk resolution. Although these votes are well short of a majority, they do suggest that a shift in investors’ values could be a precursor to institutional change; especially when considering that under Securities and Exchanges Commission rules, a proposal that receives a minimum of 3% of votes can be resubmitted the next year, and “a proposal that consistently gets the support of at least 10 percent of the shares voted can be re-filed indefinitely, assuming it meets the overall requirements for proper subject matter.”
Most recently, on Jan. 29, the Royal Dutch Shell Board of Directors endorsed a resolution that As You Sow co-filed as part of the “Aiming for A” Coalition of investors, recommending that shareholders support it. This resolution requires the company to commit to reducing emissions, investing in renewable energy, eliminating bonus systems that promote climate-harming activities, and “stress test its business model against the two degrees Celsius warming limit adopted by 141 governments in the UN's Copenhagen Accord.” According to Andrew Logan, director of the oil and gas and insurance program at Ceres, a U.S.-based investor advocacy group, Shell’s decision could be instrumental in influencing other major oil and gas corporations to address climate change-induced risks, because “It’s a real validation that these concerns are important and deserve attention and transparency from the [energy] industry.”
Is it enough?
However, transitioning away from fossil fuels remains a difficult hurdle to overcome in the fight for clean energy. While many Fortune 500 companies have started reporting data about the environmental impact of their practices, the “greenwashing trend” in corporate activity is often misleading, and does not change the fact that many corporations continue to dance around the issues of fossil fuels and carbon emissions.
For instance, despite Shell’s endorsement of a progressive shareholder resolution, the company announced on the same day that it plans to start drilling this summer in Alaska’s Chuckhi Sea. An overwhelming body of scientific research tells us that drilling in the Arctic is an inherently risky activity that would only augment the severity of global warming. This raises concerns that cooperating with corporations could simply just be talk.
When I asked Ms. Timbers about the dynamics of working with oil and gas companies, she explained that much of As You Sow’s work lies in getting corporations like Shell to understand that there are many hidden risks in global warning. She also explained that many environmental advocacy groups see energy corporations like Shell and Exxon Mobil moving away from oil in the long run.
After all, corporations exist to make profit. Conventional business economics tells us that they move away from operations that are too risky, and there has been recent discussion about the financial risks associated with fossil fuels. However, reducing this to a problem to be mitigated by the business cycle’s process of creative destruction would consequently be destructive in its own right. Global warming poses an insidious threat for the planet that will only continue to worsen without proactive efforts to eliminate fossil fuel dependence.
This is why organizations like As You Sow are especially crucial. Given that environmentalism movement currently operates in a capitalist economic context, it is imperative that corporations play an active role as well. Shareholder activism is a growing trend, and a report published by Broadridge Financial Solutions and PwC finds that while shareholder support for proposals related to social and environmental issues averaged just 18% in 2013, this coincided with the fact that “three-quarters of directors surveyed say they have had not very much or no discussion about issues like human rights, climate change, carbon emissions or resource scarcity during the last twelve months.” The report also finds that of the small percentage of directors who are discussing corporate social responsibility issues, these discussions are more likely to take place at the largest companies because these companies may be “already reporting to stakeholders on their corporate social responsibility initiatives.”
In other words, initiating conversations to inform and educate corporate management lays the groundwork for corporate social responsibility. As You Sow is not a policymaking organization, and besides working with the SEC to determine the legality of shareholder resolution proposals, it does not interact often with government agencies at the state nor national level. However, Ms. Timber carefully explained that the group’s focus on business practices is a different, but necessary approach, to environmental advocacy.
“Our goal is to move companies to adopt better practices. Working with companies directly, rather than through regulators or consumer pressure, can be one of the most effective ways to achieve that. But you need everyone’s efforts. You need people working with shareholders, working with companies, and outside holding protests. Companies have a lot of power, and they are a big part of the climate problem. If we can help them change, we can help change the status quo.”
Therefore, groups like As You Sow are arguably more effective than traditional grassroots organizations because they exist with the understanding that corporations are profit-maximizing institutions, but also advocate strongly for corporate social responsibility. As part of a tradition of California’s environmentally progressive politics, As You Sow is leading the way by working with companies nationwide and multinational corporations as well. The organization’s (hopefully) continued successes will ultimately prove to be case studies in how profits and social benefits do not have to be dichotomized, and that ethical growth is a better model to follow than market fundamentalism.