Shareholder Activism - Part 2
Air Date: Week of June 16, 2000
Environmentalists have a new tactic: they're buying stocks as a way into the boardrooms of major corporations with the aim of making the companies more sustainable and accountable. Living On Earth’s Anna Solomon-Greenbaum has the second of her series on shareholder activism.
CURWOOD: This is Living on Earth. I'm Steve Curwood. Major corporations are finely tuned to do one thing—make money—lots of money. And that mission often makes companies the target of social and environmental activists who have different agenda. Companies can ignore protestors, but they have to listen to their shareholders. So increasingly, activists are buying stock to gain a voice in the corridors of corporate power. But the education process may go both ways, as Living On Earth’s Anna Solomon-Greenbaum reports in the second part of her series on shareholder activism.
DUCHIN: Today is a really beautiful day. It's only 19 below zero, which believe it or not is balmy for up here.
SOLOMON-GREENBAUM: March seventeenth. Melanie Duchin, Greenpeace activist, speaking from a Quonset hut on the Arctic ice off Alaska.
DUCHIN: To the north of the camp you can see a great frozen expanse of Arctic ocean and snowdrifts, and it's really quite beautiful. And it's a stark contrast to, if you look a thousand east, which is where BP Amoco's Northstar project is being built, in that direction you see cranes and dump trucks and all manner of industrial equipment.
SOLOMON-GREENBAUM: Melanie Duchin and fellow Greenpeace campaigners are camped out on the ice to protest BP Amoco's newest Arctic oil field. Greenpeace says it threatens the Arctic ecosystem, and that burning oil in general threatens the global climate. They plan to disrupt construction here. It's classic Greenpeace activism.
DUCHIN: We're trying to stop the project. We're not going away. We're going to be here until this project is canceled.
(Indoor voices conversing, laughing)
SOLOMON-GREENBAUM: April thirteenth, London. Another front in Greenpeace's Northstar campaign.
TUNMORE: My name is Stephanie Tunmore, and I'm climate and energy campaigner for Greenpeace, U.K. I currently own two BP Amoco shares.
SOLOMON-GREENBAUM: Stephanie Tunmore has traded her activist attire for a business button-down and is headed for BP's annual shareholder's meeting. Instead of harassing the company from the outside, she is using her stake as part owner to prod the company from within.
TUNMORE: Greenpeace bought 150 shares just over a year ago, and then reallocated them to individual members and supporters. For us to become shareholders is important because it gives us an entry into the company. We can talk to other shareholders on the same basis: we're like you, we are shareholders. We care about this company. We want to see it do the right thing.
SOLOMON-GREENBAUM: It's a striking departure for an organization known for its guerilla tactics. But, Stephanie Tunmore says:
TUNMORE: For Greenpeace it's always been, within the guidelines of nonviolent direct action, it's whatever it takes. We use legal means, we use scientific reports, we now use shareholder activism.
SOLOMON-GREENBAUM: Greenpeacers have used their new status as BP shareholders to file a shareholder resolution. The resolution asks the company to abandon its new Arctic oil field and reinvest the money in solar energy. And as shareholders, Greenpeacers here are singing a different pitch than their colleagues out on the ice. It's not so much about what's good for the planet as what's good for the company.
TUNMORE: We know that climate change is caused by burning fossil fuels. We know that there are international agreements being reached to restrict the use of fossil fuels. If they remain a fossil fuel company they'll go the way of all dinosaurs.
WOMAN: Are you a shareholder?
SOLOMON-GREENBAUM: April fourteenth. Outside London's Royal Festival Hall, the venue for BP's annual meeting. Colorful banners have been strung above the Thames river. Bobbies in fluorescent jackets stand guard as protesters gather, some in unusual dress. There is a line of tall, somber polar bears, and a small boy in a furry brown costume.
MALCOLM: I'm dressed as a caribou and I have this caribou outfit.
SOLOMON-GREENBAUM: His name is Malcolm and he's holding a sign: Do not drill for oil in my nursery.
MALCOLM: These are supposed to look like hooves. Actually, this is not the most perfect skin, because the baby caribou has a much, much richer brown than this.
MAN: No, not now.
SOLOMON-GREENBAUM: BP stockholders on their way to the meeting try to avoid the gauntlet of environmental and human rights activists, however cute they may be. But the stockholders won't be able to avoid the activists who will go into the meeting with them. Like Greenpeace's Iain McGill.
McGILL: We're here to present to the shareholders our resolution, and explain to them why we believe they should support it. Why it's in their interest to support it.
SOLOMON-GREENBAUM: The Greenpeace resolution will be presented, opened up for debate, and then voted on. These votes will be added to millions of others cast by investors around the world.
SOLOMON-GREENBAUM: The shareholders file into the meeting. No caribou, polar bears, or tape recorders allowed.
SOLOMON-GREENBAUM: After the meeting, Stephanie Tunmore celebrates with a smoke.
TUNMORE: It was an unprecedented vote. We're very pleased. We've got -- the preliminary figures show we have 13.5 percent of the vote.
SOLOMON-GREENBAUM: Thirteen-and-a-half percent may not sound like much, but activists like Ethan Manuel are elated. He's here with another environmental group, which voted its shares in support of the Greenpeace resolution.
MANUEL: It's a big success because generally first-year resolutions get three to four percent of the support, because shareholders want to familiarize themselves with the issue and don't want to defy the company, frankly. And so, any time you get more than ten percent of shareholders to vote with you, it really represents a large percentage of shareholders.
SOLOMON-GREENBAUM: All told, about $14 billion worth of BP’s shares were voted against BP’s management and in favor of the shift from drilling for oil in the Arctic to developing solar energy.
MANUEL: It's a very big number that can't be ignored by the board of directors of BP Amoco.
SOLOMON-GREENBAUM: In the atrium of BP’s London headquarters, big red numbers keep count of daily production on a model of an oil barrel. Today's figures: two million fifty thousand barrels of oil, 6.4 billion cubic feet of gas. Upstairs, BP Managing Director Chris Gibson Smith is magnanimous about the shareholder challenge to the company's established way of doing business.
GIBSON-SMITH: We haven't had time to think about it, but I promise you we will think about it.
SOLOMON-GREENBAUM: Mr. Gibson-Smith says the Greenpeace-sponsored resolution made for the most interesting annual meeting he's ever attended. He says Greenpeacers made a shrewd choice when they added shares to their more classic tactics.
GIBSON-SMITH: I take the people in suits at the meeting very seriously. I think actually they engage us in a much more profound way than the demonstrations do. The demonstrations on the ice are dangerous. They're breaking the law. And that's not very attractive to me. So the ones in suits win for me.
SOLOMON-GREENBAUM: That said, Mr. Gibson Smith warns there are limits to the influence investor activists can have. He says environmentalists have to take a genuine interest in the financial well-being of the company, if BP is going to take an interest in them. The Greenpeace resolution, he says, exposed the group's lack of business savvy. It's appropriate for shareholders to decide who will control and run the company, he says, but it's going too far to actually try to manage it.
GIBSON-SMITH: I think if you get the shareholders trying to run the firm, that will turn out to be incredibly inefficient. We are deeply skilled at creating wealth for society, and they're not. We are.
SOLOMON-GREENBAUM: The Greenpeace investors are unrepentant. As Stephanie Tunmore put it, it isn't wealth that's driving them.
TUNMORE: We don't profit from the shares. We don't cash our dividends. And we'll dispense with them as soon as their usefulness is over.
SOLOMON-GREENBAUM: But the effectiveness of that approach remains to be seen. The old guard of investor activists may not always go along.
McDOUGALL: The investment community wants to know that the NGOs themselves believe in the success of companies, and they want companies to be profitable.
SOLOMON-GREENBAUM: Alan McDougall runs a U.K. company that advises big investors how to vote on shareholder resolutions. The tradition of shareholder activism goes back a long way, and about 30 years ago religious groups and other small investors began using their shares to pressure companies on social and environmental issues. They have often joined forces with pension funds and investment firms. But these groups are usually investors first. The activism comes second. Alan McDougall says this old guard may not support the newcomers until they're convinced they share the same assumptions.
McDOUGALL: Clearly there is one strand within the NGO community that doesn't particularly care whether the companies are profitable or not, because they believe that their particular objectives override the desire to see the company be profitable. So I think we've got some dialoguing to do on that.
SOLOMON-GREENBAUM: Some of the activist groups are eager for that dialogue to begin.
CHAN-FISHEL: We are going to do it right.
SOLOMON-GREENBAUM: Michelle Chan-Fishel coordinates the Green Investments Project at Friends of the Earth. Friends of the Earth was the first environmental group to use the shareholder process. Now they've become a kind of mentor on the subject for other nonprofits. Ms. Chan-Fishel says some activists might not like talking about profit when the environment is on the line. But, she says, that can change.
CHAN-FISHEL: Once they start working with shareholders and engaging with senior-level management, then they are able to become more sophisticated. They're able to find out what the real win-win situations are, and the real ties between financial performance and environmental performance.
SOLOMON-GREENBAUM: Ms. Chan-Fishel says this kind of engagement is especially important now. Globalization is reducing the influence of local and national policy, she says, so the role of shareholders as watchdogs is growing. It's too soon to tell whether the Greenpeace resolution has begun that kind of engagement at BP. The company hasn't backed off its new Alaska oil field, and the protesters who promised to stop it left when the ice began to thaw. And BP hasn't shifted any money into its solar company, which is already one of the largest in the world. But there are signs that BP is stepping up its green efforts. Its Web site has been revamped to focus on solar and other clean energy sources. And the company recently announced it will invest up to $50 million in a big U.S. provider of so-called green power. Michele Chan-Fishel of Friends of the Earth says progress is always like this at corporations, slow and incremental. She says it's important for the new generation of shareholder activists to realize this, and get used to it. But patience isn't a virtue for Greenpeace activists. And Stephanie Tunmore says that isn't going to change. Whether they're holding banners or shares.
TUNMORE: I think absolutely we want to see results, and we want to see results now. There isn't time. Look at what's happening to the climate. It's not slow. It's not incremental. And we can't afford to take into consideration the sensitivities of these poor companies. We want them to move and we want them to move now, and we shouldn't have to apologize for that.
SOLOMON-GREENBAUM: For Living on Earth, I'm Anna Solomon-Greenbaum in London.
(Music up and under)
CURWOOD: Our series on shareholder activism was edited by Peter Thomson.
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