Chevron Called to Carpet for Trying to Buy Local Election

Ahead of Chevron's shareholder meeting on May 27, council members from the city of Richmond, California, Richmond Progressive Alliance, Sierra Club, Asian Pacific Environmental Network, Communities for a Better Environment, Credo Mobile and members of the Richmond community delivered over 100,000 petition signatures in support of a shareholder resolution issued by Green Century that calls on Chevron to end its spending to influence elections.

Last year, Chevron spent over $3 million dollars on advertising for its preferred mayoral and city council member candidates. The town of Richmond has only 100,000 residents, making the spend over $30 dollars per resident. Imagine if the corporate giant spent that money enriching the local community instead!

Why the big investment? As you may recall, Richmond, California, is the home of a major refinery for the oil and gas producer. The refinery was the site of a 2012 explosion and fire that sent over 15,000 area residents to the hospital with respiratory distress, rashes and other ailments. In 2013, the city sued the corporate giant, alleging that the blaze was the result of “a continuation of years of neglect, lax oversight and corporate indifference to necessary safety inspection and repairs,” as quoted in SF Gate.

At the time, Chevron promised to vigorously fight the lawsuit, claiming that it is “a waste of the city’s resources and yet another example of its failed leadership,” claiming that the lawsuit was designed to shift focus away from a “dysfunctional” city council.

That vigorous fighting included efforts  to buy a Chevron-friendly city council that will be more magnanimous to the local employer. According to KQED, “A new council majority sympathetic to Chevron could squelch the suit or pave the way for a settlement more favorable to the oil giant.”

Despite the big bucks, the effort to buy the local election failed, and the progressive slate of candidates made it into office.

Now, shareholder activists are once again holding Chevron's feet to the fire with a shareholder resolution asking Chevron's board of directors to adopt a policy to refrain from using corporate funds to influence any political election.

Unsurprisingly, Chevron is not keen to give up the rights it gained with the Citizens United ruling to spend unlimited amounts of money to influence elections. From the board of director's response in the proxy statement:

"Your board is confident that the company’s political activities are aligned with its stockholders’ long-term interests .... Your board believes that, given robust internal approval processes and the important role of Chevron’s political participation toward effective and responsible energy policy, the adoption of this proposal is imprudent and contrary to stockholders’ interests. Therefore, your board unanimously recommends that you vote AGAINST this proposal."

The Sierra Club hosted a rally yesterday in Richmond deliver 100,000 signatures from community members who support the resolution. If the resolution dies, it will not die quietly.

Josh Sonnenfeld, associate director of Our Wild America at Sierra Club, explained the reason for the rally: "Chevron's statement makes it clear that the corporation sees no problem with hand-picking candidates that would benefit their own bottom-line at the detriment of the health and safety of the community. This is why we've teamed up with shareholders to change this behavior that is so toxic to our democracy and our environment."

I'm not a betting woman, but if I were, I'd put down money that this resolution will not pass, despite the Sierra Club's great efforts.

However, activist shareholder resolutions are not usually actually about the resolution. In fact, they almost always broadly fail because the bulk of outstanding shares are either held by people directly related to the company or in mutual and pension funds, the managers of which are quite conservative and not inclined to vote for things the board doesn't support.

So, why bother? Any shareholder with a small piece of the pie can get a resolution in the proxy statement, which forces the board to read it and think about an issue they might not have otherwise considered. That's a chance for pretty big influence with a relatively small spend.

While Chevron is never going to give up its right to spend money on lobbying, it very well might ease back on its Goliath-approach in Richmond. Especially given the fact that it was ineffective in the 2014 election. In the response to the shareholders in the proxy statement, the board of directors even mentioned the situation in Richmond directly:

"With respect to political involvement in Richmond, Chevron has been fully transparent regarding our participation in the civic election of 2014. We provided funding through Moving Forward, an independent expenditure campaign committee that includes local labor unions, businesses and public safety organizations. This money was used to fund direct communication with voters so they could make informed decisions about which candidates are best able to lead Richmond. As the city’s largest employer, Chevron chose to participate in the election to make sure its voice was heard and to provide resources to help inform voters."

That's an awfully faint defense of what was clearly a pretty unsuccessful expenditure of $3 million dollars. Time will tell, but my guess is that the Public Policy Committee is going to be slow to approve lofty expenditures in Richmond's next city election, which counts as a victory in my book.

Image credit Josh Sonnenfeld of Sierra Club