Institutional investor groups concerned about corporate funding of political campaigns are expected to announce shareholder resolutions Wednesday that will challenge three energy firms making big-dollar contributions to halt California's landmark law limiting greenhouse gas emissions.
The resolutions target Occidental Petroleum Corp., Valero Energy Corp. and Tesoro Corp., which have contributed to an $8-million campaign on behalf of Proposition 23, which would effectively repeal the state's stringent global warming rules.
The resolutions will come initially from a tiny group of shareholders. Green Century Capital Management in Boston, which is co-filing the resolution challenging Los Angeles-based Occidental, holds fewer than 100 shares in the company. Valero and Tesoro are based in San Antonio.
Wednesday's announcement is sponsored in part by the Investor Network on Climate Risk, which represents institutional investors with $9 trillion in assets, showing the prospect of broad future support for the resolutions.
The announcement marks the beginning of a concerted campaign by a group of large investors to defeat Proposition 23 and preserve the California law cutting industrial and vehicle emissions. Next week, several large investment firms — including one of the world's largest, Deutsche Asset Management — are expected to formally announce opposition to Proposition 23.
At the same time, the resolutions underscore the growing use of shareholder pressure on corporations to disclose details of their political spending.
This year, shareholders of Target Corp. and others objected to the company's support for a Republican gubernatorial candidate in Minnesota with a record of opposing gay rights. Target apologized and promised to review its donation policies.
"Leading institutional investors both large and small are concerned that Prop. 23 … would be a step backward," said Mindy Lubber of the Investor Network.
California's public pension funds are not taking an official position on the shareholder resolutions. But a member of the board of New York City's pension system, one of the nation's largest, said he was interested in the resolution and had supported resolutions like it in the past. Similar interest has been expressed privately by other pension fund executives.
But the challenge was dismissed by officials at Valero, which has contributed $4 million to the Proposition 23 campaign. Like the other resolutions, the one offered to Valero's board comes from a relatively minor shareholder: the Unitarian church. It would require independent board members to review Valero's political contributions and their effects on the company's reputation and on climate change.
The filers are a "stockholder activist group," said Valero spokesman Bill Day in describing the Unitarian Universalist Assn. of Congregations.
"Valero's support of Proposition 23 reflects its position as a significant employer in California with 1,600 employees and an annual payroll of $122 million," Day said, arguing Proposition 23 would delay a go-it-alone policy that could threaten 1 million jobs.
At issue in the Proposition 23 debate is the 2006 Global Warming Solutions Act, known as AB32, which requires the state to cut greenhouse gas emissions to 1990 levels by 2020. That effort is supposed to begin in 2011, but Proposition 23 would halt implementation until the state's unemployment rate falls below 5.5% for an entire year.
With unemployment now at more than 12%, the law — considered the most ambitious clean-air legislation in the country when it passed in 2006 — could be stalled for years under the ballot measure.
The shareholder group contended that AB32 is vital to job creation. Since enactment of the law, the state has benefitted from more than $9 billion in investments aimed at developing clean energy technology, they said.
Market research by VantagePoint Venture Partners, a San Bruno, Calif., investment firm that has extensive holdings in clean-energy technology, suggests that more than $2 billion was invested in green start-ups in California last year, creating more than half a million jobs.
The group attributes these gains — and the presence in California of seven of the country's 10 largest clean-energy technology companies — to AB32 and the state's other energy policies.
Day pointed out that the resolutions to be announced Wednesday would not be considered until the Valero board's April meeting.
The resolutions' backers acknowledge that they are unlikely to have an immediate effect on campaign spending by oil companies. But proponents see the effort as a way to highlight what's at stake in the Proposition 23 debate and to warn companies away from additional contributions to the cause in California and elsewhere.
"If Prop. 23 passes, it would be a considerable setback for renewable energy investment in the U.S.," said Mayura Hooper, a spokesman for Deutsche Asset Management. "Investors require consistent and long-term policies, and if a leader like California suspends its regulatory framework for climate change, there is a high risk that other states will follow."
The international investment house, which has not taken a position on the resolutions, has emphasized investment in green technology for some of the $700 billion it manages.