May 26, 2011 — In a statement released yesterday, investors with assets collectively exceeding $156 billion urged Chevron Corporation to pursue an “equitable negotiated settlement” to end its nearly 20-year legal battle with indigenous populations in the Amazon rainforest. The long-running court case alleges that Texaco, which merged with Chevron 10 years ago, destroyed huge tracts of the rainforest by dumping billions of gallons of oil waste products over several decades. Citing the “grave reputational damage” Chevron has suffered due to the lawsuit, Trillium Asset Management, the New York State Comptroller’s office and more than twenty additional investors called on the company to promptly negotiate a reasonable settlement to prevent further shareholder damage.
In a press release, New York State Comptroller Thomas P. DiNapoli, trustee of the $140.6 billion New York State Common Retirement Fund (Fund), which owns 7.5 million Chevron shares worth an estimated $780 million stated, “It’s time for Chevron to face reality. The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don’t derive any benefit from this never-ending courtroom drama.
“The entire case is looming like a hammer over shareholders’ heads. Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable.”
For nearly 25 years, beginning in 1964, Texaco and its joint venture partner Petroecuador dumped nearly 16 billion gallons of oil waste products into the Amazon rainforest. The two companies also spilled nearly 17 million gallons of oil from their trans-Ecuadorian pipeline operation between 1971 and 1991 —50 percent more oil than was spilled by the Exxon Valdez crash.
The statement follows just days after Trillium submitted a complaint to the Securities and Exchange Commission requesting that staff examine whether Chevron Corp. has appropriately disclosed to its shareholders the scope and magnitude of financial and operational risk from a recent adverse legal judgment in Ecuador. In its letter, Trillium states its belief that the issues raised may have “the potential to rise to the level of materiality under the securities laws.”
In a letter sent in November 2008, DiNapoli called on Chevron’s board of directors to come to an equitable settlement in order to avoid substantial penalties in an Ecuadorian court. Chevron refused to negotiate the case, and in February 2011 the Ecuadorian Provincial Court awarded plaintiffs nearly $18 billion in compensatory and punitive damages. The Ecuadorian court judgment is the second-largest of its kind, topped only by BP’s $20 billion fund established to settle claims stemming from the 2010 Gulf of Mexico oil spill. DiNapoli is co-lead plaintiff in an ongoing class action lawsuit filed against BP last year.
Shareholder Proposal Support Remains Steady
The shareholder proposal jointly filed by Trillium and the New York State Office of the Comptroller that referred to the Ecuador litigation received about 25 percent of the vote, the company announced at the meeting. The proposal, in its second year, called for the company to appoint an independent director with environmental expertise.