Tag Articles: Chevron

“Chevron chiefs face shareholders after huge $18bn Ecuador fine”

Shelley Alpern, Trillium’s Director of ESG Research and Shareholder Advocacy, was quoted in guardian.co.uk on May 25, 2011:  ”The Ecuadorian courts are but one step away from seizing Chevron’s assets to pay for the record $18bn judgment. It doesn’t seem unreasonable to hope that a settlement agreement might be brokered that comes in below this extraordinary amount, puts funds to work immediately restoring the polluted areas, and helps Chevron put this reputational disaster behind it.”

Click here to read the article.
Click here to read Trillium’s press release about the request made to the SEC to review Chevron’s shareholder disclosures.

Chevron – Environmental Oversight

WHEREAS

Environmental expertise is critical to the success of companies in the energy industry because of the significant environmental issues associated with their operations. Shareholders, lenders, host country governments and regulators, and affected communities are focused on these impacts. A company’s inability to demonstrate that its environmental policies and practices are in line with internationally accepted standards can lead to difficulties in raising new capital and obtaining the necessary licences from regulators.

Chevron has repeatedly been cited for allegedly harmful environmental practices:

  • Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources by Texaco in the 1970s. Plaintiffs suing Chevron are challenging the adequacy ofa remediation effort completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron be held liable for up to $27.3 billion in damages.
  • Chevron is accused of polluting land and water resources by its Niger Delta operations, and damaging the local fishing economy through dredging of waterways.  These practices have fueled civil unrest, protests, and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protesters.
  • Chevron faces allegations of environmental and health damages to local communities from its operations in Kazakhstan. In 2007, a consortium in which Chevron has a 50% interest was fined approximately $609 million for illegally storing sulphur.

We believe that these controversies have the potential to damage shareholder value and that the company must respond to environmental challenges in an effective, strategic and transparent manner in order to restore trust and minimize the adverse impact of its operations.

Environmental management is critical to the future success of the company. We believe it would benefit the company to address the environmental impact of its business at the most strategic level- by appointing a specialist to the board. An authoritative figure with acknowledged environmental expertise and standing could perform a valuable and strategic role for the company by enabling Chevron to more effectively address the environmental issues inherent in its business. It would also help ensure that the highest levels of attention focus on the development of environmental standards for new projects. Such a board role would strengthen the company’s ability to demonstrate the seriousness with which it is addressing environmental issues.

RESOLVED

Shareholders request that, as the terms in office of elected board directors expire, at least one candidate be recommended who:

  • has a high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field, in each case as reasonably determined by the company’s board, and
  • will qualify, subject to limited exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under the standards applicable to the company as an NYSE listed company,

in order that the board includes at least one director satisfying the foregoing criteria, which director shall have designated responsibility on the board for environmental matters.

Chevron – Environmental Oversight

WHEREAS

Environmental expertise is critical to the success of companies in the energy industry because of the significant environmental issues associated with their operations.  Shareholders, lenders, host country governments and regulators, and affected communities are focused on these impacts.   A company’s inability to demonstrate that its environmental policies and practices are in line with internationally accepted standards can lead to difficulties in raising new capital and obtaining the necessary licences from regulators.

Chevron has repeatedly been cited for allegedly harmful environmental practices:

  • Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources by Texaco in the 1970s. Plaintiffs suing Chevron are challenging the adequacy of a remediation effort completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron could be held liable for up to $27.3 billion in damages.
  • Chevron is accused of polluting land and water resources by its Niger Delta operations, and damaging the local fishing economy through dredging of waterways. These practices have fueled civil unrest, protests, and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protestors.
  • Chevron faces allegations of environmental and health damages to local communities from its operations in Kazakhstan. In 2007, a consortium in which Chevron has a 50% interest was fined approximately $609 million for illegally storing sulphur.

We believe that these controversies have the potential to damage shareholder value and that the company must respond to environmental challenges in an effective, strategic and transparent manner in order to restore trust and minimize the adverse impact of its operations.

Chevron does not currently have an independent director with environmental expertise. We believe it would benefit the company to address the environmental impact of its business at the most strategic level – by appointing a specialist to the board.  An authoritative figure with acknowledged environmental expertise and standing could perform a valuable and strategic role for the company by enabling Chevron to more effectively address the environmental issues inherent in its business. It would also help ensure that the highest levels of attention focus on the development of environmental standards for new projects.  Such a board role would strengthen the company’s ability to demonstrate the seriousness with which it is addressing environmental issues.

RESOLVED

Shareholders request that, as the terms in office of elected board directors expire, at least one candidate be recommended who:

  • has a high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field, in each case as reasonably determined by the company’s board, and
  • will qualify, subject to limited exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under  standards applicable to the company as an NYSE listed company,

in order that the board includes at least one director satisfying the foregoing criteria, which director shall have designated responsibility on the board for environmental matters.

Chevron Liability in Ecuador Pollution Case Approaches $27 Billion

 Court Judgment Expected This Year

by Shelley Alpern

Five years ago, I had the privilege of getting a firsthand look at the evidence in one of the most important lawsuits being heard anywhere in the world. The exhibits are a number of oily pits and ponds scattered throughout the state of Sucumbios, Ecuador, right in the middle of the Amazon rainforest. The contamination is allegedly the work of Texaco, the first petroleum company to break ground in Ecuador in the early 1970s. The court case is being heard in Lago Agrio, a sad-looking town whose many ramshackle buildings look far older than their age due to the ever-present rain and humidity. Poverty is everywhere. Contrasted with the lush jungle surrounding it, the whole town stands out like a very sore thumb.

The lawsuit Aguinda v. Texaco was first filed in 1993. The defendant is Chevron, which acquired Texaco in 2001. The company is charged with polluting hundreds of sites from Texaco’s operations in the 1970s and 1980s. Texaco spent $40 million in the 1990s to clean up contaminated sites per an agreement with the Ecuadorian government, and the two parties declared the site remediated in 1998. But an international team of lawyers is representing thousands of indigenous residents and settlers in a civil suit, claiming that the pollution is responsible for the region’s rising rates of cancer and other serious illnesses, and that the cleanup was sloppy, inadequate and fraudulent.

“This is an epic case,” Sean Hecht, the director of the University of California at Los Angeles’s Environmental Law Center, told the Wall Street Journal in April. “The sheer size of the money involved also explains why a company like Chevron will continue to fight this as long as possible.”

No one disputes the existence of the contaminated sites, but virtually everything else in this case is in dispute – who is responsible for creating them (Chevron blames its former partner Petroecuador), how unclean the sites are, and whether they bear the blame for the health problems in the area. The vitriol between the two sides has played out in the courts, media, and through intense lobbying of non-judicial branches of government.

Advantage Plaintiffs

Chevron has unquestionably greater resources than the defendants, but its deep pockets have thus far failed to secure it any advantage in winning this case. Indeed, Aguinda v. Texaco can only feel like a minor headache that exploded into a migraine.

  • Losing bid for arbitration. In October 2008, Chevron was denied by the U.S. Court of Appeals for the Second Circuit in its motion to force Ecuador out of court and into binding arbitration. Any judgment against Chevron in Ecuador will be enforced in the United States, per the ruling of the U.S. court that decided the venue in 2002.
  • Damages Estimate Increased to $27 Billion. It’s hard to believe that five years ago, when a consultant hired by the plaintiffs estimated that the cost to finish cleaning up the contaminated sites could go as high as $6 billion, the amount seemed shockingly large. The Ecuadorian court’s appointed expert now assesses damages at $27 billion and estimates that the number of cancer deaths from oil contamination to be greater than 1,400.
  • Fraud charge. In September 2008, two Chevron lawyers were indicted in Ecuador for alleged fraud in the remediation effort. The indictment argues that this remediation was not conducted adequately. Chevron maintains that the indictments are politically motivated. Chevron also asserts that it cannot get a fair trial in Ecuador, a point not without merit, given Ecuadorian President Rafael Correa’s open support for the plaintiffs.

A final judgment is expected in 2009. The losing party will have the right to appeal to an intermediate court and then to Ecuador’s Supreme Court. Chevron has pledged to appeal should it lose in this round. However, its refusal to consider settling the case has only backfired in the court of public opinion.

David v. Goliath

Aguinda v. Texaco has taken a sustained toll on Chevron’s reputation. As played out in the media, the case might as well be named David v. Goliath. Hundreds of articles have covered the story worldwide, with long features sympathetic to the plaintiffs in venues as diverse as Vanity Fair and Outside magazine. A documentary about the case, Crude, premiered at the Sundance Film Festival earlier this year, and 60 Minutes featured a segment in May 2009. In large part due to its perceived refusal to take responsibility for Texaco’s misdeeds in Ecuador, professional corporate reputation watchers have found Chevron to be one of the most mistrusted companies in the world. In December, Chevron ranked fourth among five North American companies singled out by the research and consulting firm ECO:FACT for the year 2008. 

Chevron has fought back with its own PR offensive, and is aggressively exerting pressure on the U.S. to revoke Ecuador trade privileges. But it has an uphill political battle to fight with the change in administrations. In 2006, then-Senator Obama and colleague Senator Patrick Leahy wrote to the U.S. Trade Representative:

…seek[ing] your assurances that the U.S. Trade Representative will not allow negotiations over the

Andean Free Trade Agreement to interfere with a case involving Chevron…. While we are not prejudging the outcome of the case, we do believe the 30,000 indigenous residents of Ecuador deserve their day in court.

For what it’s worth, the lead American attorney for the plaintiffs played basketball with the president at Harvard Law School. Chevron remains undeterred. One of the company’s lobbyists told Newsweek  ”We can’t allow little countries to screw around with big companies like this.”*

Showdown in San Ramon, Part V

This April, for the fifth year, shareholders will have a chance to weigh in on Chevron’s handling of Aguinda v. Texaco by voting on a shareholder resolution sponsored by the New York City Pension Funds, Trillium Asset Management Corporation, the Pennsylvania Treasurer’s office, the New York State Comptroller and Amnesty International USA. Collectively, the proponents held 14.4 million shares of Chevron stock at the time they filed the proposal. The proposal calls upon the company to prepare a report “on the policies and procedures that guide Chevron’s assessment of host country laws and regulations with respect to their adequacy to protect human health, the environment and our company’s reputation.” In prior years, this proposal has received about 9% of the vote.

Chevron’s annual stockholder meeting in San Ramon, California, routinely draws protestors and celebrities (Bianca Jagger, Darryl Hannah) eager to draw attention to the company’s unresolved environmental and human rights issues all over the globe where it operates. Last year’s meeting drew 75 protestors in hazmat (hazardous material) garb, equipped with brooms to “clean up” Chevron’s pollution in Ecuador and its nearby refinery in Richmond, CA.   The company’s gatekeepers will look for every technical loophole possible to keep unhappy shareholders out of the meeting. Once inside the meeting, CEO Bill Reilly will ruthlessly enforce the two-minute limit for shareholders’ questions and comments – but if past is precedent, the meeting will drag on for hours anyway as the long queue at the microphones gets to have its say. Afterwards, the press will report the resolution as having been ‘resoundingly’ defeated, even though the supportive shares represent multiple billions under management by some of the country’s most prestigious institutions. And we will be left to wonder once more, how many multiples of $27 billion will it take before a critical mass of shareholders becomes concerned?

*  “Chevron Hires Lobbyists to Squeeze Ecuador in Toxic-Dumping Case.  What an Obama Win Could Mean,” Newsweek, 26 July 2008.

Chevron – Global Environmental Standards Report

WHEREAS

The Chevron Business and Ethics Code places the highest priority on the safety of its staff, community members and the environment where it operates. Corporate Policy 530 “commits Chevron to comply with the spirit and letter of all environmental, health and safety laws and regulations, regardless of the degree of enforcement.”

Our company operates in 180 countries, including Africa, Asia and Latin America nations where environmental regimes may be less protective of human health and the environment than in other countries where Chevron operates.

CEO David O’Reilly has recognized the importance of our company’s relationships with oil producing nations in Africa and Latin America. (International Petroleum Finance, 03/09/05, “Chevron Chief Believes the Surplus is Over.”)

Notwithstanding Chevron’s efforts to comply with environmental laws and regulations in developing countries, our company has repeatedly been cited for practices that allegedly have caused environmental damage and harmed the health and welfare of local communities.

  • Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources in the 1970s. (“Ecuador Keeps Up Oil Cleanup Fight Against Chevron,” Los Angeles Times, 11/17/08)
  • A court-appointed expert in the Ecuadorian litigation has recommended that Chevron be held liable for up to $27.3 billion in damages. This amount includes $18.9 billion for environmental remediation and compensation to local people, and $8.3 billion in unjust enrichment penalties. (Technical Summary Report, Engineer Richard Cabrera, Expert for the Court of Nueva Loja- November, 2008)
  • Chevron is accused of polluting land and water resources in its ongoing operations in the Niger Delta. According to observers, these persistent environmental problems have fueled civil unrest, protests against our company and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protestors. (“Chevron Faces Suit Over Nigerian Violence,” San Francisco Chronicle, 10/26/08)
  • Unocal’s pipeline operations in Burma contributed to the deforestation of the last primary tropical rainforest on mainland Asia, a recognized ‘biodiversity hot spot.’ (“Unocal-Total Oil Pipeline in Burma Threatens Indigenous People, Animals,” Environmental News Network, 4/27/02)

Chevron’s Environmental, Health and Safety Fines and Settlements have increased from $3.99 million in 2003 to $14.06 million in 2007, according to the company’s latest Corporate Responsibility Report.

Chevron’s three strategic priorities for environmental performance are: “Defining world-class standards, measuring and communicating performance and demonstrating continual performance improvement,” toward the goal of being  “recognized and admired everywhere for having a record of environmental excellence.”

RESOLVED

The shareholders request that the Board prepare a report by November 2008, prepared at reasonable cost and omitting proprietary information, on the policies and procedures that guide Chevron’s assessment of host country laws and regulations with respect to their adequacy to protect human health, the environment and our company’s reputation.

SUPPORTING STATEMENT

We believe that Chevron’s record to date demonstrates a gap between its international environmental aspirations and its performance, which would be narrowed by a commitment to apply the highest environmental standards wherever the company operates. The requested report would play a role in illuminating and addressing the factors accounting for this gap.

Statement on Recent Developments in Aguinda v. Texaco

Trillium Asset Management Corporation Statement on
Recent Developments in Aguinda v. Texaco
December 4, 2008
  

 

Contact:           Shelley Alpern
                        (617) 292-8026, x 248

 

On November 26, 2008, the court-appointed expert charged with assessing Chevron’s liability for damages in connection with Aguinda v. Texaco raised that figure by two-thirds, from $16.3 billion assessed in April to $27 billion. Richard Cabrera had concluded in a 4,000 page report to the court last spring that 100% of Chevron’s former sites are extensively contaminated with cancer-causing toxins, and that an earlier clean-up Texaco claimed it had completed was ineffective. Texaco, which dumped more than 18 billion gallons of toxic waste into large sections of the Amazon rainforest in the 1970s and ‘80s, was acquired by Chevron in 2001. A judgment will be announced next year.

This announcement is the latest in a series of setbacks for Chevron related to the litigation. In October, the U.S. Court of Appeals for the Second Circuit denied an attempt by Chevron to force the Ecuadorian government into binding arbitration to determine who should be responsible for the liability. The three-judge panel unanimously found Chevron’s claim to be without merit. In September, two Chevron lawyers and seven former Ecuadorian government officials were indicted in Ecuador on fraud charges relating to Texaco’s 1990s remediation of the contaminated sites. Also this fall, Ecuador’s renewal of trade benefits was renewed despite a concerted lobbying effort by Chevron to persuade Congress to use them as leverage to influence the outcome of the trial in Ecuador.

For the past several years, Trillium Asset Management Corporation has monitored Aguinda v. Texaco closely and filed several shareholder resolutions related to the case, both independently and in coordination with the New York City pension funds. Our director of advocacy visited contaminated areas of the rainforest in 2004. Long before damage estimates rose into 8-digit figures, through resolutions and dialogue with management, we urged Chevron to come clean with its shareholders about the high risks posed by its litigation strategy. We believe Chevron’s management thought it could keep this case hidden from investors, a strategy that has backfired miserably because it failed to recognize the magnitude of public interest in the case worldwide. The Ecuadorian courts have proved to be no pushover, and Chevron’s ability to outlast the plaintiffs lawyers is now open to serious question. It is time for Chevron to rethink what can be gained by continuing to fight what seems to be an increasingly inevitable and embarrassing judgment of enormous financial magnitude. We call upon Chevron to negotiate a settlement and bring this case to an end.

#          #          #          #

2008 Advocacy Review

For our 2008 advocacy efforts, we’re pleased to report a fair amount of progress — never as much as we’d like (we’d like superhero powers), but enough to confirm that shareholder activism remains a potent tool for change.

Climate change. Our shareholder resolution at ConocoPhillips requesting a report on the environmental and social impacts of tar sands drilling won almost 28% of the vote, an impressive vote in this arena. Our resolution at Bank of America addressing its financing of coal-fired power plants and mountaintop coal removal was deemed inadmissible by the Securities and Exchange Commission (SEC), but we eventually sat down with bank officials to express our displeasure in a more intimate setting. Our takeaway: don’t expect BAC to stop funding these projects any time soon, even while it invests more and more in less carbon-intensive projects. Alliant Energy agreed to our request to report publicly on its efforts to incent customers to reduce their energy use, leading us to withdraw a resolution.

Human Rights. We co-filed a resolution led by our friends at Domini Social Investments at Nucor after media reports linked the company’s supply chain to forced labor. Nucor agreed to implement a formal policy and code of conduct expressing opposition to forced labor, and to dialogue with us on how to best report to shareholders on this issue, leading us to withdraw. We also spent time in conversation with Talbots, Target, Liz Claiborne, Nike, Gap and Jones Apparel on how their purchasing practices put pressure on their suppliers that can lead to a higher risk of labor violations.

Experts on the genocide in Darfur have declared that if anyone has any influence over the Sudanese government that is perpetrating the atrocities, it would be China. China sells arms to the government, and two Chinese oil companies operating in Sudan provide major revenues. Since we don’t own shares in any of the Chinese or other foreign firms in Sudan (and US firms are prohibited by sanctions), we’re talking to their investment bankers and investors on Wall Street. This last year we filed resolutions with Morgan Stanley, Merrill Lynch, and JP Morgan Chase. We withdrew at Morgan Stanley and Merrill after constructive dialogues on diminishing the risks they incur from these relationships. Our resolution at JP Morgan received 7.7%, enough for us to proceed with a re-filing should it prove necessary.

Political contributions transparency. How much corporate trade association money is being diverted to ads and groups that are shaping the election this year? No one knows for sure, but it could run to the hundreds of millions, according to the Center for Political Accountability. In 2008, our resolution at Procter & Gamble prompted the company to commit to greater transparency, while Ford Motor and General Motors remained resistant despite resolutions.

Employment nondiscrimination. We withdrew a resolution at Pentair after the company agreed to add sexual orientation to its nondiscrimination policy. Our resolution at Expeditors International on the same drew 52% in support – and a strange silence from company management and the Board of Directors. Perhaps they’re waiting for a super-majority, or just like flouting the will of their shareholders. We’ll re-file and let you know.

Environmental Justice. Chevron‘s shareholders defeated our resolution addressing the strength of the company’s global environmental standards in light of its issues in Ecuador, Nigeria and elsewhere. The good news, however, is a major break in the multibillion-dollar lawsuit Chevron faces in Ecuador for Texaco’s widespread rainforest pollution. After more than a decade, the company has finally agreed to explore a settlement.

After persistent nudging, Toyota Motor Corporation is starting to take seriously the contradiction between its supposed boycott of Burma, and the Burmese involvement of the independent company Toyota Tsusho that has a distributorship in that country. As this progresses, as the saying goes, you’ll read it hear first.

Investors Decry BP’s Entry Into Tar Sands

INVESTORS DECRY BP’S ENTRY INTO TAR SANDS

Statement to be submitted at BP annual meeting today in London

 

Contacts: Shelley Alpern, Trillium Asset Management Corporation
(617) 292-8026, x 248

Lauren Compere, Boston Common Asset Management
(617) 720-5557

April 17, 2008 (Boston) – A group of American and British investors released a statement today expressing disappointment at BP’s (NYSE: BP) investment in the Canadian tar sands, calling the move a “disturbing step backwards.” A representative from the Ecumenical Council for Corporate Responsibility intends the statement at BP’s annual stockholder meeting, which is taking place today at ExCeL London in London Docklands at 11:30 a.m. GMT. The investor group includes Trillium Asset Management Corporation (“Trillium”), Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, the Ecumenical Council for Corporate Responsibility, Rathbone Greenbank Investments, Newground Investments, Pax World, Northstar Asset Management, Sierra Club Funds and Green Century Capital Management.

In December 2007, BP announced its entry into the tar sands business via two joint ventures with Husky Energy of Canada (Toronto: HSE.TO) with a total joint investment of $3 billion. Husky brings its “Sunrise” oil sand project to an upstream partnership, and BP will contribute a refinery based in Toledo, OH. The first output is expected to commence in 2012, and build to 200,000 barrels per day within a decade.

Citing the heavy environmental footprint of the tar sands, which have caused Canada to fall behind in meeting its Kyoto Protocol commitments, the statement also raises questions about BP’s long term business strategy. “We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and question whether this may undermine [BP's] future competitiveness…..We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader to be offset by the harsh environmental impacts unleashed by tar sands development.”

The life-cycle environmental impacts of tar sands-derived oil, or bitumen, compare poorly to that of conventionally derived fossil fuel. Extracting and refining bitumen produces nearly triple the greenhouse gas emissions (GHGs) of traditional oil extraction and requires 2-5 barrels of fresh water for every barrel extracted. The reliance on the Athabasca River as a source of fresh water, along with the fragmentation of natural habitats, is endangering numerous species of bird and mammal. In addition, the province of Alberta is struggling to cope with the stresses that rapid development has placed on its social and physical infrastructure.

The statement also notes the investors’ skepticism that today’s “best practices” methodologies for extracting tar sands will be adequate enough to protect the environment. “We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign.” It quotes a report from Canada’s independent Pembina Institute that concludes, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” * Using SAGD does not lower carbon emissions.

ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) are facing shareholder proposals this spring calling for public reporting on the environmental and social impacts of the companies’ tar sands development. Those proposals have been filed by Trillium and Green Century Capital Management, respectively.

“We had understood from BP that the company would not participate in the tar sands due to their high carbon footprint, and therefore this came as a big surprise and disappointment,” said Shelley Alpern, vice president of Trillium, a Boston-based investment firm. “This should simply be a no-go area for BP. We expect better the company that aspires to go beyond petroleum.”

The growing backlash against tar sands is spreading beyond Canadian environmental groups to include and other international non-governmental organizations and even the US government. Last year’s US energy bill included a provision that banned the federal government from purchasing any fuels whose life-cycle GHG emissions exceed those of conventional fossil fuels.

“For over 12 years, we have held BP up as a ‘best-in-class’ integrated oil company when we were not able to invest in their U.S. counterparts due to poor environmental and human rights records. In recent years though given the range of concerns that we have had to raise with BP from safety management to corporate governance, it has been much more difficult to back up this claim. Their involvement in tar sands is just the last in a series of disappointments on their sustainability approach,” stated Lauren Compere, Director of Shareholder Advocacy at Boston Common Asset Management.

At the stockholder meeting, a representative of the shareholder group intends to question BP’s leadership on its plans to reduce or offset greenhouse gas emissions from the Sunrise project; what assurances the company can provide that best practices will be applied to the project; how BP will engage in public-private efforts to protect the Canadian boreal forest; and how the company is assessing the risks to reputation, health and safety posed by the tar sands.

# # # #

Joint Statement on BP’s Entry into the Canadian Tar Sands

April 17, 2008

 

The following investors wish to go on record at this shareholder meeting concerning BP’s entry into the Alberta tar sands: Trillium, Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, Green Century Capital Management…..

We are long-term investors in BP. From our perspective, BP has been an attractive investment in no small part because of its pursuit of environmental and social sustainability, its robust stakeholder engagement programs, and its development of solar, wind and biofuels businesses. For this reason, we are deeply disappointed by BP’s entry into the Canadian oil sands.

On a comparative basis, oil sands development offers some of the worst life-cycle environmental impacts of any fossil fuel, emitting emits nearly triple the GHG emissions of traditional oil extraction; using 2-5 barrels of fresh water for every barrel of oil extracted; and endangering numerous species of birds and mammals. Canada has fallen behind in its Kyoto commitments due to oil sands development. Even if managed superbly, the oversized environmental footprint of the tar sands is unavoidable.

We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign. According to Canada’s independent Pembina Institute, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” *

We believe that this is a disturbing step backwards for BP, whose very logo and tag line, “Beyond Petroleum” communicate the highest aspirations. Prior to BP’s announcement in December, we had understood that our company would not pursue tar sands development due to the heavy carbon footprint of both the operations and the end-product. We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and we question whether this may undermine our future competitiveness. We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader being offset by the harsh environmental impacts unleashed by tar sands development.

We respectfully request answers to the following questions:

Ø How will BP reduce or offset the greenhouse gas emissions from the Sunrise project?

Ø What assurances can BP provide that best practices will be applied to the project?

Ø How will BP engage in public-private efforts to protect the Canadian boreal forest in the aggregate?

Ø And what risks to reputation, health and safety does BP anticipate if it fails to address these issues related to the tar sands?

We have found BP to be quite responsive to our concerns in the past and invite you to dialogue with us on these issues. Thank you.

* Death By A Thousand Cuts: Impacts of In Situ Oil Sands Development on Alberta’s Boreal Forest, August 2006, p. viii (www.cpaws-sask.org/common/pdfs/Death_by_thousand_cuts.pdf)* Death By A Thousand Cuts: Impacts of In Situ Oil Sands Development on Alberta’s Boreal Forest, August 2006, p. viii.

Tar Sands Development Stickier Than Anticipated

In a rational global economy not entirely driven by short-term profit maximization, the collective body politic of all nations would have applied the precautionary principal to the threat of climate change twenty years ago. We’d now be celebrating the fruits of two decades of aggressive efficiency measures, phased down fossil fuel use, and the mass distribution of renewable en­ergy technologies.

Instead, we have the tar sands.

Record oil prices and declining access to the oil and gas re­sources of nations such as Russia, Saudi Arabia, Sudan and Ven­ezuela has led to a rush to develop Canada’s tar sands deposits. CIBC World Markets chief economist Jeffrey Rubin estimates that of the world’s oil properties, the Alberta oil sands repre­sent 60% of the resources where energy companies can invest.1

Every major Western oil and gas producer is either in the game already or is making plans to be – Chevron, ConocoPhillips, Imperial Oil (ExxonMobil‘s Canadian subsidiary), Suncor, Shell, BP, Statoil, Marathon, Devon, Murphy Oil, TotalFina, and PetroCanada.

Tar sands are just what the moniker evokes (which is prob­ably why the industry prefers the less gooey-sounding “oil sands”) – an oil known as bitumen embedded in earth and sand, most of it deeply buried. As one might imagine, it takes a lot of resources to squeeze out and refine bitumen into us­able product. Bitumen from oil sands is “one of the most environmentally costly sources of transport fuel in the world”2 – as the mining, upgrading, and refining process requires the draining of wetlands, diversion of rivers, and the removal of trees and vegetation. Tailing ponds from mining operations cover al­most 20 square miles of forest and bogs, and their pollutants are acutely toxic to aquatic life and known to contaminate the groundwater, surrounding soil, and surface water. Extracting one barrel of bitumen requires up to five barrels of fresh water, most of which is drawn from Alberta’s Athabasca River. Less than 10% of the water is returned to the river, which is threatening the long term survival of numerous fish, songbird, and waterfowl species. Oil sands development consumes twice the water used annually by the population of Calgary.

Bad enough? There’s more. Refining bitumen emits 3-4 times more greenhouse gas emissions (GHGs) than refining conventional oil, and the finished product releases more GHG per barrel when burned. Yet oil and gas companies are using less GHG-intensive natural gas to power the extraction. Even nuclear power developers see an opportunity; the Canadian company Bruce Power (a partnership that includes Cameco and TransCanada) recently announced a plan to build four nuclear power plants in Alberta to respond to the surge in de­mand created by the oil sands industry.

Tar sands extraction was recently deemed “the most de­structive project on Earth” in a February 2008 report of the same name.3 The tar sands are also the world’s largest industrial project, with the amount of oil reserves second only to Saudi Arabia’s. Companies plan to spend as much as $125 billion to expand operations threefold over the next 10 to 15 years, and a typical oil sands project has a lifespan of over 50 years.”

Nearly all oil from the tar sands is exported to the United States and turned into transportation fuel. Canada currently exports over 2 million barrels per day (bpd) to the US, which it plans to increase to 3 million bpd by 2015.

Houston-based ConocoPhillips is hitching its ride to that vision. The company’s worldwide production totals 2.3 mil­lion bpd today, and over the next 20 years, it aims to pump out an eventual one million bpd from the tar sands. In February, ConocoPhillips Canada said that if other companies were suc­cessful in using nuclear energy to power Canadian oil-sands operations, the company would be a “fast follower.”4

ConocoPhillips announced its first investment in renewables, a relatively paltry $150 million, just last spring. Our doubts about ConocoPhillips’s strategic direction led Trillium Asset Management Corporation (“Trillium”) to file the first shareholder resolution addressing tar sands at the company. Our proposal asks for a report on the environmental damage that would re­sult from the company’s expanding oil sands operations, including the impli­cations of discontinuing its expansion plans. Shareholders will vote on the proposal in April.

You Never Write

The intent behind the proposal is to obtain information on how ConocoPhillips is anticipating the massive environmen­tal risks associated with tar sands development and planning to mitigate them. Other companies heavily invested in the oil sands are starting to report publicly about their impacts, in­cluding Suncor, Shell, Encana, PetroCanada, and Imperial Oil. We believe investors are owed a better understanding of how ConocoPhillips is managing its risks in the tar sands.

The company’s latest sustainability report contained just one vague paragraph about its environmental responsibil­ity in the tar sands. It discloses virtually nothing about one of the company’s main tar sands projects (known as Surmont), or about the implications of its $11 billion FCCL Oil Sands Partnership with EnCana, or its $5 billion pipeline partnership with TransCanada Corp. Syncrude, the tar sands joint venture in which ConocoPhillips holds a 9 percent interest, has issued a report, but the project’s environmental profile is disheartening. Canada’s Pembina Institute told Trillium that Syncrude lacks accredited management systems such as ISO 14001, and has yet to set voluntary GHG targets or participate in the Al­berta Biodiversity Monitoring Initiative. It also has the weak­est compliance record of all the operating mines. Syncrude received the lowest score (18 percent) of ten projects studied in Pembina’s Oil Sands Report Card published last year, and it was the only project that refused to provide information for the survey. (Syncrude’s competitors are not exactly standouts – the highest score was 56 percent.) The Report Card observed that overall, “Information about the actual and proposed en­vironmental performance of individual oil sands operations is not easily accessible…. There is little comparative information about the actual and proposed environmental performance of individual oil sands operations and far too little discussion of best practices available to oil sands developers.”

No slam dunk

While it’s indisputable that demand for fossil fuels is cur­rently as strong as ever, the days when oil companies can es­cape payment for the carbon emissions of their operations and product are increasingly numbered. Existing and impending regulations at the international, federal, and provincial level are placing a price on GHG emissions. The Kyoto Protocol obliges industrialized countries to reduce national GHG emis­sions below 1990 levels by 2012, and the December 2007 fol­low up meeting in Bali reaffirmed its cap-and-trade approach as the path going forward. Most of the 15 countries in which ConocoPhillips produces or explores for oil and natural gas have ratified Kyoto.

All too aware that the tar sands are preventing them from meeting their Kyoto obligations, in March, the Canadian fed­eral government released a GHG reduction plan that would force new oil sands projects and coal-fired electricity plants to capture and store the bulk of their greenhouse gases. The plan imposes industry-wide 18 percent intensity reductions, followed by 2 percent reductions every year after until 2020 (although the regime would be reviewed in 2012). Companies that fail to meet their targets would face prosecution under the Criminal Code. Oil sands projects yet to be built would have to capture and store their emissions.

In a spring 2007 survey commissioned by the Pembina In­stitute, 71 percent of Albertans agreed that the Alberta pro­vincial government should suspend new oil sands approvals until infrastructure and environmental management issues are addressed, and 70 percent favored total over intensity-based GHG reduction targets, “even if it costs industry more.” Oil companies are also facing lawsuits from Canada’s indig­enous tribes and environmental groups that threaten to delay projects.

Even pressure from the U.S. is growing. A provision in last year’s energy bill bars government contracts for unconvention­al petroleum sources whose lifecycle GHG emissions exceed those of equivalent conventional fuels.

We could go on and on – and we do, in a letter to institu­tional investors soliciting their support for the ConocoPhillips resolution that you can find on our web site at www.trilliumin­vest.com. Last year, a ConocoPhillips official admitted the in­dustry has an image problem, noting that the oil industry ranks last in surveys – “last in credibility even behind tobacco.”5 Is it any wonder why? With so much cash on hand, it’s time for the oil and gas companies to begin the transition into energy com­panies that recognize that if we’re to have a future at all, it will need to be powered by renewable sources.

Notes

1. “Oil Sands Key Target for Global Energy Players,” Globe & Mail, December 11, 2006.

2. The Oil Sands Report Card (2007), Pembina Institute and World Wildlife Canada, p. vii.

3. Environmental Defence, Canada’s Toxic Tar Sands: The Most Destructive Project on Earth, February 2008, available at http://www.environmentaldefence.ca/reports/tarsands.htm.

4. http://www.heavyoilinfo.com/newsitems/conocophillips-seeks-oil-sands-cost-cutting.

5. “Experts Outline Energy of Fugure,” Topeka Capital Journal, October 5, 2007.

Chevron – Global Environmental Standards Report

WHEREAS

The Chevron Business and Ethics Code places the highest priority on the safety of its staff, community members and the environment where it operates. Corporate Policy 530 “commits Chevron to comply with the spirit and letter of all environmental, health and safety laws and regulations, regardless of the degree of enforcement.”

Our company operates in 180 countries, including Africa, Asia and Latin America nations where environmental regimes may be less protective of human health and the environment than in North American and European countries where Chevron operates.

CEO David O’Reilly has recognized the importance of our company’s relationships with oil producing nations in Africa and Latin America. (International Petroleum Finance, 03/09/05, “Chevron Chief Believes the Surplus is Over.”)

Notwithstanding Chevron’s efforts to comply with environmental laws and regulations in developing countries, our company has repeatedly been cited for practices that allegedly have caused environmental damage and harmed the health and welfare of local communities.

  • Chevron is accused of polluting land and water resources in its ongoing operations in the Niger Delta. According to observers, these persistent environmental problems have fueled civil unrest, protests against our company and a related lawsuit alleging Chevron’s complicity in security forces’ killing of two protestors. (Nigeria Ten Years On: Injustice and Violence Haunt the Oil Delta, Amnesty International, 11/03/05)
  • Kazakhstan authorities have imposed a $609 million fine on the Chevron-led consortium developing the Tengiz oil field, for alleged environmental violations.
  • In 2002, the Angolan government fined Chevron $2 million for pipeline oil spills that polluted beaches and damaged fishing in the Cabinda region.
  • Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources in the 1970s. (“Rain Forest Jekyll and Hyde,” The New York Times, 10/20/05)
  • Unocal’s pipeline operations in Burma contributed to the deforestation of the last primary tropical rainforest on mainland Asia, a recognized ‘biodiversity hot spot.’ (“Unocal-Total Oil Pipeline in Burma Threatens Indigenous People, Animals,” Environmental News Network, 4/27/02)

Chevron’s total Environmental, Health and Safety Fines and Settlements has increased from 278 in 2002 to 699 in 2006, according to the company’s latest Corporate Responsibility Report.

Chevron’s three strategic priorities for environmental performance are: “Defining world-class standards, measuring and communicating performance and demonstrating continual performance improvement,” toward the goal of being “recognized and admired everywhere for having a record of environmental excellence.”

RESOLVED

The shareholders request that the Board prepare a report by November 2008, prepared at reasonable cost and omitting proprietary information, on the policies and procedures that guide Chevron’s assessment of host country laws and regulations with respect to their adequacy to protect human health, the environment and our company’s reputation.

SUPPORTING STATEMENT

We believe that Chevron’s record to date demonstrates a gap between its international environmental aspirations and its performance, which would be narrowed by a commitment to apply the highest environmental standards wherever the company operates. The requested report would play a role in illuminating and addressing the factors accounting for this gap.