| NEW YORK, April 17
NEW YORK, April 17 Steve Farris runs a $33
billion Texas oil and gas company and turns, for advice, to a
bearded Vermont environmentalist.
As other energy firms battled climate change and
anti-pollution activists in recent years, the Apache Corp
chief executive instead built an alliance with Steven
Heim, managing director of Boston Common Asset Management, one
of the better-known socially responsible investment firms.
The relationship helped Apache sidestep time-consuming proxy
fights that have plagued some of its peers, in exchange for
changes like committing to protect the rights of native peoples
living near remote gas projects, and using cleaner chemicals in
hydraulic fracturing, a drilling method that environmentalists
say could threaten groundwater.
Heim also stages investor meetings for Apache where its
executives and engineers take questions on topics like pollution
or human rights. These draw representatives from mainstream
investment firms like T. Rowe Price, Gabelli & Co and
Morgan Stanley & Co.
"What I've been trying to do is to elevate the level of
understanding of issues by the investors, not just the
executives," Heim said.
Others have taken notice as climate change becomes more of a
business concern. ConocoPhillips now also consults Heim,
for instance, while Chevron Corp Chief Governance
Officer Lydia Beebe said it has sent representatives to the
Apache meetings and staged similar ones of its own.
"The 'Apache Model' is a very appropriate one for
constructive shareholder/company engagement," Brian Rice, a
portfolio manager for the California State Teachers' Retirement
System, said in an e-mail.
Peace with environmentalists has helped take some pressure
off Apache, whose share price has lagged rivals' on concerns
like the security of some of its overseas projects, including a
large investment in politically chaotic Egypt.
Proxymonitor.org shows Apache has not faced any shareholder
proxy proposals on environmental issues since 2006. Larger
rivals like Exxon Mobil Corp have faced dozens, as have
smaller ones like EOG Resources Inc, which has faced
Apache's Farris said the relationship with Heim helps the
company connect with shareholders who increasingly expect
transparency. "Shareholders own the company, they have a right
to their opinion," Farris said.
Apache Senior Vice President Sarah Teslik said that while
Apache does not aim its outreach to pre-empt proposals, "we hope
it obviates the need for most of them."
Boston Common owns only about 75,000 shares of Apache, a
slight number relative to its influence. Other environmental
activists say they too have gotten a better reception lately as
companies want to at least appear responsive.
Just last month for instance, Exxon Mobil reported on risks
it could face from climate change and Southern Co said it
would report on its renewable energy projects, in both cases
following deals with activists.
"You can't be a climate-change denier any more," said Andrew
Behar, chief executive of As You Sow, a California foundation
that has negotiated with both companies.
"Shareholder Engagement" has become a cliche as executives
cultivate investor ties and defend against wealthy activists
like Third Point LLC's Daniel Loeb or Pershing Square Capital
Management's William Ackman. But where those managers run their
own candidates for corporate boards, activists like Boston
Common and As You Sow get leverage by sponsoring shareholder
Heim, who splits his time between Boston and Montpelier,
Vermont, estimates his firm files about five such proxy
proposals a year. One in 2013 called on PNC Financial Services
Group to report on the emissions impact of its lending.
Some question the resolutions. In a March 27 speech Daniel
Gallagher, a Republican member of the U.S. Securities and
Exchange Commission, suggested making it harder to get some
resolutions onto ballots. He cited Boston Common's PNC item and
said it was "dubious" it was worth a vote.
At least in the energy sector, however, big investors are
paying more attention to climate topics. David Smith, portfolio
manager for Gabelli & Co said the threat of new regulations also
drives companies to embrace climate concerns. "This is something
they want to get ahead of," Smith said.
Others worry partnerships such as the one between Apache and
Heim do not push far enough to bring real change. "Like
apartheid, climate change doesn't yield to incremental tiny
steps," said Bill McKibben, president of 350.org, known for
protests against the proposed Keystone XL pipeline.
Told of the critique, Heim cited other changes his firm has
won like deals with pipeline companies to report on gas leaks
and getting solar panel makers to cut waste. "This is all from
incremental tiny steps. Cumulatively it all adds up," Heim said.
(Reporting by Ross Kerber; Editing by Richard Valdmanis and