SAN RAMON, Calif./DALLAS (Reuters) - Chevron Corp investors rejected a call for a report on environmental laws where it operates, disappointing activists and funds worried by a $27 billion damages claim against it in Ecuador.
The closely watched proposal at its annual meeting on Wednesday, for a report on how regulations in host countries protect people and the environment, won the support of 7 percent of shareholders, according to preliminary results from Chevron.
While activists addressed management and shareholders at the meeting at Chevron’s headquarters in San Ramon, California, about five or six dozen people gathered outside to protest.
A few held up a large sign picturing Chief Executive David O’Reilly next to the words “I will pretend to care about the environment,” in the style of a Chevron advertising campaign.
Larger rival Exxon Mobil Corp remains a favorite target of environmentalists and politicians, but a drop in oil prices in the past year muted dissent at its meeting in Texas.
Chevron faces the massive claim over pollution in Ecuador, with a ruling due this year, and that was one issue cited by the mostly state and municipal funds in the rejected proposal.
Chevron, which says votes on similar issues at past meetings got support of 8 percent to 10 percent, had criticized ‘Item 10’ as part of a campaign led by trial lawyers to force the company to settle the Ecuador case.
Plaintiffs in the case, now a decade and a half old, say Texaco -- bought by Chevron in 2001 -- damaged their health by dumping billions of gallons of dirty water from 1972 to 1992.
“I think that the senior management of the company is hiding the truth from the board and from shareholders,” Luis Yanza, founder of the Amazon Defense Coalition representing communities in the polluted rainforest, said at the meeting.
But O’Reilly told a previous speaker that any suffering in Ecuador was the responsibility of state-run Petroecuador. “Yes, there are definitely problems in the area in which you live, but these problems are not the problems of Texaco,” he said.
The Dublin-born executive, chairman and CEO since 2000, was less conciliatory with others, saying an “alternative” annual report, “The True Cost of Chevron,” cited by a few speakers was “insulting to our employees, and it deserves the trash can.”
Kirk Herbertson, of Washington, D.C.-based environmental think tank World Resources Institute, said the pressure on Chevron showed companies now operate in a “global fishbowl” since communicating is so much easier for the average person.
“Even the fact that there was a shareholder resolution demonstrates the power of reputational risk,” Herbertson said. “A few years ago, you wouldn’t really have seen a company as large as Chevron responding to community concerns.”
Among other measures, more than a quarter of shareholders backed both a proposal for a report on Chevron’s selection of countries, given its presence in Myanmar, and one for a human rights policy.
FOSSIL FUEL FUTURE
As for Exxon, it successfully fended off proposals related to governance, climate change and renewable fuels.
“Certainly for the foreseeable future, the world is going to continue to rely on fossil fuels,” CEO Rex Tillerson told the meeting in Dallas, where three protesters gathered outside holding signs encouraging Exxon to stop global “war - ming.”
Some investors say Exxon must sharpen its focus on renewable fuels and climate change sooner rather than later as cutting carbon emissions becomes a priority for governments.
“Data shows that if Exxon Mobil remains committed to its present path, burning fossil fuels, it will greatly harm poor nations, and their people most of all,” Ann Rockefeller Roberts said.
Only 30 percent of shareholders backed a binding proposal to establish an independent chairman, which was opposed by Exxon. A similar measure, pushed hard by some members of the Rockefeller family at last year’s meeting, also failed. John D. Rockefeller founded Exxon precursor Standard Oil Co in 1870.
In his address to shareholders, Tillerson said Exxon would stick with investing to help meet global energy demand, a strategy he said had helped it weather the current downturn.
Activists targeting oil companies had more success in Europe recently. At Royal Dutch Shell’s annual meeting last week, investors rejected the oil major’s executive pay plan in a rare move that reflected growing frustration at high corporate payouts in the economic downturn.
Reporting by Braden Reddall in San Ramon and Anna Driver in Dallas; Editing by Gerald E. McCormick, Gary Hill and Matthew Lewis
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