Wednesday, May 27, 2009

The New Electorate

I just read an interesting article over at the Guardian regarding the Chevron annual meeting and an expected vote “on a resolution urging management to assess the company’s compliance with the environmental laws of every country in which it operates.” The article is primarily concerned with a growing green ethic in the “extractive industry” (oil, gas, and mining companies). But I am struck by the Chevron vote itself.

We are all familiar with the idea of political lobbying. Environmental groups and industry groups play tug of war with each other - the rope consisting of state and federal politicians. Yet there is another kind of elected official in this country – the director of a publicly traded corporation. The elections that put them into and out of office are often held behind closed doors. Many are dominated by large, often institutional, shareholders. But at the end of the day, and however removed, ownership of many large companies is held by individuals.

Most people don’t consider that when they own shares in a company, they own a say in how that company should be operated – and consequently moral responsibility for its actions. As hard as environmental groups lobby our publicly elected officials, I am surprised they don’t lobby the privately elected ones more diligently. I sometimes get the feeling that many environmental groups simply see corporations as the “enemy”, and look no deeper. How much could these groups achieve by directing at least some of their efforts at swaying corporate shareholders and educating them about the influence they wield?

Today, corporate directors are concerned first and foremost with corporate profitability – that is their job after all – because they believe it will please their constituents. Chevron’s constituents may have just signaled that profitability alone is not enough.

** A quick follow-up. Check out this article discussing the meeting. A great discussion about the ability of Chevron's shareholders to promote change in the way the company operates.

**Yet another update. Chevron's shareholders rejected the resolution calling for management to assess its compliance with environmental laws.

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