Aguinda v. ChevronTexaco is one of the most complicated and drawn-out global lawsuits in history, seeking damages for the environmental and health impacts of oil extraction in Ecuador dating back to the 1960s. It's the subject of a superb documentary called Crude from director Joe Berlinger and has been featured on 60 Minutes.
Chevron (CVX), the successor defendant following its purchase of Texaco has filed a series of appeals but lost the latest round last week when an Ecuadorian court upheld an $18 billion judgment against the company. It was Chevron's decision to have the case litigated in Ecuador instead of the United States. Both sides have accused the other of corruption.
An independent report released last year criticized the financial, operational, and reputational risks of Chevron's response to the suit. It will be dismissed by some because it was commissioned by Amazon Watch and Rainforest Action Network, who are frank about their own point of view. (Their website is called ChevronToxico: The Campaign for Justice in Ecuador.) But it is hard to dispute the findings by Simon Billenness and Sanford Lewis that the company's admissions about its liability risks in court documents are inconsistent with its financial reports and that its legal and public relations strategy poses an unacceptably high risk. It isn't only the "Chevron-Toxico" logo that is leaking toxic material.
Three shareholder proposals filed by Chevron investors reflect these concerns.
1. Environmental Director
This is a re-filing by New York State of last year's resolution with some updated language. New York State is the lead. Amnesty International USA and Zevin Asset Management are co-filers.
2. Independent Chair
This is a new resolution asking Chevron to separate the positions of CEO and Chair. It uses standard language for a corporate governance resolution of this kind with added language on Ecuador. The lead filer is the Unitarian Universalist Association Common Endowment Fund and Zevin is a co-filer.
3. Calling Special Meeting of Shareholders
Lead filed by Investor Voice, this resolution calls on the company to amend its bylaws to give shareholders new powers to call a special meeting. It contains language on Ecuador and Burma. Zevin co-filed as well.
Management of environmental risk — including the risk of litigation — is increasingly being seen as an essential element of investment risk and shareholders are increasingly recognizing the importance of initiatives to respond to poor management of that risk.