Napa – Harrington Investments, Inc., (HII) a socially responsible investment advisory firm, announced today that for the upcoming annual meeting, it will be presenting a shareholder resolution to implement rigorous new human rights oversight within Chevron corporation.
The resolution would amend Chevron’s bylaws to establish a board committee on human rights, elevating the onus of human rights to the responsibility of those who are compensated to exercise fiduciary oversight over the corporation’s strategic direction.
Corporate directors’ fiduciary duties oblige them to exercise care such as undertaking appropriate inquiries into potential material issues facing the company, and to avoid conflicts of interest. Failure to exercise these and other duties in good faith could lead to individual board member liabilities.
“It seems like the only response Chevron has to a nine and a half billion dollar ($9,500,000,000) court judgment against it in Ecuador for ruining the lives of tens of thousands of Ecuadorian citizens is to spend money on public relations and seek relief in U.S. courts. The underlying governance issues, however, remain. In contrast, this proposal is seeking to address the underlying need for responsible human rights oversight and fiduciary duty,” said John Harrington, President and CEO of HII.
The SEC recently rejected Chevron’s request to exclude the proposal from the shareholder ballot.
This resolution is opposed by Chevron management, who asserts that “establishing a human rights committee is duplicative of the company’s current governance framework and its efforts to monitor human rights issues and maintain its continued commitment to universal human rights.” Chevron management also claims that “…support for universal human rights has long been and will continue to be a core value and an important part of the way Chevron conducts its business.”
Numerous examples of alleged human rights abuses have been leveled at the company. For instance, oil development practices in Ecuador, by Chevron-acquired subsidiary Texaco, have led to one of the largest judgments ever assessed against a company. Other human rights violations by Chevron have been alleged in several other countries, including the U.S.
Harrington said, “Human rights must be inserted into the DNA of fiduciary duty at Chevron. Simply allowing management to choose when and how it addresses human rights, such as through endorsing voluntary codes of conduct, marginalizes and demeans human rights. By amending the bylaws of the Corporation and elevating oversight of this issue to its own board committee, respect for human rights can be made a legal and moral imperative of the company.”
Among other issues, the SEC staff rejected Chevron’s argument to exclude the HII proposal based upon the company’s interpretation that under Delaware law, shareholders have no right to amend the company’s bylaws to establish the requested committee.
Harrington concluded: “Clearly, shareholders, as owners, have the right to amend Chevron’s corporate bylaws. This includes establishing a board committee of the Board of Directors, with membership appointments and funding subject to board decision-making. The directors have a fiduciary duty to serve as agents of shareholders and other stakeholders. Recognition of human rights is an important fiduciary duty that can no longer be ignored by Chevron directors.”
For the past 30 years, Harrington Investments, Inc. has been pioneering socially responsible investing and shareholder advocacy. HII manages assets for institutional and individual investors concerned with social and environmental, as well as financial performance.