May 21, 2009
Calpers, the country's largest public pension fund with $170 billion in assets, announced Thursday it will support a resolution calling on Chevron to examine whether it complies with environmental regulations in Ecuador. The move comes as the oil giant faces a potential $27 billion dollar liability for environmental damage caused by Texaco, a company Chevron (NYSE:CVX) acquired in 2001. In court filings Texaco has admitted to dumping and spilling billions of gallons of toxic waste and oil in eastern Ecuador's Amazon rainforest between 1964 and 1990.
Calpers (the California Public Employees' Retirement System) joins two New York funds—the state’s Common Retirement Fund and the Employees Retirement System of New York City—and public pension funds of Connecticut, Pennsylvania, and Maryland in supporting the resolution. Together the funds control more than $1 billion of Chevron stock. Calpers owns about $600 million worth of shares in the oil major.
“The CalPERS vote is a significant announcement that puts enormous pressure on Chevron’s management in the investor community,” said Dan Orlow, a private American investor who is advising the Amazonian communities. “It demonstrates that important pension funds are now lining up against Chevron on Ecuador.”
Chevron’s management says it expects an adverse judgment in the case but would appeal. The potential liability is about one-fifth the current market value of Chevron ($129 billion) and 87 percent of the price Chevron paid for Texaco.
Chevron's annual meeting is scheduled for May 27 at the company's headquarters in San Ramon, CA. The Amazon Defense Coalition, a group that represents the plantiffs, including rainforest communities and indigenous groups, says that indigenous leaders from the affected region are expected to attend and confront Chevron’s management about Ecuador.
Chevron has carried on costly public relations and lobbying campaign in an effort to block the legal judgment. Last year it was revealed that Chevron hired former Senate majority leader Trent Lott, former Clinton White House Chief of Staff Mac McLarty, former Democratic senator John Breaux and John McCain fund-raiser Wayne Berman to lobby United States Trade Representative Susan Schwab, key Members of Congress, and Deputy Secretary of State John Negroponte to threaten suspending U.S. trade preferences with Ecuador over the law suit.