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 As other energy firms battled climate change and anti-pollution
activists in recent years, the Apache Corp chief executive instead
built an alliance with Steven Heim, managing director of Boston
Common Asset Management, one of the better-known socially
responsible investment firms.
The relationship helped Apache sidestep time-consuming proxy fights
that have plagued some of its peers, in exchange for changes like
committing to protect the rights of native peoples living near
remote gas projects, and using cleaner chemicals in hydraulic
fracturing, a drilling method that environmentalists say could
threaten groundwater.
Heim also stages investor meetings for Apache where its executives
and engineers take questions on topics like pollution or human
rights. These draw representatives from mainstream investment firms
like T. Rowe Price, Gabelli & Co and Morgan Stanley & Co.
"What I've been trying to do is to elevate the level of
understanding of issues by the investors, not just the executives,"
Heim said.
Others have taken notice as climate change becomes more of a
business concern. ConocoPhillips now also consults Heim, for
instance, while Chevron Corp Chief Governance Officer Lydia Beebe
said it has sent representatives to the Apache meetings and staged
similar ones of its own.
"The 'Apache Model' is a very appropriate one for constructive
shareholder/company engagement," Brian Rice, a portfolio manager for
the California State Teachers' Retirement System, said in an e-mail.
Peace with environmentalists has helped take some pressure off
Apache, whose share price has lagged rivals' on concerns like the
security of some of its overseas projects, including a large
investment in politically chaotic Egypt.
Proxymonitor.org shows Apache has not faced any shareholder proxy
proposals on environmental issues since 2006. Larger rivals like
Exxon Mobil Corp have faced dozens, as have smaller ones like EOG
Resources Inc, which has faced three.
Apache's Farris said the relationship with Heim helps the company
connect with shareholders who increasingly expect transparency.
"Shareholders own the company, they have a right to their opinion,"
Farris said.
Apache Senior Vice President Sarah Teslik said that while Apache
does not aim its outreach to pre-empt proposals, "we hope it
obviates the need for most of them."
BUILDING BRIDGES
Boston Common owns only about 75,000 shares of Apache, a slight
number relative to its influence. Other environmental activists say
they too have gotten a better reception lately as companies want to
at least appear responsive.
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Just last month for instance, Exxon Mobil reported on risks it could
face from climate change and Southern Co said it would report on its
renewable energy projects, in both cases following deals with
activists.
"You can't be a climate-change denier any more," said Andrew Behar,
chief executive of As You Sow, a California foundation that has
negotiated with both companies.
"Shareholder Engagement" has become a cliche as executives cultivate
investor ties and defend against wealthy activists like Third Point
LLC's Daniel Loeb or Pershing Square Capital Management's William
Ackman. But where those managers run their own candidates for
corporate boards, activists like Boston Common and As You Sow get
leverage by sponsoring shareholder resolutions.
Heim, who splits his time between Boston and Montpelier, Vermont,
estimates his firm files about five such proxy proposals a year. One
in 2013 called on PNC Financial Services Group to report on the
emissions impact of its lending.
Some question the resolutions. In a March 27 speech Daniel
Gallagher, a Republican member of the U.S. Securities and Exchange
Commission, suggested making it harder to get some resolutions onto
ballots. He cited Boston Common's PNC item and said it was "dubious"
it was worth a vote.
At least in the energy sector, however, big investors are paying
more attention to climate topics. David Smith, portfolio manager for
Gabelli & Co said the threat of new regulations also drives
companies to embrace climate concerns. "This is something they want
to get ahead of," Smith said.
Others worry partnerships such as the one between Apache and Heim do
not push far enough to bring real change. "Like apartheid, climate
change doesn't yield to incremental tiny steps," said Bill McKibben,
president of 350.org, known for protests against the proposed
Keystone XL pipeline.
Told of the critique, Heim cited other changes his firm has won like
deals with pipeline companies to report on gas leaks and getting
solar panel makers to cut waste. "This is all from incremental tiny
steps. Cumulatively it all adds up," Heim said.
(Reporting by Ross Kerber; editing by Richard Valdmanis and Richard
Chang)
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