This spring, investors have the opportunity to ensure that their investments are supporting democracy in Burma.
Foreign companies operating in Burma provide a steady flow of financial revenue to the Burmese regime, and are widely recognized as assisting in maintaining military rule in the country – in 2006-2007 the petroleum sector alone comprised 43% of Burma’s exports.
Chevron is the last major American company with active operations in Burma. When Chevron purchased US oil company UNOCAL in 2005, it acquired a minority stake in the Yadana pipeline in Burma, which transports natural gas to Thailand. A “grandfather” clause exempts Chevron from current US sanctions on commercial activity in Burma.
With the growing recognition that a corporation’s long-term financial performance is affected in part by its social policies, a shareholder resolution has been filed at Chevron to address investors’ concerns regarding the company’s involvement in the Yadana pipeline in Burma. Ongoing human rights issues, as well as mounting legal and reputational risks, have shareholders, unions and civil society groups calling for the company’s withdrawal from the country.
What are the potential risks Chevron faces in Burma that concern investors?
- Future litigation risks (i.e. UNOCAL settled out of court in 2005);
- Inability to sell assets, or heightened risk of selling assets at a heavily discounted price (i.e. Canada’s Ivanhoe Mines in Burma);
- Financial risks as a result of unreliable official exchange rates, ongoing shortage of foreign currency, and the wide current account deficit;
- Financial transactions that do not meet international accounting standards; and
- Risk of expropriation without compensation.
The shareholder resolution seeks greater transparency on how Chevron evaluates its human rights impact, especially in high risk countries like Burma. It calls on the company to report on its criteria for investment, continued operations in, or withdrawal from specific countries. Vote results for the resolution will be announced at Chevron’s annual meeting, scheduled to take place on May 26, 2009.
The resolution was co-filed by a diverse cross-section of US investors: the Teamsters General Fund, AFL-CIO, Ms. Adelaide Gomer, The Maryknoll Fathers and Brothers, Mercy Investment Program, Newground Social Investment, Ursuline Sisters of Tildonk and the Unitarian Universalist Association.
What can you do to show your support for human rights in Burma?
- If you are an individual investor, you can express your support for human rights in Burma by asking the investment manager of your organization’s fund or endowment to consider voting in favour of the resolution, and by asking your members to do the same with their investment advisors and mutual fund companies.
- If you are an investment professional, consider voting your fund’s proxies in favour of the resolution at Chevron to ensure the company carefully evaluates the investment risks of maintaining operations in Burma.