Shareholder Resolutions: Another Tool for Fighting Climate Change

Those of us concerned about climate change in the United States have a right to be frustrated. The Trump Administration seems determined to undermine every hard-won diplomatic, legislative and policy success in the climate arena. Take, for example, withdrawing from the Paris Climate Accords, weakening targets for power plant emissions, and installing an implacable opponent of the agency to chair the EPA. The list goes on. While the federal government is in the grip of these science-deniers and climate change reactionaries, other governmental units and private citizens must find a way to make a difference. One tool available to many private citizens is to exercise their rights as shareholders of large corporations.

Over half the American population owns shares in public corporations, either directly or in their retirement savings plans. Public corporations are supposed to function as democracies of a sort in which each shareholder has influence in corporate governance according to the number of shares she owns.  Each shareholder can vote on who will sit on the board of directors and, in some cases, on non-binding resolutions affecting corporate policy and direction. These shareholder resolutions usually can be adopted by the vote of a majority of all voting shares.

There is a long history of shareholder resistance on environmental and social grounds. Shareholders pushed Dow Chemical to cease producing napalm during the Viet Nam war. Shareholders forced corporations to cease doing business with South Africa, or to divest, during the apartheid years. And shareholders have recently forced McDonalds to stop using polystyrene foam packaging.

The number of shareholder resolutions of all sorts introduced each year has been growing until just recently. But the number of climate-related resolutions at energy companies has dropped over the last three years. Some see this as a good sign that corporations are willing to take the issues more seriously without the need for shareholder resolutions. All of the resolutions for the last decade are collected at the website of the organization As You Sow.

Shareholder resolutions often call for reports to shareholders on the corporation’s plans to cut emissions or its adherence to the guidelines in the Paris Climate Accord. Here is a recent shareholder resolution at Amazon.

BE IT RESOLVED: Shareholders request that Inc. adopt a policy with quantitative companywide goals for managing greenhouse gas GHG emissions considering the objectives and timelines of the Paris Climate Agreement and report at reasonable cost and omitting proprietary information on its plans to achieve these targets.

Frequently, a shareholder resolution fails to achieve a majority of the shares voting, at least in the first year it is introduced. But resolutions can be resubmitted and many in the climate arena pick up support from year to year. An environmental proposal must obtain 3% of the total vote its first year to be resubmitted, 6% the second year and 10% the third year. If it fails to meet these minimum vote totals, it may not be resubmitted for three years.

Even a failed resolution, or one unlikely to succeed, can have positive effect. Shareholders should think of resolutions as a portal to open dialogue with corporate management. In many cases, management will confer with the shareholder group advancing a proposal and come to some agreement that satisfies the group. This is then followed by a withdrawal of the resolution before it is voted on by all the shareholders. So far in 2019, climate-related shareholder resolutions at General Electric, Amazon, Emerson, Kroger and J.P. Morgan, among others, have followed this “agreement then withdrawal” pattern.

The Securities and Exchange Commission has developed rules for submitting shareholder resolutions and adjudicates any objection by the corporation to a particular resolution. Any shareholder who owns $2,000 worth of company stock and has held it for one year prior to the annual filing deadline may file a proposal. Unless the corporation agrees to the resolution, it is inserted in the proxy statement issued to shareholders in advance of the corporate annual meeting. Proponents of the resolution are allowed only 500 words in the proxy statement to present their case.

Several shareholder activist organizations have produced FAQ sheets and downloadable guides to filing shareholder resolutions. The process is relatively easy, but recent climate-related shareholder resolutions at large U.S. energy companies have hit a speed bump. Resolutions calling for the disclosure of specific targets for emission reduction and adherence to the Paris Climate Accords have been blocked by the SEC at Chevron, Devon Energy, ExxonMobil, and Hess Oil.

In the Obama era, similar shareholder resolutions were allowed to proceed despite opposition from the corporations.  Now the Trump SEC has decided these resolutions are an attempt to micromanage the corporation, even though they are non-binding.  Since Trump took office the SEC has consistently ruled in favor of corporations that oppose these resolutions. One U.S. Senator has written to the SEC Chairman complaining that the use of the “micromanagement” concept is an unwarranted effort to reduce shareholder efforts to protect their investment from the effects of climate change.

The approach of the Trump SEC should come as no surprise, given the overwhelming power and influence that energy companies have purchased with their huge Republican campaign contributions. One commentator has suggested that when it comes to big energy companies investors may now be left only with the ax – divestment. Writing in High Country News, Carl Segerstrom reports that the divestment movement claims to have pulled more than $8.5 trillion out of fossil fuel companies. Massive divestment will certainly get the attention of corporate executives.

I continue to believe, however, that the swiftest and most certain method of returning corporations to the path of moral capitalism is to rid ourselves of the political leaders whose policies have allowed these corporations to subordinate our environmental future to short term profit in the first place. A political change at the top will signal that it is time to get serious about climate change in corporate boardrooms.

Donald Trump: Guilty of Obstruction of Justice

Special Counsel Robert Mueller has now delivered his final report on the investigation of Russian meddling in the 2016 election to the Justice Department. This investigation was broadened mid-stream to include potential obstruction of justice by the President through his interference with the Russia investigation. The final report consists of two volumes – the first devoted to Russian meddling and the second to the obstruction issue. The evidence of Russian meddling is stunning. The evidence of obstruction of justice is equally compelling, although the report was careful not to assert directly that the President committed a crime. Instead, it politely concludes that the evidence “does not exonerate” him.

In his May 29 public statement, Mueller referred to the Justice Department policy barring the indictment of a sitting President. Charging the President with a crime, he said, was “not an option we could consider.” It is important to understand that Mueller did not say the evidence was insufficient to make out a case of obstruction, only that Congress must decide this question in an impeachment proceeding. Mueller reiterated what he said earlier in his report — if his office had been confident that the President did not commit obstruction of justice, it would have said so. But “we are unable to reach that judgment.”

The rest of us are not constrained by the Justice Department policy. Anyone reading the Mueller Report with an ounce of objectivity will conclude that Trump actually did violate federal criminal law several times. That is also the conclusion of nearly 1000 former U.S. Attorneys and prosecutors who have signed an online letter concerning the report. They said:

Each of us believes that the conduct of President Trump described in Special Counsel Robert Mueller’s report would, in the case of any other person not covered by the Office of Legal Counsel policy against indicting a sitting President, result in multiple felony charges for obstruction of justice.

What Constitutes Obstruction of Justice?

Several federal statutes prohibit obstruction of justice, but the proof elements necessary for a conviction are the same for each one. First, the defendant must have committed an “obstructive act.” Any act can be obstructive if it has the potential to block, render more difficult or hinder a proceeding.  An effort to influence a proceeding can be an obstructive act, even if done subtly, cleverly, or with “cloaking of purpose.” And an improper motive can render conduct criminal even when the conduct would otherwise be lawful and within the actor’s authority. A conviction for obstruction of justice does not depend on the success of the obstructive act.

Second, there must be a connection between the obstructive act and an official proceeding. One statute requires a connection to judicial or grand jury proceedings. Another requires a connection to a “pending” federal agency proceeding or congressional inquiry. Still another requires a connection to an official proceeding that need not be pending or about to be instituted at the time of the offense. The obstructive act must be objectively likely to obstruct the proceeding and the actor must subjectively contemplate a particular proceeding he hopes to influence.

Finally, the act must be done with corrupt intent, meaning “knowingly and dishonestly” or “with improper motive.” This element is satisfied when the actor had the intent to obtain an improper advantage for himself inconsistent with official duty and the rights of others.

Using this framework, the report analyzes ten categories of conduct by the President. I will focus on two of these.

The Termination of FBI Director James Comey.

Immediately after he took office, President Trump began an effort to influence and control FBI Director James Comey. On January 27, Trump invited Comey to dinner at the White House and asked him repeatedly whether he wanted to remain as Director. At the end of the dinner Trump told Comey “I need loyalty.” Then in February following Michael Flynn’s forced resignation, Trump spoke in private with Comey – but only after clearing the room of everyone else.  Trump said “I hope you can see your way clear to letting this go, to letting Flynn go. He’s a good guy.”

Twice in testimony before Congress – March 20, 2017 and May 3, 2017 – Comey declined to answer questions about whether the FBI investigators had ruled out anyone in the Trump Administration, including the President. Trump was furious.

Over the weekend of May 5, Trump decided to fire Comey and began the draft of a letter doing so. The draft specifically referred to the Russia investigation and that Trump was not a target. On May 8, Trump informed his staff, as well as Attorney General Sessions and Assistant Attorney General Rosenstein, that the decision had been made. Rosenstein offered to write a memo recommending that Comey be removed because of poor handling of the Clinton email issue, but the resulting memo did not mention the Russia investigation. Comey was fired on May 9, 2017.

Firing Comey was an obstructive act. It had the natural and probable effect of impeding the investigation by delay and disruption. It had the natural tendency to chill and discourage other investigators. Trump followed the firing with public statements that heaped scorn on the investigation, calling it a witch hunt, among other things. These actions had the potential to affect a successor director’s conduct. Firing Comey had the necessary connection to the FBI’s investigation of Russian meddling, which could have and did result in indictments. In addition, Trump knew that Flynn was under investigation and asked Comey to “let Flynn go.”

Finally, Trump’s firing of Comey was in response to Comey’s unwillingness to state publicly that Trump was not a target of the investigation. Substantial evidence indicates that the intent behind this was to protect Trump himself and the campaign from investigation. As soon as Flynn became a target, Trump asked for Comey’s loyalty. He was furious when Jeff Sessions recused himself. Trump knew that the investigation could uncover his dealings with the Russians concerning a Trump Tower in Moscow, which continued up until June 2016.

Trump dictated a press release about the firing that falsely said it was in response to a recommendation from Rosenstein. Press Secretary Sarah Sanders then falsely told reporters that Rosenstein “on his own” decided to come to the President about his concerns with Comey. But because of push-back from the Department of Justice that the firing was not Rosenstein’s idea, a new narrative was developed. During an interview with Lester Holt on NBC on May 11, Trump admitted that he had made the decision to fire Comey regardless of the recommendation from Rosenstein, saying “this Russia thing with Trump and Russia is a made up story.” The initial pretextual reason offered by Trump for the firing adds to the intent element because it shows he had concerns about the true reason.

Trump’s Efforts to Remove Mueller

It is hard to overstate the effect that the appointment of Special Counsel Mueller had on Trump. According to notes taken by a person present at the meeting where Trump was told of the appointment, the President said “Oh my God, This is terrible. This is the end of my Presidency. I’m fucked.” Trump berated Attorney General Session for leaving him exposed to a Special Counsel.

Trump immediately claimed that Mueller had conflicts of interest but Steve Bannon and others told him the alleged conflicts were “ridiculous and petty.” On June 14, 2017, The Washington Post reported that the Special Counsel was investigating whether the President had attempted to obstruct justice. The following morning Trump issues a tweet storm criticizing this new development, calling the investigation “the single greatest WITCH HUNT in American history – led by some very bad and conflicted people.”

On Saturday, June 17, 2017, Trump called White House Counsel at home Don McGahn and directed him to have Mueller removed. McGahn failed to carry out this instruction, so Trump called a second time.  In this call he said “Call Rod [Rosenstein], tell Rod that Mueller has conflicts and can’t be Special Counsel. Mueller has to go. Call me back when you do it.”  Instead of carrying out these instructions, McGahn was prepared to resign. Through the intervention of other White House staff, McGahn was convinced to stay and Mueller was not fired.

The Mueller Report makes quite clear that the attempt to remove the Special Counsel would be an obstructive act. Removal would delay further activity and chill the actions of any replacement Special Counsel. And, since Trump knew his actions were now under investigation by the Special Counsel, there is a connection to a potential judicial proceeding. Intent is shown by the sequence of events. On June 13, Rosenstein testified before Congress that there was no cause to remove Mueller and Trump dictated a press release that he had no intention of firing Mueller. The next day the media reported Trump was under investigation. Trump immediately began calling McGahn for the purpose of having Mueller removed.

Implications for an Impeachment Inquiry

Robert Mueller handed the issue of President Trump’s potential criminal liability to Congress for the only proceeding available to try a sitting President – impeachment. Impeachment is not a criminal trial, rather it is a political one. The Constitution says that a President may be impeached for “treason, bribery or other high crimes and misdemeanors.” To remove Trump, his conduct need not actually constitute a chargeable crime. Some acts, say a gross violation of the Emoluments Clause, are impeachable even though they are not crimes. And not every crime is a “high crime or misdemeanor” as we saw in the impeachment of Bill Clinton.

Scholars and constitutional lawyers agree that a “high crime or misdemeanor” is an abuse of power by a high official that constitutes an offense against the state or a violation of the public trust. In an impeachment proceeding, it should not matter whether we agree with Trump’s policies and decisions. The sole question should be whether he has inflicted a serious political injury to the country through an abuse of power enabled by his high office. Does removing one chief investigator inquiring into Trump’s own conduct, and threatening the removal of another, rise to that level? We may soon find out.