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Oil Industry and Finance Mick Money-Maker (Mick has asked us not to use his or her real name. If you would like to contact Mick, please write to Mick Money-Maker, c/o Greg Muttitt, Corporate Watch, and it will be forwarded.) In terms of finance and business, last year the oil sector was the highest rising sector of the stock market. Every single institutional investor that you’re going to meet is going to have shares in oil companies, because of the potential profit to be made out of investing: the rewards are enormous. Bob [Nind] ended up by making a comment about how the big institutional investors that control 60-70% or more of the shares in companies like Shell, are not going to be backing the Resolution on Wednesday. But the battle for the shareholder resolution is taking place NOW, and has been taking place over the last two or three months. But by and large, most of the environmental movement have been absent - ABSENT - from that debate, from that lobby. My own company, we’ve had one letter about the Shell Resolution. Just ONE. We’ve got half a million policy holders. But who dealt with it? Our senior management - our general manager, our top investment managers - were having two hour meetings discussing this one letter. Can you imagine what would have happened if they’d had a thousand letters? The Prudential announced that they’re backing the management. They probably only got about three letters. Most of the environmental movement have been totally absent from this, and I feel frustrated about that. Anyway, lets have a look at what’s going on in finance. At the end of the day, the people who are using this money, they’re using our money to do it. I’ve talked with a lot of campaigners in the past, and there’s this crazy mistake that people make - people think that Lord Hanson owns Hanson, for example. Of course Hanson doesn’t own Hanson. The Shell management don’t own Shell. Shell and Hanson are owned by the likes of trade union influenced pension funds, by Labour-controlled local authority pension funds, by people like the Teachers Pension Scheme. The Teachers Pension Scheme owns about 1% of Shell. So it’s OWNED by people like US, and there’s been a lack of radical awareness about this. Hanson and Shell are owned by us, so when you get campaigners focusing on the management, you know very often they’re missing the target, because the people they should be focusing their attention on is the owners of the companies, which is the shareholders, which tends to be us. A very quick picture about how the system works. When you take out a pension or investment, you might see a financial advisor. They’ll sell you a personal pension plan, or investment, or a company pension scheme, which will go into a big insurance company scheme. The money then arrives on somebody’s desk - a few million pounds might arrive on a Monday morning - which they’ve then got to invest, and they’ll buy and sell shares. But what I want to focus on is the analysts. People say to me, “Well, where’s the real POWER in the City? Is it with the institutional shareholders? Where’s the power?” And part of the power is with a group of people - in Shell’s case, probably about 30 or 40 individuals who track and analyse their business to make buy or sell recommendations. And here’s some of them in Shell, okay - from Goldman Sachs, Barclays, Credit Lyonnais - it actually runs into a couple of pages. What the analysts’ job is, is to get somebody from the big investment company, whether it’s my own, or anywhere else, to buy or sell the shares of Shell. They’ve got to convince you that the shares in Shell are a buy or a sell, because they make their money not from investing in Shell, but from a percentage term on the turnover of shares in Shell. And they will have perhaps 30 or more, what are called, equity sales people, or tradesmen - they’ll ring up 100 fund managers, and depending on whether the recommendation’s to buy or sell shares in Shell, they’ll tell them that. And these analysts make their money by producing the best reports on the oil companies - a huge wealth of information if you can get hold of any of it. These people, they’re producing reports like this - this is about oil exploration, and this is about BP and Shell. The analysts know Shell better than some of the management of Shell, or any other oil company might know the company. It’s their full-time job to find out what companies do around the world, where the money’s coming from. They produce things like this. These were retrieved from the bin because so much of this stuff is produced, it just ends up in the recycling bin, because it just never gets read. But in campaigners hands, when you can get hold of something like this, you can actually get a LOT of detailed data about companies’ operations. You can find out where the reserves are, the life of the reserves, where their assets are, the value of the assets, and how much have been produced. For a campaigner to get hold of this kind of information, if you want to find out what the direction of the company is going, what they’re doing. It’s something which can be quite useful, and it’s certainly been my goal to get as much of this data, which is used in the City, out into campaigners’ hands. Why I mention the analysts, is because some of the most effective campaigning that’s been done by environmental groups is when literally when they pick up the phone and speak to some of these people. Has anyone ever done that? Some of you? Fantastic. Fantastic, because people never get phone calls from environmentalists. They get phone calls, typically, from oil, business people. And if you can ring them up and say, “how about lunch”, and some will say, “yeah, let’s have lunch”. Or even invite campaign groups around. Surfers Against Sewage - have you come across that? So these are critical people, because in the same way that the oil industry can persuade them of their views, the environmental lobby can persuade them of a completely opposite set of views. Something Greenpeace did recently with a company called EVC, Eurovinyl Corporation, which is producing PVC. When EVC produced a flotation document about PVC production, which is full of claims about the environment which were wrong, Greenpeace produced an alternative broker’s report - an analyst’s report - which went out to all the fund managers, giving the alternative view. The key thing is to pick up the points on which the companies are wrong, and engage the analysts in a debate about them. So these are key people. An organisation that Bob mentioned - PIRC - here’s a report produced by PIRC. They go into quite a lot of detail, about - for example here, oil operations in Nigeria. If you can produce something that’s equal quality to these analysts and to the fund managers, you begin to engage them in a debate of ideas. Okay, here’s the top shareholders in Shell at the moment. Hermes - that’s the Post Office Workers’ Pension Scheme. If you go to the trade union there, the Post Office have got some of the toughest environmental policies you’ll see, but they don’t let it affect the way they run their money. If some of the campaigners had been speaking to the members of the Post Office union, which is a very radical union, we could have possibly have delivered the Post Office pension scheme to this Resolution. Prudential - we’ve already talked about them. Mercury Asset Management, which controls 3%. Does Mercury really control 3% of Shell? Well the truth is that most of Mercury’s clients are Labour and pension schemes with trade union-nominated members and workers’ pension schemes. Mercury doesn’t own that money - it comes from pension schemes, and the same with Schroders. So, you could have lobbied these people, through the trustees - the people who are responsible for the pension fund or whatever. And here’s Glasgow’s pension scheme, controlled by the Labour Party. Just in UK equities with Schroders, which is one of the big shareholders in Shell, they’ve got £1 bn of funds. A lot of that is going to be in Shell. If you run it down, you see the names of everyone from Scottish Amicable, Baillie Gifford, Fleming, Philips and Drew, M&G - all the big household names - and you can see the amount of money, here. All of that money is influence and power, because if the trustees here had known about where the money’s invested, they might have found it in companies they would naturally not want to back. I think what we’ve got here is a huge potential to get a focus on a campaign, and as I said earlier, the debate’s happening at the moment. On this Resolution, the Catholic vote’s coming in, it looks like the Methodist vote’s coming in. I think by and large the labour movement’s vote’s come in. People like Kingston Council, and Bradford City Council, and a lot of county councils are in. But there’s so many county councils that could have shares in Shell, that won’t even know about this. Whose responsibility is it to raise these issues? I think by and large it’s up to the environmental community of campaigners to get involved in this debate. And I don’t think there’s a single environmental organisation that has anyone focusing on shareholder campaigns at the moment, full time. I know that people like Sarah Tyack at Friends of the Earth, and a few people at Greenpeace, are looking at it in more detail, but the potential to campaign on this is huge. By and large, people belonging to environmental groups, have household insurance, or personal insurance, which will be with people like Norwich Union or Sun Alliance. And they’re using all that money to invest in shares in companies like Shell. If you don’t, you’re certainly going to relatives or friends that will do. Why not write to them and put the alternative point of view? To present a valid alternative to Shell, you’ve got to come up with a business that is better than Shell, but is based on something sustainable. You need to say to the City, ‘look, there are alternatives out there’. Even solar is beginning to look quite attractive. If we can start getting some of the big institutions away from the oil industry, into alternatives, we’ll be getting somewhere. Any questions? Q - I just think - I’ve been here before and seen this. About 30 years ago there was a problem with something called asbestos. For years, the lid was kept on the damaging effects of asbestos, then there were massive clean-up costs, and to put it bluntly, a load of people had their arses sued off. Now, I see some caution in the insurance industry that had to pick up the asbestos bill. It is now perhaps time to point out to investment managers that they’re picking an investment that is now at the same point in space as the asbestos industry was at, and if they don’t move, they’re going to lose their shares. MICK - Yeah, I know, and I agree with that point. But, no oil - I’ve got one of the few funds that avoids the oil industry. Even with the biggest ethical funds in the UK, they generally have big investments is in the oil industry. There’s not much debate at the moment, in that part of the community. Q - The guides that you showed, that the analysts produced. How easy are they for a non-shareholder to get? MICK - I think you’ve got to find it here - it says, ‘not for distribution outside’ - I think it says here, ‘materials have been produced, and not to be distributed’ - unless you ask me for it. Well, they will often give it to academic institutions, but they’re not going to give it to en mass to all the members of the environmental movement. There’s one organisation that’s trying to get it systematically - that’s Forest Monitor, which some of you probably know [contact: Stuart Wilson / Paula Vandergert / Isabel, Forest Monitor, 114 Broad Street, Ely, Cambs CB7 4BE; tel. 01353 669 989; fax 01353 665 092]. They’ve have been calling up analysts and getting information, and building up data. And they’re doing it really systematically, and they’ve got a very close global picture of forest companies and logging companies, because they’ve done it systematically. I think you need to do the same thing with others, really. Q - I’m in a trade union, I don’t know what the pension fund is invested in. But I mean, who’s going to give the information out? MICK - The union rep on the pension scheme. Q - But how easy actually is it to get the union pension fund to do what you want them to do? Because this is something that the NUM had problems with, and the courts backed the trustees. MICK - Yeah, but it depends what you’re trying to do. That was to disinvest, but if you’ve got a vote, and the issue is whether to use your vote or not, and your arguments are reasonably good, then they’ll back the vote. And we’ve seen that with a lot of local authorities that have come in and backed the vote. The potential for this is HUGE. The US is light-years ahead of Britain on a lot of this stuff. This is a big report produced about shareholder resolutions, which comes out by INRC. It’s well worth getting. I’ll just point to the back - that these are all the pages of shareholder resolutions - all big US corporations, mostly on human rights, social, environmental, gay rights issues. It just goes to show - and these resolutions are getting everything from 10, 15, 20% of the shareholder vote. And the thing about America, it’s a popular people’s movement, and it’s not yet that in the UK. Q - How many of them were passed? MICK - None. But it’s bringing them to the table. It’s about trying to get in - for example, getting in all the unions might take ten years. But the thing is, you could win. I’ll give you an example. One of the first campaigns I was involved with was a campaign on a company called Fysons over peat bogs, and Fysons threw a £250,000 of their money to try and stop the environmentalists on that particular issue. And PIRC and a few environmentalists - we had £400 and they used that was spent on buying a shareholder list - produced an alternative report to Fysons, and we then hit all the institutional shareholders. And within a year, Fysons was in close debate with big institutional shareholders like South Yorkshire Pension Fund. Within a year they transferred the majority of their SSSIs to English Heritage. It wasn’t a perfect result, but it was a start. And what it was about - I made the point earlier - was that the management don’t own the company, the shareholders do, and if you’ve got the shareholders on your side, then you can do something. Q - I’ve just got a suggestion for information. You can get the ‘Clean Investment Pack’ from the Campaign Against the Arms Trade. We were all really bored with the idea of this campaign, and no one did it for about five years. And finally, they got round to it last year, and it basically lists local authorities, churches, a health authorities that have got shares in the arms trade, and we finally got it out to all our supporters, and it’s been brilliant - we’ve had people disinvesting everywhere because they’ve had so many letters, and we’ve also had a massive first page picture in the Daily Mirror, with Princess Di, and it says, the Red Cross arming so-and-so and so-and-so, because they actually had shares, so it worked to a level, and it did make the whole corporate structure look dodgy. Okay, thanks very much to Mick... [APPLAUSE]
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