By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
A Voice investigation of McCall's thousands of proxy votes on shareholder resolutions since 1993 reveals a chilling pattern of social indifferencejustified by his office on the grounds of his fiduciary obligation to maximize gains for pension-holders. McCall's votes have been demonstrably more conservative than those cast by the California Public Employees' Retirement System (CalPERS) or by former city comptroller Alan Hevesi, who is now running for McCall's job.
While Hevesi championed the CERES principlesa code of conduct developed by the Coalition of Environmentally Responsible Economies, a partnership of investor, environmental, and labor groups formed after the 1989 Exxon Valdez oil spillMcCall voted against resolutions calling on companies to adopt them 88 out of 95 times. He has opposed 34 consecutive CERES resolutions since 1998, voting repeatedly against them at Niagara Mohawk, an upstate energy company currently facing Clean Air Act violations filed by Attorney General Eliot Spitzer. Hevesi and his successor, William Thompson, a McCall supporter, serve as members of the CERES board and, like CalPERS, have always supported its resolutions.
CERES executive director Robert Massie told the Voice: "We have been perplexed by the failure of the New York State Common Retirement System to support the CERES principles, which are the most widely accepted, modest request from shareholders for disclosure and accountability on environmental issues. We continue to hope that this important institutional investor will choose to support the principles in the future." McCall almost invariably voted with corporate managers who opposed CERES, even though its 10-point code requiring an annual environmental audit has been successfully adopted by General Motors, Bethlehem Steel, Polaroid, Coca-Cola, and even utilities like Pennsylvania Power &Light.
The gubernatorial candidate who has campaigned on the basis of his pension fund prowess has either opposed or abstained on 90 percent of the environmental issues that have surfaced as shareholder resolutions, including all four of the ones last year that simply sought reports assessing their own gas emissions from energy companies (Allegheny Energy, Chevron, Eastman Chemical, and Norfolk Southern). He did the same on 2000 and 2001 resolutions requesting disclosure on "the potential environmental damage" of plans by Chevron and ExxonMobil to drill in the Arctic National Wildlife Refuge. These latest votes continue patterns on emissions that go back to 1994, and on ANWR to 1997.
Last spring, he even refused to support a CalPERS-backed attempt to get Enron to analyze "the biodiversity and indigenous peoples impacts" of its operations, though its routing of a gas pipeline through Bolivian tropical forests had just prompted opposition to the project from 25 members of Congress. His office's only defense was to attribute the CERES opposition to the "complicated choices" a comptroller must make and to say that his emissions stance is "under review." The panel has no statutory authority.
McCall's spokesman, Jeffrey Gordon, does point with pride to McCall's votes "for five years in favor of resolutions that told General Electric to disclose how much they were spending on lobbyists to stop the dredging" of the Hudson and to avoid responsibility for polluting it with PCBs. However, even McCall's GE record is mixed, with him opposing the CERES principles at the company (1994), a call for a report on Superfund compliance even though it was listed as the worst violator in the country (1997), and repeated efforts to restrain its nuclear business (up to 2001).
Gordon insists that McCall's "first responsibility" is to "protect the interests" of the fund's "nearly one million retirees" by making investments that make money. He says the comptroller "has been active in areas where he believes he can make an impact," contending that proxy resolutions are not the only "tool at his disposal" to influence corporate policy. Pointing out that McCall met twice with GE's CEO Jack Welch to discuss the Hudson, Gordon cites the comptroller's access to CEOs and directors as an effective way of spurring improvements.
A 14-page policy statement for the fund issued this year by the comptroller's office simply states that it "generally abstains" on resolutions "aimed at protecting the environment" unless a "specific action can significantly improve a company's poor environmental record."
McCall's passive use of his proxy power has rarely attracted media attention. A 2001 Dow Jones news story on pension funds across the country, however, quoted Robert Monks, a corporate governance pioneer, as saying that McCall's state fund had "done virtually nothing," in contrast with the city, CalPERS, and Wisconsin. Monks pointed out that socially irresponsible behavior often leads to lower stock values, and that environmental damage can result in lawsuits, fines, and loss of reputation. Pointing out that 30 percent of "the owners" of public corporations are "the beneficiaries of pension plans," Monks explained that "the average person spends 18 years in retirement and doesn't just want money, but also a safe, clean civil environment."
Certainly no one at McCall's office is suggesting, as Gordon was quick to make clear, that Hevesi, or CalPERS for that matter, has neglected any obligations to pension-holders by taking a more activist stance. And Hevesi, too, predictably refused to make any comparisons between his and McCall's records. But Hevesi's defense of his CERES and other votes makes its own implicit comparison. He told the Voice he was "very proud of how aggressively" the funds voted, adding that the city's trustees "did so as investors who knew there was a downside to corporate misbehavior or the failure to pursue social goals." Hevesi contends that the funds "met their fiduciary duty by taking the long view of their interests."