Shareholders Stand Up for Profit and Against ESG at Chevron

Under pressure from asset managers, the company embraced policies that are harmful to investors.


By Vivek Ramaswamy, Sept. 7, 2022 

I sent a letter to Chevron’s board of directors Tuesday questioning its recent decisions to embrace policies that my firm, Strive Asset Management, believes are harmful to its business interests.

In 2021 a Dutch climate nonprofit called Follow This submitted a shareholder resolution demanding that Chevron reduce “Scope 3 emissions.” The Environmental Protection Agency’s website defines Scope 3 emissions as those that are “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain,” including employee commuting, leased assets and downstream use of products by customers.

Follow This expressly said it sought to combat climate change, not advance a business goal. Chevron’s board opposed the proposal. Yet the resolution earned majority shareholder support, including from its three largest shareholders at the time, Vanguard, State Street and BlackRock.

The resolution would require Chevron to account for things beyond its control, such as whether its employees drive hybrids or Humvees to work, whether its leased data center is powered by coal or wind, or whether its customers use its gasoline to deliver solar panels or tractors. There is no way for Chevron to force these third parties to change their behavior other than to refuse to employ or do business with them if they don’t comply.

Scope 3 accounting is useless even in theory as a gauge of environmental impact, because it would count the same unit of emissions more than once. A gallon of gasoline used anywhere in Chevron’s value chain would count toward Chevron’s Scope 3 emissions and the Scope 3 emissions of each company involved. But many companies in Chevron’s value chain haven’t adopted such caps. Caterpillar hasn’t, so Chevron effectively bears full responsibility for the emissions of every Caterpillar backhoe that burns its fuel.

Read the full Wall Street Journal article here.