Goldman Sachs Challenged on Global Warming in Wake of ‘Climategate’

Goldman Sachs logoNLPC has filed a shareholder proposal asking Goldman Sachs to report on the science behind its embrace of global warming in the wake of the ‘Climategate’ scandal.

Goldman’s ‘climate policy’ is more than corporate public relations. In 2007, Goldman participated in the buyout of energy firm TXU. The transaction resulted in the cancelation of 8 of 11 planned coal-fired power plants after pressure from environmental activists.

It might make wealthy financiers in New York City feel good about themselves to scotch electric generation in the name of environmentalism, but it has negative consequences for ordinary people. Electricity is a basic need, like food and medical care. Cancelling plants while parts of the country face regular power shortages, and raising the cost of electricity for consumers, is positively immoral.

The supporting statement for the resolution reads:

In 2005, Goldman Sachs established its “Environmental Policy Framework,” which stated:

“Goldman Sachs acknowledges the scientific consensus, led by the Intergovernmental Panel on Climate Change (IPPC), that climate change is a reality and that human activities are largely responsible for increasing concentrations of greenhouse gases in the earth’s atmosphere.”

IPPC, an organization of the United Nations, does not conduct its own scientific research but relies on the research of others, such as the Climatic Research Unit (CRU) of the University of East Anglia.

In late 2008, CRU became embroiled in the “Climategate” controversy, after hacked emails and documents were placed on the internet suggesting that CRU and/or collaborating scientists elsewhere:

1) Sought to exaggerate data supportive of global warming.

2) Sought to suppress data at odds with global warming, including the use of a “trick” to “hide the decline” in temperatures.

3) Sought to exclude scientists skeptical of global warming from peer-reviewed journals, so that their research could be dismissed because it is not peer-reviewed.

4) Exhibited a harsh and political prejudice toward skeptics, contrary to the spirit and ethics of scientific inquiry. CRU director Phil Jones characterized the death of a skeptic as “cheering news.”

5) Destroyed original climate data on which some CRU findings were based.

Global warming is cited as a rationale for “cap and trade” legislation. A 2009 Heritage Foundation study estimated that the Waxman-Markey bill would destroy over 1.1 million jobs, hike electricity rates 90 percent, and reduce the U.S. gross domestic product by nearly $10 trillion over the next 25 years. How is this in the interests of Goldman Sachs shareholders?

In 2007, Goldman Sachs and others bought out the energy firm TXU. According to a TXU press release, the transaction resulted in the cancellation of 8 of 11 planned coal-fired power plants “preventing 56 million tons of annual carbon emissions.” The buyout was “endorsed by Environmental Defense and Natural Resources Defense Council.”

Thus, because of a policy based on unsettled science and pushed by outside pressure groups, millions of consumers will be denied the opportunity to buy more affordable electricity produced from an abundant domestic resource. How is this in our national interest, or in the interests of ordinary Americans?

The resolution itself reads:

The shareholders request that the Board of Directors prepare by October 2010, at reasonable expense and omitting proprietary information, a global warming report. The report may discuss:

1) Specific scientific data and studies relied on to formulate Goldman Sachs’ original climate policy in 2005, as well as data and studies relied on since that time.

2) Extent to which Goldman Sachs now believes human activity will significantly alter global climate.

3) Estimate of costs and benefits to Goldman Sachs of its climate policy.

NLPC became a critic of Goldman’s climate policy soon after it was developed. At the 2006 Goldman Sachs annual meeting, we raised issues regarding the company’s relationship with environmental activists, and a glaring conflict of interest by then-CEO Henry Paulson who also chaired the Nature Conservancy.

We noted that Goldman’s environmental policy closely paralleled the Nature Conservancy agenda on key issues like global warming. Moreover, Paulson’s son Merritt was a trustee of a Nature Conservancy-related group that was the recipient of a Goldman Sachs donation a huge tract of 680,000 acres in Chile. The resolution asked whether these moves reflected shareholder interests or Paulson’s personal interests.

In my remarks at the meeting, I noted that the Nature Conservancy had been mired in scandal in recent years, as detailed in a Washington Post series and in Senate hearings. The group sold ecologically sensitive land at a discount to its own trustees on which they built multi-million dollar vacation homes, and structured land donations so wealthy donors could improperly receive tax breaks.

Goldman’s response, delivered by former Sarah Lee CEO John H. Bryan, chairman of the Goldman Governance Committee, was that the Goldman board approved the environmental policy and the Chilean land deal. Bryan specifically denied that the Nature Conservancy was involved at all in the land deal, even though according to its tax return, the Nature Conservancy was paid a consulting fee of $144,000 by Goldman for its involvement.

The resolution failed because it was opposed by Goldman management, but it generated media coverage, including the Wall Street Journal, Financial Times (UK), Reuters, Bloomberg, National Public Radio and The Independent (UK). On April 4, 2006, the Wall Street Journal published an opinion article titled “Green-Nosing” by business writer Judith Dobrzynski. She wrote:

It’s ludicrous to suggest that Goldman’s board acted alone, as if directors didn’t know of Mr. Paulson’s involvement with the conservancy or his advocacy of environmental causes.


Corporate America Sells Out Public by Jumping on Cap-and-Trade Bandwagon

Witness Intimidation on Cap-and-Trade