Activist Mutual Fund Seeks Curbs on Corporate Global Warming Talk

By Kevin Mooney | August 17, 2008 | 7:14pm EDT
( – The managers of a mutual fund that describes itself as “dedicated to providing both financial and pro-free enterprise ideological returns to investors” want the Securities and Exchange Commission (SEC) to advise publicly traded companies against publishing what the managers describe as “potentially false and misleading” information on global warming.

In a July 23 letter, Thomas Borelli and Steven J. Milloy, managers of the Free Enterprise Action Fund, asked the SEC to issue a general statement advising companies to avoid making unqualified public statements on what the fund managers say are unsettled questions involving climate change and other environmental issues.

Borelli and Milloy cited recent statements by scientific groups contesting the conclusion that carbon emissions caused by human activity are a significant cause of global warming.

“The American Physical Society, the leading professional society for American physicists announced in July 2008 on one of its websites that, ‘There is a considerable presence within the scientific community of people who do not agree with the IPCC [Intergovernmental Panel on Climate Change] conclusion that anthropogenic CO2 emissions are very probably likely to be primarily responsible for the global warming that has occurred since the Industrial Revolution,’” the managers say in their letter.

They also point to a petition signed by more than 31,000 scientists that was released in May by the Oregon Institute of Science and Medicine.  The petition says: “There is no convincing scientific evidence that human release of carbon dioxide, methane or other greenhouse gases is causing, or will cause in the future, catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate."

A spokesman for the SEC told that the agency does not comment on private petitions and did not say whether or not any action would be taken.

The letter to the SEC by the managers of the Free Enterprise Action Fund ( includes some examples of the sort of corporate statements the fund managers find objectionable.

A report issued by Lehman Brothers, for example, relied on “the so-called ‘hockey stick’ graph to support the notion that humans are causing global warming,” the letter says.

That chart showed an upward spike in temperature in the late 20th industry. But that analysis was subsequently disputed by the National Academy of Sciences (NAS) and other individual researchers, Milloy says.

The letter also cites a “Call for Action” by GE “to slow, stop and even reverse the damage of greenhouse gases.”

General Electric’s statement was issued in tandem with a report ( from the U.S. Climate Action Partnership (U.S. Cap), that calls for federal legislation that supposedly would help reduce greenhouse gas emissions.

Another example cited in the letter is from a full-page newspaper ad that Exelon ran on July 15, 2008.  It said, in part: "The science is overwhelming--climate change is happening now and human activity is the primary cause.”

A 2007 report from Goldman Sachs, the letter says, told readers:  “By now, the dynamics of global warming are widely known, and we find no reason to dispute the scientific assumptions.”

The Free Enterprise Action Fund is a shareholder in Lehman Brothers, General Electric and Exelon and Goldman Sachs.
“It’s not appropriate for companies to say the debate is over and the case is closed when it is becoming more apparent all the time that climatologists have no firm idea about what drives warming and cooling cycles,” Milloy told “We think statements of certainty about climate are actually misstatements.”
“Companies have an obligation under current law to refrain from making false and misleading statements on material matters, and the SEC has been pretty strict about this,” Milloy said.  “Yet, when you get into global warming issues it’s almost like they [the corporations] have the environmentalists writing propaganda for them.”
Publicly traded corporations that want to speak out on global warming should include qualifying remarks in their communications with investors, and in their public pronouncements, disclosing that a debate exists and that there are costs attached to new regulations, Milloy said.
Corporate Response
Lehman Brothers and Goldman Sachs both declined to comment on the Free Enterprise Action Fund’s letter to the SEC.
Paul Elsberg, senior communications specialist with Exelon, emailed this statement:
“Exelon believes that climate change is real and that action is needed to immediately reverse greenhouse gas emissions (GHGs).  We are already among the lowest carbon emitters in the utility industry by virtue of our nuclear fleet. And this year, we are on track to meet our voluntary commitment to reduce our carbon emissions by 8 percent as part of EPA’s Climate Leaders Program. Exelon’s industry-leading, low-carbon strategy seeks to reduce, displace or offset 15 million metric tons of GHGs by 2020. This is more than our current, annual carbon footprint.”
Peter O’Toole, a spokesman for General Electric, told that the company “disagreed with the thesis” put forth by the Free Enterprise Action Fund.
“GE shareholders think clean technology is a great revenue stream for the company and they disagree with the fund’s thesis,” O’Toole said. “We made $14 billion in clean technology revenues in 2007 -- that’s billion with a B.”
Moreover, he said, General Electric shareholder support for Free Enterprise Action Fund proposals over the last three years have diminished to the point where their newest proposal will not be automatically included as a shareholder proposal in 2009.
Unfortunately, too many CEO’s fail to grasp the connection between high energy prices and the cost of environmental regulations they continue to pursue, Free Enterprise Action Fund’s Borelli told
“The CEO’s have not thought through all of the consequences of global warming regulations on their business,” he said. “It means more unemployment, higher energy prices and lower GDP (Gross Domestic Product), and they’re actually lobbying for this.”
Those companies that continue to press for regulations are essentially lobbying against their own earnings, said Borelli.
Corporate America, however, is not necessarily a friend of the free market, James Dellinger, executive director of Greenwatch, a project of the Capital Research Center (CRC), told
“So long as corporate leaders can insulate their own lifestyles and score public relations points, they will continue to embrace green schemes that seek to mollify activists at the expense of investors,” Dellinger said.
"The sad reality is corporate America now leans left and is a major funding source for pro-regulatory lawmakers," he said. "Greater vigilance is needed on the part of shareholders to safeguard profitable enterprises that would otherwise succumb to costly political endeavors.”

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