With the battle with the United Auto Workers also becoming a fight for shareholder support, a coalition of major shareholders are demanding that General Motor Co. join other automakers, including Ford Motor Co., and sign an agreement to honor California’s clean vehicle standards.
New York City Comptroller Scott Stringer and a coalition of 25 major investors with $1.1 trillion in collective assets under management are calling on General Motors to make the commitment to the California standards.
GM has said it favors one national standard, but the Trump administration pushed a rollback of the California standards to which more than a dozen other states also subscribe. The administration also is challenging California’s long-standing right to set its own standards setting the stage for a court fight that will take months if not years to resolve, leaving carmakers with no clear guidelines to follow.
(Minnesota, New Mexico Adopt California Mileage Rules Trump Wants to Block)
In a letter to GM Chairman Mary Barra, the investor signatories together stressed the urgent need to avoid the significant regulatory uncertainty and litigation delay that would result from President Trump’s proposed rollback of federal clean vehicle standards, as well as the importance of reducing emissions in the near-term from the transportation sector – the largest source of greenhouse gas emissions in the U.S.
The investors argued in the letter that the agreement between the states and automakers provides the best available opportunity to address those needs while also positioning the company for competitive success in a global marketplace that is pivoting to cleaner vehicles.
“We urge you to join this compromise agreement,” said the investor signatories in their letter to the company, “which is consistent with GM’s call for a national solution, continuously improving fuel economy and its stated goal of moving toward zero emissions.”
The letter comes as GM is the midst of a battle with the UAW, which has left 48,000 union members on picket lines and idled GM factories across North America. The union has argued UAW members are entitled to compensation after helping save the company and clearing the way for it to make $35 billion in profits over the past three years.
GM has argued it needs to husband its resources to prepare for sweeping technological changes that promise to alter the shape of the industry in the future.
GM gave no immediate response to the letter from investors.
Union supporters have argued that the GM’s labor policies are designed to benefit a select group of hedge fund investors and have actually jeopardized the company’s future.
New York State Comptroller Thomas DiNapoli, who oversees the nation’s third-largest pension fund, wrote last week Barra, saying he was concerned about the impact the strike was having on GM’s earnings.
North America’s Building Trades Unions also wrote to Barra urging her to find a swift and fair resolution to the contract dispute with the UAW. The NABTU retirement funds holds more than $3.46 billion in GM shares, making them one of the automaker’s largest shareholders.
In the letter to Barra, NABTU President Sean McGarvey voiced concerns about GM’s approach to the UAW.
“We have watched the strike closely and remained silent until now. We are concerned with your approach to our Company’s most important asset, its workforce, and the fallout on GM’s ability to generate long-term value for shareholders,” McGarvey wrote.
Stringer noted originally GM lobbied the Trump administration, both individually and through its trade organization, to roll back the U.S. Corporate Average Fuel Economy and greenhouse gas vehicle standards.
However, in June of this year, after significant investor engagement, the company joined 16 other automakers to write a letter to Trump that, citing the need to avoid regulatory uncertainty, expressed approval for a rule supported by California that is stricter than the standards proposed by the Trump administration – and that helps promote electric vehicles.
In July, however, GM failed to join Ford, BMW, Honda, and Volkswagen as they reached a compromise agreement with California – supported by 13 states that have adopted California’s standards.
Ford, BMW, Honda and VW cited the regulatory chaos Trump’s rollback would cause, as states that have adopted California’s standards represent about 37% of the U.S. market, as well as the business case for investing in cleaner vehicles.
“In New York City, we know that a sustainable planet and a secure retirement go hand-in-hand. As an investor in GM and other U.S. automakers, I am deeply concerned with the fallout of President Trump’s proposed rollback because it would undermine the U.S. auto industry and result in increased emissions at a moment when we need bold action on climate,” Stringer said.
(Trump Admin Eliminates CA Waiver, Delays Details on Fuel Economy Roll Back)
“General Motors can choose to help lead the U.S. auto sector into the 21st Century or help President Trump drag it backwards while the rest of the world speeds ahead. I, and many other investors, urge them to stand up for our planet and our future. They should join the compromise agreement, without delay,” he added.
