This is one of a series of potential tactics against fossil fuel companies, meant to limit their ability to supply fossil fuels.
1. Phishing for Leaks | 2. Crashing the Roadshow (you are here) | 3. Amplifying Corporate Dissent
This campaign is presented in draft form. It would be helpful to know what you think, what you find interesting, and potential issues. If you have expertise in underwriting, oil or gas drilling, recruiting, or other mentioned fields, and would like to contribute your knowledge, please contact me. Industry insiders and insights make these posts possible.
October 26, 2020 Edit: It seems that this type of action is coming too late, as it’s already being done. An anonymous contributor sent in some useful thoughts on this piece. They are lightly edited and included at the bottom.
2. Crashing the Roadshow
In December 2008, Tim DeChristopher bid $1.8 million for oil and gas rights on lease-able land, with no intention to pay. His protest drove up the price of the parcels, disrupted bidding, and eventually led to him being sentenced to prison, and the cancellation of the oil and gas leases.
The auction was a small technical venue unprepared and unaccustomed to . His protest was effective and brilliant because it used this to target the industry where it hurt most: Their balance sheets.
Disrupting the roadshow is another way to hurt fossil fuel companies’ balance sheets, while avoiding jail time.
What is a “roadshow,” and why crash it?
Financial roadshows happen when a company wants to raise large amounts of money for a project, like an oil rig or a pipeline. At the roadshow, potential investors meet with a project or company’s management team, and try to convince them to invest. This is usually facilitated by an underwriting firm (typically an investment bank), acting as a middleman. Companies like Uber, AirBnB, and General Motors used roadshows to raise money. So did this coal power plant and Keystone XL. (Sorry - I can’t find a link for Keystone XL. The public is typically not invited to roadshows.)
Roadshows are a venue for investors and managers conversations to build the trust necessary for investment. This happens through conversations. Investors express concerns and discuss among themselves. Management answers questions in group question and answer sessions, and one-on-one settings.
By inserting environmental concerns and questions into this conversation, activists can elevate the investor-manager dialog, effectively obstructing trust (and investment) until environmental concerns are addressed.
When this happens, management will receive the strongest possible market signal that it must consider environmental impacts. (What signal is stronger than your investors/potential owners demanding that you do something?) This can lead either to less environmentally destructive or to scrapped fossil fuel projects, allowing funding to be diverted to non-fossil fuel investments.
This campaign can take several forms. All forms depend on knowing when and where a roadshow will happen and having a list of questions ready for the management.
- Acquire a prospectus and balance sheet. The prospectus may be listed on the company’s website or the SEC’s website. Or you can just call and ask a secretary to send you a copy.
- Find the time and location of roadshows. The prospectus will generally list several “brokers,” whom you can think of as the facilitating middle-men. Brokers will tell you the times and locations for the roadshow.
- Create a list of difficult and painful questions to ask the management. Volunteers from the financial sector can help here. There is also a list of suggested questions below.
Logistics for an overt disruption
- Create a pamphlet or flier with your questions. These should be narrowly focused on financial concerns. Public opinion and environmental impacts should probably be included only in as much as they affect the endeavor’s riskiness and its bottom line. For extra effect, your flier or pamphlet can ask attendees to leak information to you.
- Expose potential investors to the damage they may do. Advertise pictures and news articles of the last environmental catastrophe from a similar project. Because there are few investors in a single project, the advertising budget for this would be relatively small.
- Stage an Extinction Rebellion style blockade or die-in outside (or inside) of the venue. Pass out the pamphlet or flier. If the questions listed on the flier are reasonable and the last catastrophes are fresh on investors’ minds, they’ll be inclined to ask them. After all, you’re helping the investors do their jobs.
Logistics for and undercover disruption
- Sneak into the roadshow wearing a suit and tie. This can be as easy as walking to the registration desk, stating a name, and giving a plausible excuse for not being on the guest list. A strategy for doing this is in the notes.
- In the public Q&A, ask questions to the management. These are reasonable questions for potential investors to have. Difficult questions help other investors understand potential risks. They may even be glad you raised them.
- Avoid one-on-one meetings and in depth-conversations. Often, at roadshows, investors are given the opportunity to meet one-on-one with the management. Since you probably don’t want to blow your cover, avoid these. It should be easy to hide in the bathroom or look busy with your laptop. Plenty of people are.
- Watch the management sweat.
Notes and disclaimers
- This might be funded by industry groups fighting physical fossil fuel infrastructure, or by renewable-energy alternatives. (Hello fishers, farmers, and renewable energy players!)
- This tactic is inspired by Tim DeChristopher’s illegal, disruptive, and successful bids to save public lands from illegal drilling.
- The legality of overt actions depends on the local laws and the action. Undercover action is probably criminal or civil trespass** but has limited enforcement ability, if activists leave if and when asked.
- This tactic may not have been used by activists before, but almost certainly has been used by industry groups. (Though they probably didn’t have to sneak in.)
On sneaking in: I have run and worked at high-ticket-price conferences. Because I never wanted to upset potential donors, collaborators, or investors, I almost always assumed that missing guest registrations were my administrative mistake and let people in.
- a strategy for sneaking into in-person roadshows: you might arrive in a nice suit before an important speaker is about to go on stage. Tell the secretary that the speaker invited you a bit late and would love to see you in the audience. Ask if you can sort it out later. Walk in. Maybe they’ll even give you a name tag.
- a strategy for sneaking into online roadshows: you might call a manager’s secretary, mumble something about tech problems, and ask them to send you a meeting invitation.
- The object of this sort of campaign is not to scream or judge (That would just harden opposition to environmental causes and achieve very little.) but to influence potential investors, helping raise reasonable financial and moral concerns.
Sample questions to investors
- “We just witnessed a precipitous drop in energy demand. How would another similar drop affect this investment?”
- “Your prospectus does not disclose regulatory risks due to the COP-21 Paris agreement. What’s the worst case if regulations are aggressively enforced?”
- “Current public perception of industry is extremely negative. What do you expect to happen if the regulatory environment catches up?”
- “How can we know that local and state government won’t close or heavily encumber this project in 5-10 years?”
- “This infrastructure is exposed to extreme weather. What are the insurance trends here, and why are they not mentioned?”
- “If export bans on oil were reimposed, would there be enough domestic demand to justify the pricing implied in the prospectus?”
- “What steps has the project taken to ensure a clean regulatory glideslope?” (Write these down. Inquiring minds will want to know!)
- “Due to the rise of electric cars, how much decline is expected in oil demand relative to natural gas?”
- “If the downstream were prevented from expanding, would there be enough domestic capacity to justify this project?”
- [Briefly mention a similar killed/failed project] “Could that happen here?”
- “This pipeline/infrastructure crosses the X river with X gallons/cubic meters per day. If there were a leak, what kind of environmental and health effects would occur?”
- “We’ve seen some serious mishaps with this kind of work in the past. What’s the worst case failure for this project?”
- [At the water cooler / coffee break] “I always feel bad about even looking at this stuff…” [explain why]
This is one of a series of potential tactics to use against fossil fuel companies, meant to limit their ability to supply fossil fuels.
1. Leaks for Liability | 2. Crashing the Roadshow (you are here) | 3. Amplifying Corporate Dissent
This is very intriguing, although late to the game. And of course, these days everything is virtual. Let me make a few points.
There are two kinds of road shows:
- Ones where the company is trying to raise capital (usually equity)
- Non-deal roadshows, where they are just updating current and potential investors without a particular transaction pending.
Company managements tend to be very heavily coached when the road show involves a deal and are limited by the SEC as to what they can say. I’ve been to a lot of these over the years.
Only big investors or investors seen as particularly sophisticated and likely to be long term holders get offered one on ones.
No one needs to hide in the bathroom to avoid being offered one; they are widely sought after. I was rarely a big enough investor to get one on ones for big deals but I did get a lot of one on ones with big companies either by being the only one in [redacted mid-sized city] willing to take a meeting on late Friday afternoon or by being known to company management from previous encounters.
I’ve never tried to sneak into a road show so I have no idea how easy it is. I’m sure it’s possible but not always. I also don’t know how to track upcoming roadshows since
I was always invited. The brokers generally want as many people there as possible since it makes them look good.
Many road shows never go beyond New York or London so anyone who wants to attend a lot of them needs to be based in one of those two cities.
With respect to the oil industry in particular, there are likely to be very few roadshows that actually involve a deal.
None of the big oil companies needs to raise equity while bond issuance is usually done very quickly, often without a roadshow. Financing for a particular project as opposed to general financing for the company almost never involves a public roadshow. Individual projects are generally funded by the project finance arms of banks, which then syndicate the loans to a relatively small number of big investors.
This is already being done
A final point is that I’m not actually sure what this would accomplish. A number of large and small institutional investors have already been holding oil companies’ feet to the fire in both public and private forums for some time and asking precisely the questions that this post is planning to ask. In fact, they are coordinating with each other extensively. There is an organization in Cambridge, Massachusetts called Ceres that many institutional investors who want to combat climate change are members of. It’s worth checking out: www.ceres.org