ExxonMobil is trying to exclude a climate change proposal from this year’s proxy ballot, and if the oil and gas giant succeeds, its shareholders won’t be able to vote on the proposal at the company’s annual general meeting on May 25.
The resolution calls on ExxonMobil’s board to “adopt a policy acknowledging the imperative to limit global average temperature increases to 2 degrees Celsius above pre-industrial levels, which includes committing the company to support the goal of limiting warming to less than 2 degrees Celsius.” Led by the Sisters of St. Dominic from Caldwell, New Jersey, the co-filers of the resolution include 34 institutional investors.
ExxonMobil is less than thrilled with the proposal. In a letter, the oil and gas giant recommended that the proposal be omitted from the 2016 proxy materials. The company cited two reasons: the proposal is “so inherently vague and indefinite as to be materially misleading,” and ExxonMobil “has already substantially implemented the proposal.”
The Sisters of St. Dominic and other filers don’t agree with ExxonMobil’s assessment. “We certainly do not believe the ask of the resolution is vague,” Sister Patricia Daly, OP, of the Sisters of St. Dominic told TriplePundit. “We could not be more specific about the pathway they should pursue given the SEC rules.”
ExxonMobil’s rejection of the proposal and attempts to omit it “demonstrates another way that Exxon is differentiating itself from peers and refusing to look toward the transitions needed within the business model for the low carbon economy,” Daly said.
The proposal mentioned that, back in October, 10 of ExxonMobil’s oil-industry peers, including Shell and BP, supported the American Business Act on Climate Pledge. The companies that signed it, 81 in total, pledged to support action on climate change and a climate change agreement in Paris.
ExxonMobil claims on its website that its “scientists have undertaken climate change research and related policy analysis for 25 years.” However, the company is being investigated by the California and New York attorneys general for failure to report climate change risks to shareholders and lying to the people about those risks.
Given ExxonMobil’s recent media attention on climate change, the company likely does not want conversation on the subject. “They are likely not eager to open any contemplation of a conversation of what their responsibility might be — moral or otherwise — for contributing to climate change,” Daly said of Exxon execs.
The trouble is that climate change risks to ExxonMobil’s operations exist — and they’re outlined in the emissions profile of the company’s 2015 Outlook for Energy report. “ExxonMobil believes that changes to the earth’s climate, including those that may result from anthropogenic causes, pose a risk,” the report stated.
The risks outlined include the costs of future regulation. “A key factor in assessing the world’s energy outlook is the impact of public policies,” the report reads. Specifically, policies that limit greenhouse gas growth are cited. The cost of “carbon as a proxy model” is estimated to be about $80 per ton in developed countries and about $30 per ton in developing countries by 2040.
Given the risks to ExxonMobil’s operations, it is important for the company to include the shareholder resolution it seeks to omit. The resolution differs from past proposals sponsored by the Sisters of St. Dominic, Daly pointed out. Past resolutions on climate change risks “referred to stranded assets as ‘serious material, financial risks,’” she said. However, this proposal “takes a different direction and refers to [Exxon’s] added responsibility due to their financing of disinformation on climate science.”
“Climate change is an important consideration for ExxonMobil and its board, and the board is updated at least yearly on developments in climate science and policy,” the company declared in its Outlook for Energy report. Meanwhile, the oil and gas giant seeks to keep shareholders from voting on climate action.
Photo: Mike Mozart