Update, June 1, 2017: In a stunning and decisive rebuke to ExxonMobil’s leadership, at yesterday’s annual meeting 62% of shareholders voted in favor of the proposal calling for the company to report annually on how it will ensure that its business remains resilient in the face of climate change policies and technological advances designed to limit global temperature increase to well below 2°C. It was the first time a climate-related resolution received support from a majority of ExxonMobil’s shareholders.
It’s been quite a week in Texas. Last Wednesday, I had the privilege of making opening remarks at an expert panel discussion on climate change and fossil fuel company responsibilities in front of a packed house at Rice University in Houston. The event was held a week ahead of the ExxonMobil and Chevron annual shareholders’ meetings tomorrow in Dallas and Midland, respectively—timed to inform investors about key climate-related proposals to be voted on by shareholders at both companies. Tomorrow, I’ll be inside ExxonMobil’s annual meeting for the second year in a row.
All eyes are focused on a proposal calling for annual reporting by ExxonMobil on the resilience of its portfolio of reserves and resources in a range of climate scenarios—including at least one in which global temperature increase is kept well below 2°C, as agreed by the nations of the world. This resolution could receive the support of a majority of ExxonMobil’s shareholders, despite opposition by the company’s Board. Influential proxy advisory firm Institutional Shareholder Services (ISS) has recommended a “yes” vote, and recent news reports suggest that Vanguard and Blackrock (ExxonMobil’s two largest shareowners) and Fidelity may vote in favor of the resolution.
A shareholder proposal requesting annual reporting on direct and indirect lobbying activities and expenditures by ExxonMobil received the support of more than 25% of shareowners in 2016 and will be voted on again tomorrow. This resolution highlights ExxonMobil’s membership in trade associations and industry groups that spread disinformation on climate science or misrepresent the possible effects of climate policies, including the American Legislative Exchange Council (ALEC), the American Petroleum Institute (API), the National Association of Manufacturers (NAM), and the Western States Petroleum Association (WSPA).
View and Share the Panel Discussion
For background on why these shareholder proposals matter, you can now view a recording of the expert panel “Climate Change and Climate Risk: Critical Challenges for Fossil Fuel Companies and their Investors.” Moderated by Dr. Neal Lane, former science advisor to President Bill Clinton and a Senior Fellow at Rice University’s Baker Institute for Public Policy, the panel featured:
- André Droxler, Professor of Earth Science and Scholar at Rice University’s Baker Institute;
- Yvette Arellano, Policy and Research Liaison, Texas Environmental Justice Advocacy Services (TEJAS);
- Susan E. Pacheco, Associate Professor of Pediatrics, University of Texas McGovern Medical School;
- Robert Bullard, Professor of Urban Planning and Environmental Policy, Texas Southern University;
- Robert Litterman, Investment Risk Expert, Senior Partner at Kepos Capital (formerly with Goldman Sachs).
Those attending in person and online kept the #ClimateRisk conversation going on social media; you can view our recap here.
ExxonMobil’s New Leadership
Tomorrow’s annual meeting of ExxonMobil shareholders will be the first presided over by new Chair and CEO Darren Woods, who took over at the beginning of the year from Rex Tillerson (now US Secretary of State).
When he took the helm at ExxonMobil more than a decade ago, Tillerson pledged no longer to fund groups that engage in climate denial and stated his support for a carbon tax. However, ExxonMobil’s reality did not match Tillerson’s rhetoric. In UCS’s inaugural Climate Accountability Scorecard released last October, ExxonMobil scored “egregious” on renouncing disinformation on climate science and policy.
As for Tillerson’s stated position in favor a carbon tax, UCS’s Scorecard found some skepticism about whether the company had backed up its CEO’s words with consistent action. For example, ExxonMobil’s hand-picked External Citizenship Advisory Panel called for “more specificity about the company’s support for a carbon tax, as well as its engagement on other policy issues in the United States and internationally.” (Earlier this year, a member of this panel actually resigned in protest over the company’s attacks on civil society organizations, including UCS).
Like his predecessor, Woods seems to be attempting to reposition ExxonMobil on climate. In his first blog in his new role, Woods noted that “the pledges made at last year’s Paris Accord create an effective framework for all countries to address rising emissions,” and that ExxonMobil “forecasts carbon reductions consistent with the results of the Paris accord commitments.” ExxonMobil has publicly urged the Trump administration to keep the United States in the Paris Climate Agreement.
Woods’s blog also echoed Tillerson’s stated support for a carbon tax: “A uniform price of carbon applied consistently across the economy is a sensible approach to emissions reduction.” While Woods affirms that “climate risks warrant action,” his proposed energy solutions revolve around natural gas and unproven future technologies. And Woods presents a false choice between energy access and economic development.
In Woods’s first month on the job, ExxonMobil added climate scientist Dr. Susan Avery to its board. The company didn’t take this action voluntarily—shareholders have been pressing ExxonMobil to improve its corporate governance on climate issues for years. A 2016 resolution calling for the appointment of a climate expert to ExxonMobil’s board received support from more than 20% of shareholders, while a resolution calling on the company to open up its procedures for nominating directors (known as “proxy access”) was approved by more than 60% of shareholders last May. The company amended its bylaws accordingly five months later, and appointed Avery three months after that.
The appointment of Avery, who has said “Clearly climate science is telling us get off fossil fuels as much as possible,” is a positive step. But as director of the Woods Hole Oceanographic Institution, Avery made controversial decisions to accept major funding from oil and gas companies. In addition, ExxonMobil has a (widely criticized) policy of preventing its board members from speaking directly with shareholders. Further pressure will undoubtedly be needed to improve ExxonMobil’s positions and actions on climate change.
At tomorrow’s annual meeting, shareholders should send a definitive message to ExxonMobil that it is past time to get serious about planning for a low-carbon future.
Support from UCS members make work like this possible. Will you join us? Help UCS advance independent science for a healthy environment and a safer world.