As I wrote back in March, this proxy season shareholders are calling on companies such as ExxonMobil, Chevron, and ConocoPhillips to disclose how they are positioning their companies in a carbon-constrained world and to address issues relating to their public policy advocacy on climate and energy.
According to Proxy Preview 2016, more than 370 resolutions were filed this year by shareholders concerned about the environmental and social policies and impacts of US corporations.
- 94 proposals—more than ever before—address climate change
- Corporate political activity remains a big issue, with 98 resolutions filed
25% is a win
This month, one-quarter of ConocoPhillips shareholders supported a resolution calling for a comprehensive review of the company’s positions, oversight, and processes related to public policy advocacy on energy policy and climate change. While such a percentage would be woeful in a presidential primary, in shareholder advocacy it is impressive—and it usually means that the resolution has won the support of some major asset owners like pension funds or endowments.
As You Sow, a leader in shareholder advocacy, points out that the goal of shareholder resolutions is to influence company decision-making—so success is measured by changes in corporate policy and actions:
Votes with more than 10% support are difficult for companies to ignore. Resolutions with 20% or more support send a clear message to corporate management that the current company policy is too risky or not beneficial to shareholder interests. Only the least responsive company would ignore one in five of its shareholders.
Investor concern about climate lobbying is growing
The ConocoPhillips resolution, filed by the Benedictine Sisters of Mount St. Scholastica, noted that “Investor concern about climate lobbying is growing,” and that “company political spending and lobbying on climate or energy policy, including through third parties, are increasingly scrutinized.”
Like other major fossil fuel companies, ConocoPhillips has been active in the policy arena, yet its position on climate change hasn’t been consistent. While ConocoPhillips does “recognize that human activity, including the burning of fossil fuels is contributing to increased concentrations of greenhouse gases (GHG) in the atmosphere that can lead to adverse changes in global climate,” the company over-emphasizes uncertainty about climate science. And although ConocoPhillips has supported climate action to some degree, its political affiliations have served to obstruct policy proposals to address climate change.
The resolution highlighted ConocoPhillips’s active membership in the US Chamber of Commerce, which opposes climate-related legislation and has sued to block the Environmental Protection Agency’s (EPA’s) Clean Power Plan.
While the US Chamber claims to represent the interests of the business community, few companies publicly agree with the group’s controversial positions on climate change. Opposing the EPA’s efforts to regulate heat-trapping emissions under the Clean Air Act remains a priority for the US Chamber. Andrew Lundquist, ConocoPhillips Senior Vice President, Government Affairs, serves on the US Chamber’s Board of Directors.
ConocoPhillips Chair and CEO Ryan Lance now chairs the Board of the American Petroleum Institute (API). A leaked 1998 memo describes a plan by API to achieve “victory” over climate policies by manufacturing uncertainty about climate science. API recently justified its opposition to the EPA’s Methane Rule with climate science misinformation—questioning the EPA’s science-based endangerment finding for heat-trapping emissions, including carbon pollution.
Despite opposition from API and other industry associations, the EPA recently issued a final rule to set the first-ever standards for methane emissions from new and modified sources in the oil and gas sector. While the rule is an important step forward in fighting global warming, strong standards that limit methane emissions from all oil and gas sector sources are needed.
An integrity problem
ConocoPhillips opposed the lobbying resolution. In its proxy statement, the company acknowledged its membership in the US Chamber and API, but stated that it does not “agree with all positions taken by trade and industry associations,” and that it does “take contrary positions from time to time.” However, at its annual meeting, CEO Lance failed to address the “integrity problem” for ConocoPhillips described by Sister Ceil Roeger, proxy for Needmor Fund:
We urge Conoco to stand up and oppose the actions of these trade associations like the Chamber and API who are aggressively attacking the nation’s solutions being proposed to lessen our carbon emissions. Our dollars and our reputation are sadly lined up against the important steps seeking solutions on climate change.
Business as usual raises board concerns
The role of fossil energy companies, their trade associations, and other industry groups in obstructing climate policies and spreading disinformation has prompted a range of strategies by shareholder advocates.
Noting that “business-as-usual by fossil fuel firms raises board concerns,” the New York City Comptroller’s Office filed a “proxy access” resolution with 20 fossil fuel companies or utilities, including CONSOL Energy, this year. The resolution calls for companies to give shareholders more power to shape their boards of directors.
52% is a landslide
This month, 52% of CONSOL Energy shareholders voted in favor of this resolution. Two-thirds of the “proxy access” proposals that went to a vote last year received majority support, and the number of companies that have enacted meaningful “proxy access” swelled from just six in November 2014 to 115 in early 2016. CONSOL Energy may soon join these growing ranks.
The votes at ConocoPhillips and CONSOL Energy lay the groundwork for similar debates at upcoming annual meetings of Chevron, ExxonMobil, and Royal Dutch Shell.
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