Yesterday, ExxonMobil quietly published its 2020 Energy & Carbon Summary, the company’s latest report in response to rising shareholder demands for improved climate risk disclosure. While the report came without fanfare, you can bet that ExxonMobil will be hammering away at these talking points in the lead-up to its annual general meeting in late May. My hot-take: investors should not be duped by this slick, self-serving attempt by the oil and gas giant to claim that it’s doing its part to address climate change. Here are three reasons why.
1) No commitment to reduce carbon dioxide emissions to net zero by midcentury
Last month, along with my Union of Concerned Scientists (UCS) colleague Peter Frumhoff and Myles Allen of the University of Oxford, I published an article in the Bulletin of the Atomic Scientists outlining recommendations for climate-conscious investors to hold fossil fuel companies accountable to the science of meeting the Paris Agreement’s global temperature target.
The bottom line: Fossil fuel companies must commit to achieving net zero absolute carbon dioxide emissions by midcentury—and conduct all activities in ways that are verifiably consistent with this commitment. In its latest report, ExxonMobil not only fails to make such a commitment, it actively rejects any responsibility to do so.
The company refuses to set emissions reduction targets encompassing the end use of its products, shifting the blame to customers who are using the products exactly as ExxonMobil intends them to. ExxonMobil also rejects the notion that it must align its investments with the Paris Agreement target of keeping global temperature increase to 1.5ºC above pre-industrial levels.
ExxonMobil’s Energy & Carbon Summary includes a graph from its 2019 Outlook for Energy, which projects no reductions in carbon dioxide emissions from the energy sector through 2040—and no date at which emissions reach net zero, implying indefinite warming. Senator Bernie Sanders highlighted this fact from our Bulletin article in a tweet, generating coverage in Newsweek.
ExxonMobil’s 2019 Outlook for Energy Report projected no reductions in carbon dioxide emissions from the energy sector through 2040.
2) Still banking on high-carbon projects
Without a commitment to reach net zero carbon dioxide emissions ever (never mind by midcentury), it’s no surprise that ExxonMobil’s mid-term targets are not on a net zero trajectory. But it’s worth noting how far off that pathway they seem to be.
The company touts nearly $10 billion of investments in projects to research, develop, and deploy lower-emissions energy solutions since 2000. That figure may sound impressive, until you compare it with more than $500 billion in spending on oil and gas exploration and infrastructure in that time frame.
In that context, ExxonMobil’s investments over the past two decades are 98 percent high carbon.
The report emphasizes the need for trillions of dollars more in fossil fuel investments even in a 2ºC scenario, and repeatedly insists that natural gas is a “cleaner-burning” energy source. (My colleague Derrick Z. Jackson debunked the gas industry’s climate talking points in this recent blog).
Another centerpiece of ExxonMobil’s climate strategy? Increasing production of chemicals and lubricants that it claims improve energy efficiency.
It’s worth dusting off this unforgettable analogy offered by my colleague John Rogers for my blog on ExxonMobil’s 2018 climate report: “While lubrication is important, in the context of ExxonMobil’s anti-climate activities, this seems akin to taking credit for a skyscraper project because you supplied the signs for the restroom doors… while simultaneously taking a jackhammer to the building’s foundations under cover of night.”
ExxonMobil even has the audacity to promote its Synergy brand advanced fuels and lubricants—after its advertisements for these products were cited in the Massachusetts attorney general’s investor and consumer fraud lawsuit against the company. Filed in October 2019, the complaint alleges that ExxonMobil deceptively promotes these products as “solutions” for combating climate change while failing to disclose its knowledge that their production causes climate change.
3) Failing to police trade association climate lobbying
An “Up Close” feature on the Public Issues and Contributions Committee of ExxonMobil’s Board focuses on its field trip to company facilities in Singapore. Closer to home, ExxonMobil makes no commitment to renounce disinformation on climate science and policy, or to ensure that its direct and indirect climate policy advocacy is consistent with the company’s stated positions.
At a time when mainstream investors and non-governmental organizations increasingly expect companies to align their climate lobbying with the goals of the Paris Agreement, ExxonMobil is mum on the question of reviewing the climate policy advocacy of its trade associations and leaving groups whose positions are not aligned with its own.
BlackRock and other investors should expect more, tolerate less
In the next few months, my colleagues and I will have a lot more to say about this report and the upcoming flurry of filings by ExxonMobil and other major fossil fuel companies. But based on my initial review, ExxonMobil still falls far short of what investors should be demanding of the company as the remaining carbon budget dwindles.
One investor that needs to expect more and tolerate less from ExxonMobil is BlackRock, the world’s largest asset manager—which owned 6.7 percent of the company’s stock as of the end of 2018.
In his annual letters to corporate CEOs and clients earlier this month, BlackRock CEO Larry Fink responded to mounting pressure from the investment community and climate activists with stepped-up climate commitments. All eyes will be on how these new commitments change BlackRock’s votes at this year’s annual meetings—especially given that the asset manager voted overwhelmingly against climate-related shareholder resolutions and for energy company-proposed directors in 2019.
In ExxonMobil’s case, the support of BlackRock and Vanguard would have tipped the balance in favor of several key climate-related proposals.
A key litmus test for BlackRock will be two shareholder resolutions filed with ExxonMobil this year: one sponsored by As You Sow requesting a report on if, and how, the company plans to reduce its total contribution to climate change and align its operations and investments with the Paris Agreement’s goal of maintaining global temperature rise well below 2ºC; the other sponsored by BNP Paribas requesting a report on if, and how, the company’s direct and indirect lobbying activities align with the Paris Agreement goals.
Unfortunately, ExxonMobil is likely to pull out all the stops to prevent shareholders from voting on these proposals (in the midst of a broader industry-driven effort to curtail shareholder rights).
BlackRock and other climate-conscious investors must push back aggressively—including by voting against ExxonMobil directors who are trying to sweep climate issues under the carpet, and by divesting if engagement reaches a dead-end. This proxy season is a critical opportunity to translate climate commitments into meaningful climate action.