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You are here: Home / Featured / Climate Proposals Fail at Exxon, Chevron Shareholder Meetings
Climate Proposals Fail at Exxon, Chevron Shareholder Meetings

Climate Proposals Fail at Exxon, Chevron Shareholder Meetings

May 29, 2019 Filed Under: Featured

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By Karen Savage

Exxon and Chevron shareholders rejected a series of climate change-related proposals at the companies’ annual investors meetings on Wednesday.

At Chevron’s meeting, one investor proposal asked the company to report on its strategy for reducing its carbon footprint, putting the business in alignment with the Paris Agreement.

Exxon shareholders asked the company to create a report assessing the public health risk of its Gulf Coast facilities, which are located in areas that are increasingly prone to climate change-induced storms, flooding and sea level rise. They also called on Exxon to disclose its lobbying expenses and political contributions.

Both companies received climate-related proposals calling for the creation of a special board committee on climate risks and for the establishment of an independent board chairman.

The closest any proposal came to success was the 41 percent of Exxon investors who voted against management and in favor of requiring the chair of the board of directors to be an independent member of the board. Currently, Darren Woods serves as both chief executive officer and chairman of the board, which critics say creates a conflict of interest, since one of the board’s functions is oversight of the chief executive.

While the proposal did not pass, supporters still called the vote a success.

“Company and investors have been in open conflict about climate strategy and disclosure,” said Edward Mason, head of responsible investment for the Church of England. Mason presented the proposal, which was filed by the Kestrel Foundation of Maine.

The conflict heightened when Exxon obtained permission from the Securities and Exchange Commission last month to block voting on a separate proposal by the New York State Common Retirement Fund and the Church of England requesting it set targets for reducing greenhouse gas emissions. That prompted the two funds to publicly declare their support for the proposal to separate the board chair and the chief executive and both vowed to vote against Exxon’s entire board.

Mason called the vote a “warning shot to management.”.

“The result of Exxon refusing to put our shareholder proposal to the vote is that investors have simply expressed their frustration at Exxon’s governance on other ballot items,” Mason said, adding the proposal’s narrow defeat shows investors are dissatisfied with Exxon’s conduct.

Woods said Exxon is working to reduce emissions, help consumers reduce emissions, engage with policy makers and work on breakthrough technologies such as algae-based biofuels and carbon capture technologies. Woods also said Exxon will continue to meet the growing demand for fossil fuels.

The vote indicates investors are dissatisfied with Exxon’s governance, which is preventing the company from adequately addressing climate risk, said New York State Comptroller Thomas P. DiNapoli.

“Exxon would ignore this level of support for an independent board chair at its own risk,” DiNapoli said.

Shell, BP, Equinor and Occidental Petroleum have responded in varying degrees to investor concerns on climate, while Exxon has done the exact opposite, said Andrew Logan, senior director of oil and gas at Ceres, a nonprofit dedicated to sustainable investing.

Exxon is facing two lawsuits from shareholders over its alleged misrepresentation of asset values to investors. New York also filed suit against the oil giant, after a three-year investigation by its attorney general’s office that showed Exxon had used two different sets of numbers to calculate climate risk—one for internal planning and another that was publicly disclosed to investors.

“It’s not hard to see why investors would vote for a change in the company’s governing body when Exxon’s board has refused to meaningfully engage on such a serious issue,” Logan said. “Left with few other avenues through which to voice their displeasure and concern, they’ve sent a very strong—and very public—rebuke to Exxon, not to mention a warning shot to other fossil fuel companies that fail to address climate-related risks.”

It should be the responsibility of the companies’ boards to pivot the businesses for success in a low-carbon economy, said Natasha Lamb, managing partner at Arjuna Capital. She introduced a proposal that Exxon establish a board committee on climate change to oversee corporate strategy and oversee the company’s response to climate-related risks and opportunities.

“It’s clear to investors that Exxon and Chevron face an existential threat that will not be assuaged by denial or simple lip service. It should be instead, proactive climate change strategy appears divergent to board priorities,” Lamb said, adding that given the severity of the climate crisis,  dedicated committees with climate expertise are far overdue at the oil majors.

“Investor capital is at substantial risk in the face of climate change policy, competition from renewables, peak oil demand, and unburnable fossil fuel reserves,” Lamb said.

At Chevron, 33 percent of investors voted in favor of a resolution asking the company to report on how it will reduce its greenhouse gas emissions and transition its business model to align with the goals of the Paris Agreement.

“As one of the largest historical emitters, Chevron must take finally responsibility to dramatically reduce its greenhouse gas emissions,” said Danielle Fugere, president of the shareholder advocacy group As You Sow, which introduced the resolution.

“Unfortunately, Chevron’s latest report indicates that its planned reductions through 2023 will cut only 0.1 percent of its total climate footprint, a rate that is unacceptable in a world heading rapidly toward catastrophic climate impacts,” Fugere said.

Increasingly, fossil fuel companies are being pressured to align their business models with the goals of the Paris Agreement.

“When asked about the growing number of climate liability lawsuits facing the company, Chevron’s CEO Michael Wirth announced to shareholders that there is no new science and no new evidence to back up these cases,” said Dr. Benjamin Franta, a postdoctoral candidate at Stanford University who researches the history of the fossil fuel industry.

Franta said both of Wirth’s claims are false.

“There’s a rapidly developing field of attribution science that can link Chevron’s products to climate damages such as rising temperatures and sea levels. Likewise, there’s a growing body of historical research showing the company deceived the public about the dangers of its products. Shareholders should be nervous that their company’s CEO is so misinformed about these lawsuits,” Franta said.

A lack of attention to climate change equals a lack of attention to these companies’ futures, advocates say.

“Investor capital is at substantial risk in the face of climate change policy, competition from renewables, peak oil demand, and unburnable fossil fuel reserves,” Lamb said.

Chevron is also facing increased pressure from Arctic communities to abandon plans to drill in the Alaskan and Canadian Arctic.

“I traveled halfway across the world from my home in Alaska to attend Chevron’s shareholder meeting today, to explain how important the coastal plain of the Arctic National Wildlife Refuge is to my people and to urge Chevron not to drill in our sacred lands,” said Tilisia Sisto, a representative of the Gwich’in Nation, whose lands would be impacted by the drilling.

“Yet in response, the chairman told shareholders and the board lies about how ‘clean’ and ‘safe’ drilling in the Arctic would be, not the truth about the impact of drilling on my people and on our global climate.”


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Trackbacks

  1. Links 5/31/19 – James Honest Review says:
    May 31, 2019 at 7:06 am

    […] Climate Proposals Fail at Exxon, Chevron Shareholder Meetings Climate Liability News […]

  2. Links 5/31/19 – News Views says:
    May 31, 2019 at 7:51 am

    […] Climate Proposals Fail at Exxon, Chevron Shareholder Meetings Climate Liability News […]

  3. Links 5/31/19 | AlltopCash.com says:
    May 31, 2019 at 1:39 pm

    […] Climate Proposals Fail at Exxon, Chevron Shareholder Meetings Climate Liability News […]

  4. The petroleum paradox – Menopausal Mother Nature says:
    June 6, 2019 at 4:37 am

    […] preserving the planet. For example, despite BP’s overwhelming shareholder resolution last week, Chevron and Exxon shareholders failed to pass a series of climate-related proposals around science-based targets, public-health […]

  5. Reality Bites: Fossil Fuel Companies Face Climate Liability Claims After Decades of Denial | Global Climate says:
    June 15, 2019 at 11:28 pm

    […] emissions. At Chevron’s 2019 annual general meeting, it was reported that CEO Michael Wirth falsely claimed that there is no new science or evidence to back up climate liability cases against the fossil fuel […]

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