New York State comptroller describes vote as 'unprecedented victory'
ExxonMobil this week became the latest major energy company to have a majority of shareholder votes press it to produce reports on how it will be affected by action taken to limit climate change, despite board opposition.
According to New York State comptroller Thomas DiNapoli, who brought the motion, the proposal asking Exxon to report on how its business model will be affected by global efforts to limit the average rise in temperatures to below 2°C received 62.3 percent support.
Such shareholder decisions are not binding, though experts say that in practice companies tend to pay attention in the knowledge that proxy advisory firms will not be pleased if they ignore investors’ wishes. An Exxon spokesperson says: ‘As our chairman [Darren Woods] said during the meeting, we will consider all feedback from our shareholders. Those votes receiving a majority level of support will be reconsidered by the board.’
DiNapoli says the result ‘is an unprecedented victory for investors in the fight to ensure a smooth transition to a low-carbon economy. Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of ExxonMobil. The burden is now on ExxonMobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously.’
Edward Mason, head of responsible investment at the Church Commissioners for England, which backed the proposal, says: ‘Despite strong opposition from the board, the majority of Exxon’s shareholders have sent an unequivocal signal to the company that it must do much more to disclose the impact on its business of measures to combat climate change.’
The vote follows victories for similar proposals at recent shareholder meetings of PPL Corporation (CorporateSecretary.com, 5/25) and Occidental Petroleum (CorporateSecretary.com, 5/24).
Specifically, the Exxon shareholder proposal asks that the company, starting next year, publish an annual assessment of the long-term portfolio impacts of technological advances and climate change policies. The board had asked shareholders to oppose the motion, arguing in part that its existing efforts already ‘sufficiently test the portfolio to ensure long-term shareholder value and position the company to maintain a leadership role in energy development.’
Woods on Thursday tweeted that ‘technology will be key to addressing risk of #climatechange and the world’s growing need for energy #annualmeeting.’ He also tweeted: ‘[G]oal of carbon policy should be reducing emissions at lowest cost; we support proposal by #Climate Leadership Council.’
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
