Almost two thirds of votes cast support annual assessment
Occidental Petroleum shareholders have voted – against the wishes of the board – to support a motion seeking to require the company to publicly discuss the potential effects of climate change on the company.
The firm reports that 65.7 percent of votes at the company’s recent annual meeting, taking abstentions into account, backed the proposal requesting that Occidental ‘with board oversight, produce an assessment of long-term portfolio impacts of plausible scenarios that address climate change, at reasonable cost and omitting proprietary information.’
The annual assessment ‘should explain how capital planning and business strategies incorporate analyses of the short and long-term financial risks of a lower-carbon economy,’ according to the shareholder motion. The unnamed proponents say in the company’s proxy statement that the report should outline the impacts of multiple, fluctuating demand and price scenarios on the company’s existing reserves and resource portfolio.
‘Long-term Occidental investors expect the company to generate continued shareholder value as energy policies evolve,’ they write. ‘Climate change, and actions to mitigate and adapt to it, will meaningfully affect the demand for, and costs associated with, locating and extracting carbon-based fuels.’
They add that Occidental’s competitors are providing additional disclosure, including 10 oil and gas companies having announced a shared ambition to limit the global average temperature rise to 2 degrees Celsius.
BOARD OPPOSITION
Writing in opposition to the proposal, the board of directors says Occidental recognizes the importance of economic and policy assessments taking place in many countries and among international organizations related to climate change, such as the United Nations Framework Convention on Climate Change Paris Agreement.
‘As we continue to enhance our disclosures to address climate-related risks and opportunities, we are guided by the four elements of the Financial Stability Board’s recommendations of the Task Force on Climate-related Financial Disclosures,’ the board writes. The company is expanding disclosure of how climate-related issues are relevant to its existing governance, strategy and risk-management practices and evaluating enhancements to its scenario-planning process to explicitly incorporate climate-related risks and opportunities, the directors say.
They also note that the board has an environmental, health and safety committee, which reviews and discusses with management the status of relevant issues, including climate-related matters, and monitors Occidental’s compliance with applicable laws and regulations. Among other things, it says Occidental’s capital planning and business strategies incorporate the risks of a lower-carbon economy.
‘The board acknowledges the shareholders support for this proposal,’ Eugene Batchelder, chair of Occidental’s board, says in a statement regarding the vote. ‘We look forward to continuing our shareholder engagement on the topic and providing additional disclosure about the company's assessment and management of climate-related risks and opportunities.’
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...
