Exxon Shareholders Pressure Company on Climate Risks -- Update
01 June 2017 - 4:25AM
Dow Jones News
By Bradley Olson
DALLAS -- Exxon Mobil Corp. shareholders delivered a major
rebuke to the oil giant Wednesday, calling for the company to share
more information about how climate change and regulations could
impact its operations.
The climate proposal won the support of 62% of shareholders who
cast ballots at Exxon's annual meeting, a powerful symbol that big
investors see climate change as a major risk that warrants greater
transparency from oil and gas companies.
Vanguard Group and BlackRock Inc., Exxon's two largest
shareholders, supported the measure, people familiar with the votes
said. The proposal pushes Exxon to conduct a climate "stress test"
to measure how regulations to reduce greenhouse gases and new
energy technologies could impact the value of its oil assets.
The Exxon vote came amid reports that President Donald Trump was
leaning toward pulling out of the 2015 Paris accord to restrict
carbon emissions and hold back rising temperature. The president
said on Twitter Wednesday morning he would make his determination
"over the next few days."
Exxon has stepped up its climate disclosures in recent years,
stated its commitment to the Paris climate agreement, named an
environmental expert to its board and worked to reduce emissions in
its operations.
The company, which recommended shareholders vote against the
proposal, met with about 25% of its shareholders prior to the
meeting to discuss their concerns, which included climate
vulnerabilities.
"We're confident in the commercial viability of our portfolio,"
Exxon Chairman and Chief Executive Darren Woods said Wednesday.
Mr. Woods said the company would "step back and reflect on the
vote" and how it could better express its position. The board would
also continue to discuss the question of allowing investor meetings
with non-employee directors, he said.
"This is a turning point," said Anne Simpson, the investment
director for sustainability at the California Public Employees'
Retirement System, the nation's largest pension fund, which
supported the proposal. The vote "demonstrates that investors are
seeking strong reporting and scenario analysis to better understand
the risks and opportunities of climate change."
At the annual meeting, an estimated 68% of investors also voted
for the company's pay practices, a decline from about 90% in
previous years. Proxy-advisory firm Institutional Shareholder
Services said the company's goals and targets are not specific
enough and grants to executives lack performance criteria. The vote
tallies were preliminary.
Both votes are nonbinding, but they reflect frustration among
the company's major investors over the Exxon policy that doesn't
allow shareholders to meet with non-employee directors.
Shareholders can communicate with board members by emailing them
through the company's Web site. Last year, BlackRock withheld its
support for two Exxon directors over the matter.
Such meetings were central to discussions over the past year
between Chevron Corp., the second-largest U.S. oil company, and
certain investors over executive pay and climate-change issues.
Chevron revised its pay practices in response and produced a report
on climate-change impacts, prompting shareholders backing a
resolution similar to Exxon's to withdraw it in advance of the
company's annual meeting.
In 2014, Exxon produced a climate-related report saying that
none of its assets were at risk of being stranded, or left
untapped, due to climate change. The company has consistently said
that energy demand will rise through 2040 as people around the
world, particularly in emerging nations, join the middle class.
Many oil and gas companies have come up with climate disclosures
that reach conclusions similar to Exxon. Activists and disclosure
advocates have said the fact that many companies are reaching the
same conclusion -- that they are well-positioned to withstand
climate impacts and regulations -- points to flaws in their
analyses.
"Investor sentiment can change a lot more quickly than the
trajectory for global oil demand," said Jim Krane, an energy fellow
at Rice University's Baker Institute in Houston. "For a public
company beholden to fossil fuels, that might be where the biggest
risk lies."
Sarah Krouse contributed to this article.
Write to Bradley Olson at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
May 31, 2017 14:10 ET (18:10 GMT)
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