Exxon shareholders vote to force company to disclose climate risks

In a first, the oil and gas giant will be forced to consider risks to its assets as the world moves to a low-carbon future.

CREDIT: AP Photo/Mark Humphrey
CREDIT: AP Photo/Mark Humphrey

In a surprise victory for climate advocates, 62 percent of Exxon shareholders voted in favor of a resolution requiring the oil and gas giant to report how its business will be affected by global efforts to address climate change and keep warming to below 2ºC (3.6ºF).

The vote came at Exxon’s annual meeting Thursday, just hours after it was reported that the United States would likely leave the Paris climate agreement, in which nearly every country has committed to lower emissions in an effort to meet a less-than 2ºC goal.

“The need for extractive companies to provide disclosure on the resilience of their portfolios to the transition to a low carbon economy is generally established,” the proposal authors wrote. “This resolution aims to ensure that ExxonMobil fully evaluates and discloses to investors risk to the viability of its assets as a result of the transition to a low carbon economy.”

The resolution’s passage was lauded by activist investors, who have been trying for years to get the company to address risk to the company’s assets in the face of global efforts to combat climate change. Last year, none of the four climate-related resolutions passed.

Before this year’s vote, new Exxon CEO Darren Woods told shareholders that the board recommended against the resolution but that the company was already considering the impact of climate-related regulations.

“We believe the risks of climate change are serious and warrant action — thoughtful action,” Woods said. “As a company, we are taking action in many ways, including in investing in technology.” He said the board “agrees it is important to reflect both policy and technological development in our long-term projections,” before going on to advise against the resolution.

Major investment firms reportedly voted against the board and in favor of the resolution. New York State Comptroller Thomas P. DiNapoli, a trustee of the New York Common Retirement Fund which co-sponsored the proxy resolution, called the win “an unprecedented victory.”

“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,” DiNapoli said in a statement.

Climate change is one of the greatest long-term risks we face

Exxon has come under fire — and is currently under investigation by two state attorneys general — for failing to disclose what it knew about climate risk as far back as the 1970s and for funding public campaigns to sow doubt about the reality of climate change. The company’s former CEO Rex Tillerson has been implicated in the investigation.

Thursday’s climate resolution was presented by Edward Mason, head of responsible investment at Church Commissioners for England, which manages the Church of England’s endowments. Mason called out members of the board by name —including former CEOs of Johnson and Johnson, Merck, and Xerox, all of which have made climate commitments.

“Members of the board, do you leave your understanding of climate change at the door when you attend an ExxonMobil board meeting?” Mason asked.

Another climate resolution, on methane emissions, was presented by another person of faith, Sister Patricia Daly, a longtime activist investor at Exxon. She said there is “an incredible moral imperative” to bringing energy access to those who live in energy poverty, but to do so in way that doesn’t jeopardize long-term climate stability.

The resolution to disclose methane leaks only received 38.7 percent of the vote.

The resolutions brought out some well known anti-climate advocates. Steve Milloy, the author of a site called Junk Science, spoke during the comments section of the meeting. Calling the issue a “climate hoax,” Milloy said that people like him were responsible for putting President Trump in office and criticized Exxon for kowtowing to climate activists. “My message to Exxon management is this: Stop aiding and abetting the enemies of your shareholders,” he said. Milloy also criticized Woods’ support of the global agreement to curb warming, calling it the “economically suicidal Paris accord.”

Tillerson, now serving as Trump’s Secretary of State, has also said he supports the Paris climate agreement. Despite this, it has been widely reported that the Trump administration will pull the United States out of the global agreement.