The U.S. Securities and Exchange Commission (SEC) has allowed Exxon to reject shareholders’ request for clear reporting on whether and how it intends to reduce its total carbon footprint in alignment with the global Paris goal of net-zero emissions by 2050. In a separate ruling, the SEC also allowed Chevron to avoid the question of whether it intends to align with the Paris goal.
A number of shareholders, including the Church of England and shareholder representative As You Sow joined together in a resolution with Exxon, as to whether it will join other oil and gas companies announcing plans to align with the Paris goal. A similar proposal was filed with Chevron.
Other oil and gas companies, including Shell, Repsol, Total, Eni, and others have announced a range of goals, actions, and plans intended to reduce the full scope of their greenhouse gas emissions — including product emissions — towards aligning with the global climate goal.
Exxon has implied it is in alignment with the global Paris Agreement, yet has announced increased investments in oil and gas projects at alarming rates. While those investments may decrease temporarily in the face of the Coronavirus pandemic, shareholders seek to understand the company’s long-term plans for how it intends to align with the ultimate Paris goal of limiting global temperature rise to 1.5 degrees Celsius. No such plans have been forthcoming to date.
Similarly, Chevron notes that it is in alignment with the Paris Agreement’s Nationally Determined Contributions, but fails to alert shareholders that such commitments will allow global temperature increases well above 2 degrees C.
Danielle Fugere, President of As You Sow, said shareholders are increasingly concerned that the longer companies wait to address the clear and growing danger of climate change, the worse the human and economic toll will be.
“To prevent global devastation, every single company must plan now for how it will contribute to the goal of achieving a low-carbon world,” she said.
“If companies do not intend to align with the global Paris goal, they should be clear with shareholders. Only through clear and comparable reporting can shareholders benchmark company actions and make sound investment decisions.”
Ms Fugere said Exxon and Chevron’s continued disregard of shareholder requests to address this existential crisis is astounding, as is the SEC’s.
“The SEC’s denial of shareholders’ right to raise these concerns in the public forum created for these conversations serves neither shareholders nor companies like Exxon and Chevron that are ignoring both shareholder concerns and clear warning signs of the growing dangers of climate change.”
Edward Mason, Head of Responsible Investment, Church Commissioners for England, said Exxon management continues to shutter the voices of concerned investors by blocking the shareholder proposal that has been co-filed for the second year running.
“In 2019, Exxon and the SEC blocked our shareholder proposal asking Exxon to set Paris-aligned emissions reduction targets — and they have now erased Exxon’s approach to climate strategy and disclosure from the ballot again,” Mr Mason said.
“Regardless of this ruling, it is of course imperative for investors that Exxon should report if, and how, it plans to align its operations and investments with the goal of restricting warming to well below 2 degrees and stave off catastrophic climate impacts.”
Mr Mason said ExxonMobil is doubling down on its investment in carbon-intensive oil and gas infrastructure and production at a time when every company should be taking responsibility for reducing its carbon emissions. Exxon is woefully unprepared for a low-carbon future, and its strategy poses extreme financial, environmental, and social risks.
“Investors will give harsh judgement on Exxon’s climate governance and strategy at the company’s AGM in their voting on the shareholder proposals that have made it to the ballot and on director elections.”
Sanford Lewis, Attorney for shareholders, said since 2016, the SEC staff have rewritten the principles governing shareholder proposals to make it much more difficult for shareholders to file proposals at the oil majors regarding climate change.
“These interpretations by the SEC ban proposals that are too specific as ‘micromanaging,’ but also allow companies to declare a proposal that complies with the new micromanagement interpretation to be substantially implemented by general, nonresponsive publications by the big oil and gas companies.”
“What’s more, in SEC decisions last week the only proposal remotely related to climate change that will be allowed at ExxonMobil essentially asserts that the company is spending too much money on environmental issues and especially climate change, and asks for the company to justify its environmental spending.”
Exxon and Chevron letters were posted by the SEC. Response letters from shareholder proponents for Exxon and Chevron were not, however, posted by the SEC.