Shareholder resolutions requesting reporting on how oil companies ExxonMobil and Chevron will adapt to climate change targets received record investor backing at their AGMs last week (25th May), according to US pressure group, Ceres.
The resolution that would have required ExxonMobil to prepare an annual report examining the implications to the company’s business if world leaders follow through on their pledges to keep global warming to less than 2 degrees Celsius, above pre-industrial levels, received 38% of the vote while a similar resolution put before Chevron’s investors got 41% backing from shareholders. The resolution had received the public support of investors from outside the US including the Norwegian Sovereign Wealth Fund and the Church of England. Ceres said that the previous highest support for these kinds of resolutions was 31%.
Commenting on the result Andrew Logan, Ceres Oil and Gas Program Director said the, “strong votes at Exxon and Chevron send a powerful message that investors see climate change as a material financial risk, which underscores the ongoing momentum post-Paris and urgency to prepare for a low-carbon transition. Heading into the meeting, investors managing more than $10 trillion in assets voiced their support for these resolutions, placing substantial pressure on the boards of these companies to change direction as the world moves toward a low-carbon future.”
Ceres believes that investors have sent a clear message that meaningful 2 degree stress testing is the new norm for risk reporting, and companies like Exxon and Chevron can no longer act as if nothing has changed. The group believes that the oil companies will now engage with investors and will be prepared to assess the risks and opportunities presented by the changes that will be needed as countries act to meet their climate change obligations agreed in Paris last year.
A separate resolution, calling for Exxon to align its business to the 2-degree scenario, rather than its current plans of more or less continuing to burn as much of its oil and gas as it can for as long as it can, received 18.5% support and a proposal to have a climate expert on the board had 21% of support. At the Chevron AGM 19% supported appointing an environmental expert to the board and 8% backed a resolution requiring the company to adopt targets to reduce greenhouse gas emissions. There was also 31% backing for a shareholder resolution calling for an impact report on Chevron’s fracking or shale gas extraction operations.
In Manifest’s Say on Sustainability analysis both Exxon and Chevron receive C grades indicating their sustainability reporting is still under development while the timeliness of the disclosures is a cause for concern at both companies.
While Exxon and Chevron are regarded as being slow in reacting to seeing climate change as a material business risk the French oil giant Total, which also held its AGM this week (24th May), is taking a more proactive approach to changing its business model over the next 20 years. At the meeting its chairman, Patrick Pouyanné, said the company had the ambition to become a responsible energy player by providing reliable and affordable energy to the greatest number of people, while aiming to gradually reduce the carbon intensity of its energy mix, notably through growth in gas and renewable energy. It has published a report, Integrating climate change into our strategy, outlining how it will be responding to the challenge of limiting global warming to 2 degrees Celsius. However, Total also received a C grade in Manifest’s Say on Sustainability analysis mainly because it is currently not issuing its sustainability disclosures in a timely manner.