ExxonMobil’s owners revolt against management over climate change transparency

May 31, 2017 |

In a stunning result in Dallas, ExxonMobil shareholders revolted against management over the company’s climate change policy, as investors holding 62.3% of the company’s shares called on the company to reveal the impact of climate change policy on the company’s operations.  The company’s management vigorously opposed the non-binding measure, saying that it already conducts sufficient analysis on global efforts to keep climate change impact under the “tipping point” of a 2 degree change in the global mean temperature.

The resolution

The resolution said that the company “should analyze the impacts on ExxonMobil’s oil and gas reserves and resources under a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2 degree [Celsius] target…this reporting should assess the resilience of the company’s full portfolio of reserves and resources through 2040 and beyond, and address the financial risks associated with such a scenario.”

BP, Total, ConocoPhillips and Royal Dutch Shell have already expressed support for analysis of the impact of a two degree climate change target.

Huge increase in rebels since 2016

Last year, a similar proposal won 38% support from shareholders — this year’s votes comes as the Trump Administration considers whether to pull out of the Paris Climate Change agreement — and both proponents of the measure and company management were working the phones heavily in this year’s ballot. According to the Washington Post, major financial players BlackRock, Vanguard and State Street Global Advisors abandoned management, among many other institutional investors.

What exactly was passed?

It’s a non-binding resilution calling for a report. ExxonMobil management pledged to take a look at the proposal by the company’s owners.

Potential impacts

So, thrre are several doors here.

1. ExxonMobil management could refuse to comply with the request from the owners — forcing a future showdown either between the board of directors and management, or between the owners and the board.

2. A report could be put into develop and take forever — like the company’s “we’re doing something” algae biofuels R&D program.

3. A report could come out and show that, indeed, global climate change policies could cause substantial damage to ExxonMobil’s business straregy — perhaps forcing the company to reconsider that strategy in the name of fiscal prudence.

4. A report could come out and show that the global policies will be relatively benign to ExxonMobil’s fortunes shoud the company successfully adaprt to “a new normal” — of, even suggest that there are financial opportunities. Again, forcing the company to reassess strategy.

In addition, activists have warned that there could be further revolts by company owners against climate-denying corporate policies or climate-frustrating company activities.

More on the story.

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