Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
ExxonMobil, the world’s largest listed oil company, is trying to prevent an investor proposal on setting targets for greenhouse gas emissions from coming up for a vote at its annual meeting in May.
The company has written to the Securities and Exchange Commission, the financial regulator, arguing that the proposal is misleading, amounts to an attempt to “micro-manage the company” and has already been substantially implemented.
The proposal, backed by investors with a total of $1.9 trillion under management, led by the pension fund for New York state, calls on Exxon to start setting short, medium and long-term targets for reducing greenhouse gas emissions, including those released when its products are used.
Exxon argued that it was already cutting its emissions and that forcing it into unilateral action could make it harder for countries to meet their pledges under the Paris climate agreement.
Thomas DiNapoli, New York state’s comptroller, accused the company of “trying to deny shareholders’ right to vote on a significant climate risk concern”, and said its opposition was “shortsighted and disappointing”. The state’s employee pension fund holds Exxon shares worth about $830 million.
The decision on whether to allow Exxon to prevent a vote on the proposal will be a test for the SEC, which in recent years has accepted some requests from companies to avoid votes on climate-related proposals, but has accepted others.
The proposal calls for Exxon to set targets for emissions that are “aligned with the greenhouse gas reductions goals established by the Paris climate agreement.”
In its letter to the regulator, the company says that this framing “reflects a misunderstanding both of the nature of the Paris agreement and of the global energy economy”, which makes the proposal fundamentally misleading. It argues that it can help countries cut emissions, for example by providing gas to substitute for coal in power generation, and by providing plastics that make cars lighter and more fuel efficient. If Exxon cut its own production, it adds, the oil would simply be supplied by other producers.
Setting short, medium and long-term targets for the greenhouse gases released by its products would mean giving shareholders oversight over its “day-to-day considerations”, the company says, and it is anyway reducing its emissions through initiatives such as its plan to cut leaks or methane from its operations.
Edward Mason, head of responsible investment at the Church Commissioners for England, another investor supporting the proposal, described the company’s opposition as “an outdated reflex”.
“At other companies, shareholder engagement has moved on and investors are able to have productive engagement on climate strategy at board level?.?.?.?Our proposal deserves more serious consideration and review by Exxon,” he said.
Calpers, the California state employees’ pension fund, another supporter of the proposal, said that if Exxon disagreed with the plan, it should be discussed at the annual meeting and put up for a vote. It added: “The SEC should not be in the role of muffler to important debate.”
The disagreement comes as several other natural resources companies have been responding to pressure from investors over climate change.
Last week, the mining and commodities group Glencore said it planned to cap its coal production at its 2019 level.
Royal Dutch Shell announced in December that it would link executive pay to emissions targets, which include greenhouse gases released when its products are used.
BP said earlier this month that reductions in its own greenhouse gas emissions had been included as a factor in the pay of 36,000 employees, and has agreed to disclose how its spending plans and strategy align with the Paris agreement.
The pressure from shareholders has been stepped up since the 2017 launch of Climate Action 100+, a group of 323 investors with $32 trillion under management, including AllianceBernstein, Pimco and Trillium, that focuses on about 60 companies deemed to be “systemically important emitters”, including the largest listed oil, mining and power companies.
Recommended Reading
BP: Gimi FLNG Vessel Arrival Marks GTA Project Milestone
2024-02-15 - The BP-operated Greater Tortue Ahmeyim project on the Mauritania and Senegal maritime border is expected to produce 2.3 million tonnes per annum during it’s initial phase.
E&P Highlights: Jan. 22, 2024
2024-01-22 - Here’s a roundup of the latest E&P headlines, including FIDs for the Victory and Winterfell fields and new technology updates.
US Raises Crude Production Growth Forecast for 2024
2024-03-12 - U.S. crude oil production will rise by 260,000 bbl/d to 13.19 MMbbl/d this year, the EIA said in its Short-Term Energy Outlook.
E&P Highlights: Jan. 8, 2024
2024-01-08 - Here’s a roundup of the latest E&P headlines including the second biggest deepwater gas find of 2023 and new contract awards.
Activity Offshore Norway Expected to Remain Steady in 2024
2024-01-11 - The Norwegian Offshore Directorate provided updates on 2023 activity, including 14 wildcat discoveries and eight projects going online and urging exploration in frontier areas.