Exxon shareholders win ‘historic’ climate vote against board’s advice

Shareholders in world’s largest private oil company won a victory that signals deep unease about climate change amongst major investors

(Photo: Brian Katt)


The world’s largest private oil company is being forced to reckon with the clash between its business model and international climate goals, after a “historic” showdown with investors.

At ExxonMobil’s AGM in Dallas, Texas on Wednesday, 62% of shareholders voted in favour of a climate change resolution, against the board’s advice, according to a preliminary count. While detailed data is not yet available, the convincing majority suggests some major funds joined sustainable investment activists after the same proposal won 38% of the vote last year.

Coming amid reports president Donald Trump plans to withdraw the US from the Paris climate deal, it signalled that concern about climate change is stronger than ever in financial circles.

“Investors voting against management at Exxon is a powerful rebuke to the climate denialist policies of this White House,” said Raj Thamotheram, head of thinktank Preventable Surprises. “Markets are moving and corporate America would be foolish to bet so much on the protection from this regime.”

The resolution requires Exxon to disclose how the international goal to hold global warming below 2C – as agreed in Paris – could dampen future demand for its oil and gas.

Thinktank Carbon Tracker estimated in 2015 that Exxon was planning to sink $72 billion over the next decade into developing fuel reserves that would be surplus to the requirements of a 2C world.

Despite Trump’s apparent refusal to honour the Paris Agreement, advances in clean technology and policy action elsewhere have convinced some other oil majors to start adjusting their expectations.

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During the AGM, Exxon chief executive Darren Woods reiterated his company’s support for the Paris Agreement and call for a revenue-neutral carbon tax to meet climate goals. But management opposed shareholder demands for more transparency, insisting none of Exxon’s reserves would be “stranded” in the global shift to clean energy.

Woods promised to “step back and reflect” after the result was announced.

The Church of England and New York State public pension fund, which led the shareholder rebellion, described Wednesday’s victory as “historic” and “unprecedented”.

Edward Mason, head of responsible investment for Church Commissioners, said in a statement: “Despite strong opposition from the Board, the majority of Exxon’s shareholders have sent an unequivocal signal to the company that it must do much more to disclose the impact on its business of measures to combat climate change.”

“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,” added New York State comptroller Thomas DiNapoli. “The burden is now on Exxon Mobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously.”

It piles the pressure on Exxon at the same time as it faces multiple lawsuits over allegations it deliberately cast doubt on the scientific consensus around climate change, even as its internal research confirmed it.

Grassroots campaign network 350.org has consistently argued that engaging with Exxon is futile and shareholders should take their money elsewhere.

“Exxon’s climate lies are finally catching up with them,” said Jamie Henn, strategic communications director at 350, ahead of the vote.

“Any real climate risk assessment will show that Exxon’s drill-baby-drill business plan is incompatible with a liveable planet. Despite shareholder protests, they’re still doubling down on fossil fuels when the world is moving in the opposite direction. Exxon’s refusal to adapt their business model to a carbon constrained world should send investors running for the exits.”

But institutional investors like pension funds and insurance companies typically spread their money across all economic sectors and are unlikely to flee oil and gas in bulk.

Instead, investors with an interest in sustainability see analysis of the 2C goal as a first step towards getting energy companies to diversify into clean technology or return money to shareholders.

“While we celebrate this vote, and others that we hope will follow from it, let’s not forget that the success of climate resolutions ultimately isn’t measured by voting numbers, but by the substantive changes they catalyse,” said Catherine Howarth, chief executive of pressure group ShareAction.

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