Shareholder activists target ExxonMobil on 2C climate risk

New York state and the Church of England lead push for US oil giant to reveal how shift to low carbon energy hits its business

(Flickr/Mike Mozart)

(Flickr/Mike Mozart)

By Megan Darby

New York state and the Church of England are leading calls on ExxonMobil to reveal its exposure to climate risk.

Following last month’s UN carbon-cutting pact struck in Paris, they warn the oil major could lose value in the shift to cleaner energy.

Holding more than US$1 billion worth of shares in Exxon, the group of investors has filed a proposal for consideration at its next AGM.

“The unprecedented Paris agreement to rein in global warming may significantly affect Exxon’s operations,” said Thomas DiNapoli, trustee of the New York State Common Retirement Fund.

“As shareholders, we want to know that Exxon is doing what is needed to prepare for a future with lower carbon emissions.

“The future success of the company, and its investors, requires Exxon to assess how it will perform as the world changes.”

Analysis: Top financial regulator turns up heat on polluting companies

Under the proposal, Exxon would have to disclose how government efforts to hold global warming to 2C hits demand for its product.

The Paris agreement to hold temperature rise “well below 2C” from pre-industrial levels implies a phase-out of fossil fuel burning this century.

UK-based oil companies Shell and BP agreed to similar resolutions filed last year, although their reports have yet to be published.

For the Church Commissioners of England, responsible for a £6.7 billion (US$9.6 bn) portfolio, it is their first move on this agenda stateside.

Edward Mason, head of responsible investment for the Church Commissioners of England, said: “As responsible investors we are committed to supporting the transition to a low carbon economy.

“We need more transparency and reporting from ExxonMobil to be able to assess how they are responding to the risks and opportunities presented by the low carbon transition.”

Report: Investors pressure mining giants to phase out coal

Separately, the Church is among a group of investors set to urge mining giants Anglo American, Rio Tinto and Glencore to back away from coal.

The trend for shareholder activism on climate change runs alongside decisions by some funds to pull out of fossil fuels altogether – or at least coal, the most polluting source.

Led by universities, faith groups and philanthropists, the divestment movement has gathered some high-value supporters – notably Norway’s sovereign wealth fund and California’s state pension funds – with assets totalling US$3.4 trillion at the last count.

Scientists estimate more than 80% of global coal reserves, a third of oil and half of natural gas are unburnable in a 2C world.

Read more on: Carbon bubble | Fossil Fuels