CalPERS to vote against Chevron board members over CA100+ engagement failure

Californian pension giant opposes oil major’s public policy and sustainability committee for 'failing to adequately respond' to engagement.

A boardroom

Californian public pension giant CalPERS has disclosed that it will vote against four directors at Chevron ahead of the US oil major’s annual meeting next week, in response to what it describes as the company’s failure “to adequately respond to the Climate Action 100+ engagement initiative”.

The $455 billion pension fund co-leads engagement with Chevron as part of CA100+ along with EOS, the stewardship services arm of Federated Hermes.

CalPERS made the disclosure as one of its “notable proxy votes”, which are made public “to encourage shareowners to vote in accordance with CalPERS”. 

The under-fire quartet are members of Chevron’s public policy and sustainability committee: chair Enrique Hernandez Jr, Alice Gast, Jon Huntsman and James Umpleby III. Huntsman is former Republican governor of Utah. Umpleby is chair and CEO of construction machinery manufacturer Caterpillar.

Last May, 60 percent of shareholders backed a proposal at Chevron calling for emission reduction targets. Close to half of investors also supported a proposal seeking greater disclose on the California-based firm’s lobbying activities, including around climate change.

In September, Responsible Investor reported that Chevron’s chair and CEO, Mike Wirth, told CNBC’s Mad Money programme that the US oil giant had no intention of investing profits in renewables. 

“We’d rather dividend it back to shareholders and let them plant trees, go invest in a wind and solar developer and have the right to do that with a growing dividend that comes out of our company,” Wirth said.   

CalPERS also revealed that it will support the three climate-focused shareholder proposals on the ballot at Chevron this year, including one submitted by climate activist Follow This, which calls for full value chain emissions reduction targets consistent with the goals of the Paris Agreement.   

The Californian pension fund also revealed that it will support Follow This’s proposal at Exxon Mobil next week. The US oil major was the subject of a successful campaign against its board by activist Engine No.1, which managed to replace three board members with its own climate competent picks.  

Last Tuesday, Follow This’s proposal at US upstream oil and gas giant ConocoPhillips was backed by 39 percent of shareholders, the highest level of support to date for a proposal from the non-profit referencing the Paris Climate Agreement.

The Friday before, however, just 16 percent of investors backed the same proposal at US oil major Occidental Petroleum.

CalPERS supported the Follow This proposal at ConocoPhillips but opposed it at Occidental.

Both Chevron and Exxon’s annual general meetings take place on 25 May.

There are signs that asset managers and asset owners are taking a tougher stance on corporate boards over ESG issues this year.

In April, AXA Investment Managers announced it would vote against the renewal of directors or the nomination committee chair if the board has not managed its environmental and social responsibilities properly.

The same month, the New York State Common Retirement Fund, the third largest public pension fund in the US, with $279 billion in assets, revealed that it would withhold support for all directors at companies failing to implement majority-backed shareholder proposals. The policy is particularly relevant for ESG, given the increasing support attracted by sustainability-focused proposals.

In March, CalSTRS announced plans to escalate its voting at companies performing poorly on board diversity and climate change in the 2022 proxy season. The Californian pension giant said it would oppose the entire board at firms that have no women on their board or do not disclose their Scope 1 and 2 emissions.