The Church Commissioners for England and the New York State Common Retirement Fund, lead co-filers of the climate change shareholder proposal at ExxonMobil that was excluded from its AGM ballot, are to start an ‘exempt solicitation’ campaign to try to persuade fellow investors to vote against the entire board of the American oil major.
Under SEC rules investors can submit communications intended for other investors in a process called exempt solicitation, under the catchy ‘PX14A6G’ designation. It’s a way for investors to get their message across directly.
Responsible Investor understands that both institutional investors plan to mobilise their partners in the Climate Action 100+ initiative.
Earlier this month the $207bn New York fund told RI of its plans to vote against the ExxonMobil board.
RI can now reveal that not only will the Church Commissioners also vote against the board but will work with its transatlantic partner to lobby other shareholders ahead of the May 29 meeting in Dallas.
The Church Commissioners run £8.3bn for the Church of England and they are chaired by the Archbishop of Canterbury, Justin Welby. The commissioners include senior investment figures from firms such as Schroders, Towers Watson and BlackRock.
The 10-member Exxon board includes business luminaries such as Merck’s Ken Frazier, MetLife’s Steven Kandarian and former IBM chief Sam Palmisano as well as senior figures from PepsiCo, Caterpillar and Johnson & Johnson so a vote against the board would hit the top tier of the US business establishment.
In addition, the investor partners are calling for support for one of the shareholder proposals that did make it onto the ballot.
This is resolution number 4, which calls for the separation of the roles of CEO and chair, currently held by Darren Woods, successor to Rex Tillerson who went on to become US Secretary of State.
The Church Commissioners and New York Common consider this the best way to express dissatisfaction with ExxonMobil’s perceived poor performance on climate change issues.
They regard the way ExxonMobil excluded the CA100+ climate change resolution as the result of poor governance, hence the need for an independent chair.A similar proposal has achieved almost 40% of support in previous years, which could rise this year on the back of the new campaign.
A spokesperson for CalPERS, a leading CA100+ member and part of its Steering Committee, told RI it has not yet decided how it was going to vote. Likewise, BNP Paribas told RI that there was “nothing to report as of now”.
Shade Duffy, Head of Corporate Governance, at AXA Investment Managers, said her firm had supported the inclusion on the AGM agenda of the draft resolution calling for Exxon to disclose its short, medium and long term greenhouse gas emissions targets aligned with the Paris agreements — and that it sent a letter to Exxon asking that the resolution should not be contested.
She told RI: “We share investor concerns regarding the board’s challenge of the resolution, which we believe will improve the company’s strategic planning around climate change. We will take this into account when deciding how to cast our votes at the forthcoming AGM in May.”
There is no CA100+ common voting strategy, as the decision is left to individual investor members.
In 2017, a climate change resolution co-filed by the Church Commissioners and New York State Comptroller Thomas DiNapoli, among other investors, achieved an unprecedented 62.3% of support.
BlackRock and Vanguard might have moved the dial on that occasion, but they are not part of the CA100+ initiative. Nor are State Street and Norway’s Government Pension Fund Global.
There is, however, another climate proposal at Exxon this year. It was filed by Arjuna Capital and seeks a committee on climate change.
In addition, campaign group As You Sow and the United Steelworkers have also filed exempt proxy solicitations for their respective proposals.
The former wants the board to report on the public health risks of expanding petrochemical operations and investments in Gulf Coast locations while the latter seeks disclosure of direct and indirect lobbying activity, particularly when it contradicts public positions of support of the Paris Agreement.