Exxon assumes long-term $80 emissions price as investors back GHG disclosure

Oil major reveals price expectations out to 2040 amid AGM vote

ExxonMobil, one of the oil companies whose stance on climate change disclosure has been under scrutiny from investors, has revealed that it expects the implied cost of CO2 emissions to reach $80 per metric ton [tonne] in 2040 in developed economies.

It comes as major institutional investors backed a shareholder proposal calling on Exxon to set quantitative goals for reducing its emissions at its annual meeting in Dallas yesterday (May 28).

The motion – filed by the Sisters of St. Dominic of New Jersey – was supported by investors including the AFSCME Employees Pension Plan, the California Public Employees Retirement System, the Florida State Board of Administration, F&C and Dutch giant PGGM.

F&C said that while it appreciates the company’s recent disclosures around climate change challenges – prompted by an investor campaign spearheaded by Ceres and Carbon Tracker – nevertheless “climate change presents ongoing and serious risks to shareholder value and there is room for the company to improve its transparency”.

“In the absence of a viable price for carbon, setting a greenhouse gas reduction target would demonstrate a stronger strategy for operating in carbon-constrained markets,” F&C said.

ExxonMobil had resisted the Sisters of St. Dominic resolution, saying it already provides extensive public disclosure on its approach to managing the risks of climate change.Full voting results haven’t yet been released.

Exxon released the $80 figure in its latest corporate responsibility report, saying OECD countries are “likely to continue to lead the way” in adopting greenhouse gas reduction policies – with developing nations gradually following, led by China.

“To help model the potential impacts of a broad mosaic of future GHG policies, we use a simple cost of carbon as a proxy mechanism,” Exxon says in the report.

The $80/tonne figure by 2040 compares with a $60/tonne number – albeit for 2030 – that Exxon disclosed in the same report last year. Peer companies such as BP and Shell typically refer to current price assumptions of $40/tonne.

Exxon has also revealed that two responsible investment figures have “transitioned out” of its social and environmental expert panel. Both Tim Smith of Walden Asset Management and Elizabeth McGeveran, former Senior Vice President of Governance & Sustainable Investment at F&C, have left its External Citizenship Advisory Panel, replaced by Frank Loy, the former US Under Secretary of State for Global Affairs, and Sarah Labowitz, co-director of the Center for Business and Human Rights at New York University’s Stern School of Business.