Exxon Mobil to face shareholder resolution calling for board climate committee

Investors will have the chance to vote on a proposal calling for Exxon Mobil to set up a board-level climate change committee at the oil giant’s forthcoming AGM.

Following the wide coverage given to the failure of Climate Action 100+ investors to get their resolution about climate targets onto the proxy, SRI firm Arjuna has quietly managed to get a different climate change proposal onto the meeting agenda.

The decision by the SEC to allow Exxon to omit the proposal filed by the Church Commissioners and New York Comptroller Thomas DiNapoli was greeted by calls from investors for a vote against the company’s board.

“Let’s vote the Board & Supervisors of Exxon down!” said Sylvia Van Waveren, engagement specialist at the Dutch asset manager Robeco, on LinkedIn.

The Arjuna proposal calls for the board to charter a Board Committee on Climate Change to evaluate Exxon’s “strategic vision and responses to climate change”.

The committee would “engage in formal review and oversight of corporate strategy, above and beyond matters of legal compliance, to assess the company’s responses to climate related risks and opportunities, including the potential impacts of climate change on business, strategy, financial planning, and the environment”.

Arjuna, in a supporting statement, said it believes an independent committee would better provide “focused fiduciary oversight” of climate related risks and opportunities. It should include board members with climate change expertise in areas such as policy, carbon pricing, renewable energy, adaptation, and climate science.

Exxon’s law firm Davis Polk had argued that, while it agrees with the proponent on the risks of climate change, Exxon’s existing Public Issues and Contributions Committee (PICC) already addresses the objective of the proposal. It pushed back against “having a separate board committee that has ‘climate’ in its title”.

It went on to say that climate matters are integrated into multiple aspects of the company’s business and board oversight responsibilities, “and are not treated as discrete speciality topics to be separately addressed”.But this argument did not persuade SEC attorney Lisa Krestynick, who wrote: “We are unable to concur in your view that the company may exclude the proposal.”

“Based on your arguments and the information you have presented, it appears that the company’s policies, practices and procedures do not substantially implement the proposal. Accordingly, we do not believe that the company may omit the proposal from its proxy materials.”

The proposal was filed on behalf of Adam Seitchik, represented by Arjuna. Seitchik is CIO at Arjuna, the firm he set up in 2013 with fellow former senior Trillium executive Farnum Brown; the firm’s senior team is completed by Natasha Lamb.

As it stands, there will be two climate resolutions on the Exxon proxy: Arjuna’s and an earlier one from advocacy group As You Sow. In addition, faith investment group the Unitarian Universalist Association has also managed to get a proposal calling for reporting on Exxon’s policies and procedures for making political expenditures onto the proxy.

A resolution from conservative think tank the National Center for Public Policy Research that called on Exxon to avoid investments based on “alarmist climate change concerns” that are “untethered from basic free-market capitalism” was allowed to be omitted: the SEC said it appears that Exxon had already “substantially implemented the proposal”.

Arjuna resolution text:
“Shareholders request the Board of Directors charter a new Board Committee on Climate Change to evaluate Exxon Mobil’s strategic vision and responses to climate change, and better inform Board decision making on climate issues. The charter should explicitly require the committee to engage in formal review and oversight of corporate strategy, above and beyond matters of legal compliance, to assess the company’s responses to climate related risks and opportunities, including the potential impacts of climate change on business, strategy, financial planning, and the environment.”