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Exxon rebuts proxy firms backing shareholder climate change resolution

Oil giant issues detailed response to advisors’ recommendations

Oil major ExxonMobil has issued a detailed response to proxy advisory firms ISS and Glass Lewis after they came out in support of a shareholder resolution on climate change set to be voted on at its AGM later this month – saying they “fail to recognize” that it already does address a 2-degree Celsius scenario in its disclosures.

The resolution (12 on the ballot) was filed by New York State Common Retirement Fund and co-filed by the UK’s Church Commissioners. It calls for an annual assessment of the long-term portfolio impacts of technological advances and global climate change policies and received a boost late last week when the influential advisory firms recommended support.

With Wespath’s climate resolution at peer company Occidental Petroleum receiving 67% investor support, the momentum behind investors’ calls for corporate climate disclosure is evident.

Edward Mason of the Church Commissioners – who are riding high with a newly announced 17.1% return last year – penned a powerful Op-Ed for Responsible Investor last week ahead of the Exxon AGM.

Now Exxon has countered the investors and proxy firms, arguing that it has addressed the 2-degree scenario in its reporting.

In a filing with the SEC, the Houston-based giant says: “Contrary to the conclusion on page 45 of ISS’ analysis, ExxonMobil has considered the impact of this 2-degree Celsius scenario on the “demand for the company’s products,” concluding that even in this scenario, that the world will continue to require significant quantities of hydrocarbons for which ExxonMobil is well situated to compete.“This conclusion is consistent with the conclusions reached by many other companies and independent experts.”

It continues: “ExxonMobil’s proved reserves, which are governed by SEC rules and reported annually in detail in our 10-K, are anticipated to ultimately be produced and not be ‘stranded’.”

“ExxonMobil has considered the impact of the 2-degree scenario on demand”

Exxon says it will continue its “proactive engagement with shareholders on this important matter”.

Meanwhile, environmental law firm ClientEarth has written to BP, Glencore and investors warning of the risk of investor lawsuits based on statements about future fossil fuel demand.

Both companies, the firm says, publish scenarios for future commodity demand in official reporting documents that paint a picture “at odds with expert analysis”.

ClientEarth says there’s a risk that “the companies’ management were reckless as to the truth or accuracy statements relating to these scenarios”.
If this happens, and if investors have suffered loss as a result of relying on the statement, investors can sue, the firm says.

The London-based firm said BP replied to its letter saying its disclosures are “appropriate” while Glencore replied that it recognises climate change as a “material global issue”.