Oil major ExxonMobil responds to shareholders on stranded carbon assets

Sustainable investors are persuasive at energy giant

US investors have persuaded oil giant ExxonMobil to report on how it assesses the risk of stranded assets from climate change.

The investors – newly formed sustainable boutique Arjuna Capital and As You Sow, the corporate environmental responsibility body – said they have agreed to withdraw a shareholder proposal on the issue as the company has agreed to publish a Carbon Asset Risk report on its website.

The report will provide investors with greater transparency into how ExxonMobil plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable, they said.

“We’re gratified that ExxonMobil has agreed to drop their opposition to our proposal and address this very real risk. Shareholder value is at stake if companies are not prepared for a low-carbon scenario,” said Natasha Lamb, director of equity research and shareholder engagement at Arjuna, which was formed last year by former executives at sustainable fund firm Trillium Asset Management.

The pulled resolution had called for a report by September 2014; it would also include analysis of long and short-term financial and operational risks to the company.

“That the largest American oil and gas company is the first to come to the table on this issue says a lot about the direction that energy markets are taking,” added As You Sow President Danielle Fugere.“Companies need to acknowledge that preparing for a low-carbon future is a necessity, not a choice.”

It builds on builds on a shareholder initiative coordinated by advocacy group Ceres, in which shareholders representing $3trn of assets asked 45 companies for increased disclosure of carbon risks. Carbon Asset Risk proposals were filed at 10 fossil-fuel companies this year.

Exxon’s response is in contrast to fellow energy titan BP, which as RI has reported, has rejected investors’ fears about ‘unburnable carbon’ saying it both oversimplifies the issue and overstates the financial impact. Like Exxon, BP was one of the firms targeted by the Ceres campaign.

“Investors are the canary in the coalmine and will move their money to avoid material risk,” said Lamb.

It comes as Peabody Energy, the world’s largest private-sector coal company, has also reportedly agreed to produce a similar report. The New York Times, citing Connecticut State Treasurer Denise Nappier, said the report was in exchange for the withdrawal of a shareholder resolution filed by the Connecticut Retirement Plans and Trust Funds. In January Nappier announced a similar arrangement with Ohio-based energy producer FirstEnergy.

In February RI reported that a similar resolution at Exxon that was drawn up by the Christopher Reynolds Foundation and Zevin Asset Management was withdrawn after fruitful talks at the company.