New York State and the UK’s Church Commissioners will vote against the entire board of ExxonMobil again this year in response to the US oil giant’s continued “recalcitrant” approach to climate change.
Both investors lead on engagement with the Texas-based firm as part of Climate Action 100+, the multi-trillion-dollar initiative targeting the world’s dirtiest companies.
Last year, the duo announced in an SEC filing that they would vote against Exxon’s board, and called on other investors to support a proposal to introduce an independent Chair.
That call followed Exxon’s successful blocking of several climate proposals, including two co-filed by the Church Commissioners, via the US Securities and Exchange Commission’s (SEC) ‘no action’ process.
Exxon’s long-standing pattern of opposition to shareholder proposals has continued this year after the SEC ruled on Friday that both Exxon and fellow US oil major Chevron may exclude a shareholder proposal on their plans to align with the Paris climate agreement again this year.
"It has become increasingly impossible to use shareholder proposals as a vehicle on climate change in the United States" — Edward Mason Church Commissioners
The regulator deemed that both firms had already “substantially implemented” the proposal, which was filed by US non-profit As You Sow.
In its ‘no action’ letter, Exxon stated that it incorporates “all of the NDCs [Nationally Determined Contributions] into its analysis” and by doing this regards its “forecasts and strategic planning” as “aligned with the Paris Agreement”.
Danielle Fugere, President of As You Sow, described the document as “highly misleading”.
The NDCs — the emissions reduction commitments made by countries as part of the Paris climate accord — are “ not going to get us anywhere near two degrees and investors might not know that”, she said.
Issues like these are exactly what the shareholder proposal process is for, Fugere added; “so for the SEC to deny shareholders the ability to seek clarification is of great concern and flies in the face of the process which is to bring important issues to the attention of shareholders”.
Earlier this month, RI reported that the SEC had allowed both Exxon and Chevron to escape another climate proposal filed by Dutch activist group Follow This on a technicality.
Edward Mason, Head of Responsible Investment at the UK Church Commissioners, which co-filed the proposal at Exxon with As You Sow again this year, described the absence of a climate proposal on the ballot at a company like Exxon as “astonishing”.
“It has become increasingly impossible to use shareholder proposals as a vehicle on climate change in the United States”, Mason told RI.
In response to what Mason described as Exxon’s “recalcitrant” position, both New York State and the Church Commissioners have said that they intend to vote against all Exxon’s directors and support the proposal on an independent chair.
Mason described Exxon’s business strategy as “a challenge of the most fundamental order to the purpose of CA100+”.
He said that he expects investors participating in CA100+ — including its “newest members” — to “consider their voting options very carefully”. This year saw financial heavyweights Blackrock and JP Morgan Chase join CA100+, though both have been called out for their poor ESG voting record.
New York State Comptroller, Thomas DiNapoli added: “Despite the SEC’s decision to exclude this proposal, there are other paths investors are using to address the fundamental problem. Investors can join us in voting against directors or supporting an independent board chair and help repair the governance problems afflicting Exxon.”
Speaking on behalf of CA100+, Andrew Logan, Senior Director for Oil & Gas at responsible investment group Ceres, told RI that the blocking of climate proposals at Exxon and Chevron is going to be “fork in the road rather than a dead end”.
He said it will “force investors to take what will look like more aggressive action but they’ll do it because the companies have foreclosed the possibility of a more modest approach”.
Logan added that there is, however, a time-limit for investors to show that engagement leads to progress otherwise the “voices calling for divestment will end up winning out”.