CalPERS, Exxon Shareholders Celebrate Big Win for Climate Change Reporting

Proposal #12 passes in a 62.3% proxy vote by Exxon Mobil shareowners.

Exxon Mobil shareowners can now breathe a sigh of relief knowing that climate change reports will become more extensive following the results of a proxy vote at the company’s Annual General Meeting.

Anne Simpson, CalPERS investment director, sustainability, told CIO, “I think that what this is demonstrating is that we’re increasingly in a world where the shareowner proposals are not treated as some test of loyalty to management of the company. They’re being scrutinized as to value they might bring to the investors in the company and I think that’s very important.”

The resolution, known as Proposal #12, requires the company to report on issues concerning climate change. It was passed in a 62.3%% vote by shareowners—a move that Exxon’s board of directors recommended they vote against.

“It’s very unfortunate that the board of Exxon opposed the proposal,” Simpson said. “However, what’s encouraging is that the major asset managers and asset owners have viewed the proposal on merit. It’s all the more baffling that Exxon should have chosen to oppose it, because to their great record, the company is in support of the Paris Agreement. We all have found out in recent weeks [about] the company’s written letters, not once, but twice to the White House, calling for the US to stay in the Paris Agreement. I think that a cold-blooded financial analyst would say, “if you support this policy framework, which is going to transform the energy sector, then we ought to have the risk-reporting to go with it. Otherwise it’s a cart with no horse.””

Proposal #12 was co-filed by CalPERS and a collection of other investors, which includes the Church of England and the New York State Common Retirement Fund.

“We’re so long-term, we’re virtually permanent investors,” said Simpson. “We’re looking ahead decades for the liabilities that we’re investing to pay pensions for, and for that reason, this scenario—also the Paris Agreement—are extremely important to us, not just for risk-management, but also for the opportunity that they’re bringing for all the energy companies.”

The now-greenlit proposal requires Exxon Mobil to asses their portfolio under the “2 Degree Scenario.” This will be added to not only existing reports analyzing climate change-related impacts on and gas reserves under the globally agreed upon 2-degree target, but will also examine the long-term impacts of technological advances (such as carbon capture) and global climate change policies. The proposal will also examine the resiliency and financial risks of Exxon’s portfolio through 2040, and beyond.

“Because we’re a global investor, we want to be able to track and understand where risk and where opportunity lie—not just in the US, but in the other markets where we have capital deployed within the energy sector. I think it shows investors are standing on their own two feet making their mind up, rather than simply following the lead of management, Simpson said.  “We’ve seen them talk the talk. We want them now to walk the walk, so maybe this vote’s going to help nudge them in that direction.”

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