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Last week a non-binding shareholder resolution was passed at Exxon Mobil with over 62% of eligible investors voting in favor and against management's recommendation. While this type of a result in itself is unusual, what is particularly noteworthy about this vote is that it was all about climate change. The proposal codifies a request for the company to report on potential risks related to climate change, including risks arising from emerging technologies and from government policies implemented to address climate change. Votes in favor of the proposal came from asset owners such as the Church of England and the New York State Comptroller, filers of the resolution, but also from asset managers with concerns about the impact of climate change, most notably Blackrock.
This successful resolution follows on the heels of similar success by shareholders at Occidental Petroleum and at PPL Corporation and is a clear expression of shareholder concerns regarding the issue of climate change, concerns which reflect the view of a majority of Americans. According to a Gallup poll in March, 62% of Americans believe that global warming is having an impact now while 68% of Americans believe that pollution from human activities is a primary cause of global warming. This complements the existing consensus in the scientific community but is in direct contrast to positions taken by the current U.S. administration, most notably President Trump's withdrawal from the Paris Accords on June 1 st and recent actions taken by leadership at the Environmental Protection Agency to reduce the regulation of greenhouse gas emissions. According to the same Gallup poll, 45% of Americans say they worry about global warming a "great deal", up from 37% in 2016, but 57% of those surveyed thought that the current administration would do a poor job protecting the environment.
Speaking after the meeting, Exxon Chief Executive Darren Woods indicated that the company would consider changes to their approach to communicating about climate change and related issues but would not commit the company to producing the report that the proposal calls for. Exxon Mobil is one of the few companies in its industry that does not already report regularly on these issues; BP and ConocoPhillips have been producing such reports for several years. According to CDP, formerly the Carbon Disclosure Project, over 5800 companies, representing close to 60% of global market capitalization, disclose carbon emissions through the CDP platform alone. Disclosure of data on this topic is becoming the norm in many industries and is supported by more than 800 institutional investors with assets in excess of $100 trillion.
While Exxon Mobil, Occidental Petroleum, and PPL Corporation are just beginning to respond to shareholder pressure on the issue of climate change, other publicly traded companies have made clear their commitment to addressing this global issue. A spokesperson for Nestlé recently commented that the company will "actively contribute to industry efforts and dialogue on this important topic, while strengthening our public commitments along our value chain and driving industry efforts on climate change...Our company's success ultimately depends on our ability to reliably source high-quality crops and other raw materials." Nestlé is one of hundreds of publicly traded companies that are taking active and meaningful steps to address climate change, including companies such as Bank of America, Gap, PG&E, TimeWarner, General Mills, and Levi Strauss. Investors and companies are pushing forward in their efforts to address climate change and its impacts, in spite of contrary actions taken by the federal government.
Source: Reuters, BBC, Gallup, CDP, Ceres