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Investors View Solid Support for Climate Proposals at ExxonMobil/Chevron AGMs as Wake-Up Call for Industry

CEOs Tillerson and Watson remain bullish on fossil fuels in spite of mounting pressure from institutional investors calling for alternative, more sustainable energy pathways.

NEW YORK, NY, WEDNESDAY, MAY 25, 2016 ICCR members who have long advocated for climateconscious business planning at oil and gas giants ExxonMobil and Chevron, pushed for climate action through a variety of shareholder-sponsored proposals at today’s annual meetings in Dallas and San Ramon.

The strong results lend weight to investor arguments that the companies have not done enough to adapt their businesses to the 2°C scenario adopted in the Paris Climate Agreement. The CEOs’ comments and answers during the Q & A sessions at the respective annual meetings did little to allay investor anxieties that management is prepared for the new climate realities threatening their business models.

Collectively the votes in favor of the eight climate-related proposals on the ExxonMobil ballot sent a clear message that shareholders are dissatisfied with how ExxonMobil is managing climate risks, responding to the moral imperative and political reality of the 2° C target, and aligning lobbying activities and trade association memberships with its stated positions on climate change. This includes a resolution calling for a change to the proxy access bylaw, filed in part due to ExxonMobil’s climate risk management, which would permit large shareholders to nominate directors: the proposal received more than 60% support.

Full Press Release Available here.

 
Investors Encouraged by Strong Support at ExxonMobil Annual Meeting

In a rebuke of ExxonMobil's Board and Management, at today's annual meeting 18.5% of ExxonMobil shareholders representing around $69 billion in Exxon shares voted to support Tri-State CRI's resolution calling for Exxon to acknowledge the moral imperative to limit global warming to 2 degrees Celsius or less.

Faith based investors welcome this strong signal from investors, which makes it clear that expectations are increasing on climate change. We are encouraged by the 61% vote in support of Proxy Access, 38% vote in favor of 2 Degree Scenario Planning, and 20.9% vote in favor of an independent Board member with climate expertise. This meeting, the first since the Paris Climate Agreement, indicates there has been a turning point which ExxonMobil can no longer ignore.

In the meeting discussion, ExxonMobil continued to present false solutions to climate change, focusing on the need to provide access to energy, without due consideration of the climate impacts of this strategy. For example, at the meeting, CEO Rex Tillerson said “It is a judgment of balance between future climatic events which could be catastrophic but are unknown, by the IPCC’s own acknowledgement, and more immediate needs of humanity today to address poverty, starvation, broad-based disease control, and the quality of life that billions of people are living in today, which is unacceptable to many of us.” This presents a false choice. "There must be a balance between providing critical access to energy that will improve current living conditions with the future climate impacts that may be catastrophic. The rhetoric from today's meeting demonstrated that ExxonMobil is not considering the potential unmitigated warming and associated impacts that are part of its current strategy. We instead need them to make commitments that will include providing sustainable energy access, as peers in the industry have begun to do," said Mary Beth Gallagher, Associate Director Tri-State Coalition for Responsible Investment.  ​

 

Press:

Climate Change Activists Either Prod Exxon Mobil or Sell It: http://www.nytimes.com/2016/05/26/science/exxon-mobil-annual-meeting.html?_r=0

Exxon Mobil’s shareholders meeting was totally overrun by climate demands:  http://grist.org/climate-energy/exxon-mobils-shareholders-meeting-was-totally-overrun-by-climate-demands/

Exxon faces shareholder showdown today on climate change: http://www.eenews.net/stories/1060037840

 

Preliminary Votes Outcomes (not counting abstentions):

Item 4 – Independent Chairman – 38.8% for

Item 5 – Climate Expert on Board – 20.9% for 79.1% against

Item 6 – Hire an Investment Bank  - 2%  for

Item 7 – Proxy Access Bylaw – 61.9% for 38.1% against

Item 8 – Report on Compensation for Women  - 8.5% for 91.5% against

Item 9 – Report on Lobbying – 25.8% for 74.2% against

Item 10 – Increase Capital Distributions – 4.1% for – 95.9 against

Item 11 – Policy to Limit Global Warming to 2°C – 18.5% FOR 81.5% against

Item 12 – Report on Impacts of Climate Change Policies – 38.2% for 61.8 against

Item 13 – Report Reserve Replacements in BTUs – 5.5% FOR and 94.5 % against

Item 14 – Report on Hydraulic Fracturing - 24.5% for 75.5 against

 
Shareholders to Southern Company: Transition from Coal to Low-Carbon Business Model
One-third of Southern Company Shareholders Vote for Climate Resolutions By As You Sow and Tri-State Coalition

Atlanta – May 25, 2016 Shareholder resolutions filed at Southern Company by shareholder advocacy group, As You Sow, and faith-based investor coalition, the Tri-State Coalition for Responsible Investment (“Tri-State CRI”) sent Southern Company’s Board and management a strong message: the time has come to take to reduce carbon asset risk and align its business with a “2 degrees” climate scenario. Southern Company, which generates the third highest level of carbon dioxide of U.S. utilities, and uses the third highest level of coal, has been the subject of investor attention in recent years.
The shareholder resolutions received strong support from Southern Company investors:
  • As You Sow’s resolution pushed Southern to quantify and disclose its “carbon asset risk”, or the potential losses to shareholders from coal operations. The resolution received preliminary results of 29% of shares voted in support, representing approximately $13 billion in investor assets. Southern’s newest coal plant, Kemper, is two years behind schedule, $4 billion over budget, and is being investigated by the Securities and Exchange Commission (SEC).
  • The Tri-State CRI resolution, filed by Sisters of Charity of St. Elizabeth, Sisters of St. Dominic of Caldwell, NJ, and 9 institutions, requests Southern disclose its strategy for aligning business operations with the internationally accepted goal of limiting global warming temperature increase to 2˚C. The resolution received 34% of shares voted in favor, representing approximately $15 billion in investors assets, increasing pressure on Southern to share its plans for modifying its business model to meet the 2˚C target.
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Investors are Encouraged to Support Shareholder Proposals at Southern Company

The Tri-State Coalition for Responsible Investment is encouraging shareholders to vote in favor of shareholder proposals at the May 25th Annual General Meeting of The Southern Company.  Tri-State CRI supported the drafting and filing of Item 9 on the proxy, which was filed by the Sisters of Charity of St. Elizabeth and 10 co-filers, who are members of the Interfaith Center on Corporate Responsibility.

This proposal has received support from both proxy advisory firms, ISS and Glass Lewis, with global institutional investors already declaring their support here. More information making the case in support of the proposal is available in our Exempt Solicitation here. CalPERS, the largest public pension fund in the United States, also filed an Exempt Solicitation in support, available here.

Item 9 asks the Board to publish a report outlining its business plan for this alignment that would include information about all the component parts needed to shift Southern’s business, including how Southern will strategically and systematically:

  • Integrate distributed energy resources  like storage and generation,
  • Demand response programs,
  • Smart grid technologies, and
  • Corresponding revenue models and rate designs.

This shift must also be prioritized by management and in Southern’s executive schemes, so we also request the report include information on steps you will take to align with the 2 degree goal, related to:

  • Incentivizing executives to meet these goals,
  • Shape Southern’s research and development agenda to support these efforts, and
  • Align public policy positions and engagement strategy with state regulators with meeting a 2 degree target.

This is a new moment, after the Paris Climate Agreement last winter, where 195 countries agreed to limit increases in global average temperature to 2 degrees Celsius or less. We must all be working toward the 2°C goal to stave off devastating impacts that will arise if we surpass that goal.  Even still, warming above 1.5 degrees will have detrimental impacts on communities. This will include forced migration of individuals in low-lying areas, creating climate refugees.  It will result in record high temperatures throughout the world, making some regions in the Middle East uninhabitable.

There is a strong case before investors for supporting this resolution at Southern Company:

  1. Southern faces regulatory and financial risk from climate change policy, including the Paris Climate Agreement and Clean Power Plan, and the carbon intensity of Southern’s operations.
  2. Southern’s current approach to reducing GHG emissions, including major capital investments, may entail material financial risks, related to cost overruns and delays at Kemper and Vogtle, and the debt issued to acquire AGL Resources, which recently led Moody’s and Fitch Ratings to downgrade The Southern Company rating .  The SEC recently initiated investigations into the Kemper plant related to cost-overruns and delays.
  3. Southern has inadequate disclosure on its strategy for aligning its business with a carbon constrained world. Southern still does not report to the CDP.  In addition, information on Southern’s scenario planning is not disclosed, and it therefore is impossible to assess how the possibility of a 2˚C scenario might impact operations.
  4. Finally, Southern Company will realize strategic benefits from this kind of reporting because it will enable you to seize opportunities and increase the resiliency of the business in the face of new regulatory developments.

A recent report from the Investor Responsibility Research Center Institute (IRRCi) ranking the climate orientation of the boards of the top 25 U.S. electric utilities on Climate Change, Corporate Governance, and Politics indicated that The Southern Company lags behind its peers, especially as it relates to political spending and lobbying.  As You Sow has also filed a shareholder proposal on Carbon Asset Risk, Item 10 on the proxy, with more information available here. Investors are encouraged to support both of these resolutions on Wednesday May 25th at Southern Company.

 
Sister Patricia Daly to ExxonMobil: Get on board with Paris goals (Responsible Investor)

From Responsible Investor (link)

Shareholders are encouraged to support the ‘moral imperative’ resolution on May 25

by Sister Patricia Daly | May 10th, 2016

Will climate change impact everyone the same way? What will happen to low-lying populations and vulnerable peoples if warming exceeds 2°C? Are these impacts fair? Mitigating climate change has been called the moral imperative of our generation. But what is our role as responsible investors to address this challenge?

Amid this new moment, with Pope Francis’ encyclical Laudato Si’ presenting a framework for our coexistence with the planet, stating that “the climate is a common good, belonging to all and meant for all,” and the Paris Agreement providing a goal of limiting warming to 2°C or less for the global community to work toward, ExxonMobil investors put the question before the company – must you acknowledge the moral imperative to limit warming to 2°C? Must you recognize this global goal to protect our planet and the people living on it? On May 25th, shareholders of ExxonMobil will have the opportunity to call on their company to join the rest of the world in acknowledging the imperative to keep warming to safe levels by supporting Item 11 on the proxy.

This resolution has striking applicability to ExxonMobil. This is even more appropriate this year amid questions of Exxon’s liability, or at least poor integrity, related to its knowledge about the climate impacts of its core business practices. ExxonMobil is the subject of investigations from multiple state Attorneys General for poor disclosure to investors and the public on what it knew about climate change, and is facing intense public scrutiny for its role in interfering with climate action. This is not only historic action: even in 2015, ExxonMobil spent $27million on staff, communications, lobbying, and trade associations to undermine policy action on climate change. This strategy has succeeded in keeping the policy agenda on climate change stalled for decades.

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