Climate Questions Harder for Companies to Dodge

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By Andrea Vittorio

March 25 — Fossil fuel companies such as Exxon Mobil Corp. and Chevron Corp. are finding it increasingly difficult to dodge investor requests to address climate change as more resolutions are proposed on the subject than ever before.

Lately these climate-related shareholder resolutions have been challenged less often by corporate legal teams, who can ask the Securities and Exchange Commission to block proposals from going to a vote at annual meetings. And even when proposals are challenged, the commission seems to be more willing to let them move forward.

Climate-Related Challenges at the SEC

From 2011 to 2013, companies won more climate challenges than investors did, according to data from the Sustainable Investments Institute (Si2). But since 2014, investors have been on a winning streak.

The change in shareholders' fortunes could be due to a combination of mounting pressure on the SEC to scrutinize financial risks from climate change and increased investor savviness in framing their climate concerns in writing. Companies also could be finding their arguments against climate resolutions are harder to defend.

“It's time for the companies to stop resisting and start leading,” Andrew Behar, who leads a nonprofit advocacy group called As You Sow, said in an interview.

As You Sow, Zevin Asset Management, Clean Yield Asset Management and other shareholders submitted a record 94 climate-related proposals this proxy season, part of a long-term trend of growing focus across sectors .

‘Victory' for Investors

The latest wins in an SEC challenge went to Exxon Mobil and Chevron shareholders who are asking the oil giants to assess the risks climate change poses to their business models.

“This is a major victory for investors who are working to address the risks that global warming presents to our portfolios,” New York Comptroller Thomas DiNapoli, who manages the third-largest public pension fund in the U.S., said in a March 23 statement. DiNapoli co-filed the proposal at Exxon Mobil along with the Church of England and other investors who collectively represent $1 billion in shares .

The SEC dealt a loss to Chevron on March 23 for a similar climate proposal filed by Hermes Equity Ownership Services and Wespath, which manages $20 billion in assets for the United Methodist Church.

SEC Under Pressure

It can be difficult to interpret individual decisions made by the commission, which has been under pressure lately—from institutional investors like the Rockefeller Brothers Fund and legislators in Congress—to show that it is taking the financial risks of climate change seriously .

“If they aren’t letting shareholders weigh in on issues like climate change and carbon asset risk that are so critical to the future of fossil fuel companies, then they are not doing their job,” said Natasha Lamb, director of research and engagement at Arjuna Capital.

The SEC sided with the sustainable wealth management firm earlier this month after Exxon Mobil and Chevron asked to exclude a pair of proposals seeking to return more capital to shareholders in light of carbon constraints. Another proposal on fossil fuel reserves accounting that As You Sow filed at Exxon Mobil won its challenge March 24 at the SEC.

Framing Climate Risks

It also could have something to do with how the resolutions are written, as investors learn to frame climate change as an important business risk.

“Once that sinks in with investors and they start using the right phrases, they're framing climate change as a significant policy issue rather than one that would be considered micromanaging a company,” which is against the SEC's rules for filing shareholder resolutions, said Rob Berridge, who leads shareholder engagement at the nonprofit sustainability advocacy group Ceres.

What could matter more than the text of the proposals themselves is the context in which they are proposed, according to Heidi Welsh, executive director of the Sustainable Investments Institute.

Companies' actions and disclosures on climate change are coming under a microscope as governments look to rein in rising temperatures with new domestic policies and a recently inked international agreement .

“That ups the ante on the regulatory front and makes more real” the concerns investors are raising, Welsh said in an interview.

Still, investors' arguments don't seem to be having much of an impact when it comes time to vote at annual meetings. Since companies' boards tend to encourage shareholders to vote against climate-related resolutions, they generally don't pass.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Larry Pearl at

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