Exxon Mobil Investors Seek Support for Climate Stress Test

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By Andrea Vittorio

April 13 — Shareholders concerned about how climate change will impact Exxon Mobil Corp.'s business are campaigning to win over other investors in the run-up to the oil giant's annual meeting next month.

More than 30 institutional investors, including AXA Investment Management, BNP Paribas and Schroder's, have said they will vote in support of a shareholder resolution asking the company to assess how it would fare financially under tighter carbon restrictions.

Exxon Mobil's board opposes the idea, saying in a proxy statement issued April 13 that it is already doing enough to test its business against climate-related risks and it “remain[s] confident in the commercial viability of our portfolio.” Its lawyers previously tried to stop the resolution from going to a vote (58 ECR, 3/25/16).

Now pension funds in New York and California are engaging what may be the most aggressive get-out-the-vote effort to date on the issue of climate change.

“We’re really stepping it up this year,” Anne Simpson, head of corporate governance at the nearly $300-billion California Public Employees’ Retirement System (CalPERS), told Bloomberg BNA.

CalPERS, which is the largest public pension fund in the nation, has registered with the Securities and Exchange Commission so that it can try to persuade other investors to give their support to the proposal at Exxon. Simpson said they have also gotten a “warm reception” on the subject from proxy advisory firms Institutional Shareholder Services and Glass Lewis, whose voting recommendations are used as a guide by many investors.

Votes to Come

She expects votes for climate proposals to reach a “high watermark” at companies' annual meetings beginning later this month.

Typically votes for environmental and social proposals don't reach much higher than 20 percent support. But last year, climate proposals at Royal Dutch Shell and BP Plc passed overwhelmingly after their boards decided to back them.

The Church of England, which filed those resolutions, joined with New York Comptroller Thomas DiNapoli to submit a similar climate stress test proposal at Exxon Mobil this year.

Exxon Mobil and eight more companies, including Chevron Corp. and Occidental Petroleum Corp., are being asked to analyze long-term impacts to their business from climate policies, including a goal the world's policymakers laid out late last year to limit the rise in global temperatures to 2 degrees Celsius.

Chevron's board argued in its proxy statement that such an analysis is unnecessary in light of the “safeguards and oversight” it has put in place and that revealing internal analyses and carbon pricing publicly could put the company at a competitive disadvantage.

“This is, in some way, a tacit acknowledgement that the low-carbon energy transition does potentially pose a material financial risk to the company,” Robert Schuwerk, an attorney working with the London-based think tank Carbon Tracker, told Bloomberg BNA.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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