Investors Eye Oil Majors' Lobbying on Climate Policy

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By Andrea Vittorio

Jan. 12 — Shareholders are asking a familiar question at Exxon Mobil Corp. and 10 of its oil and gas industry peers this proxy season—to explain what they are doing and saying to affect climate policy—and hoping for a different result.

Lobbying efforts by oil majors and their trade associations have long been the target of criticism from environmentalists who say they are obstructing policy action on climate change. And for years, like-minded shareholders have tried, mostly unsuccessfully, to persuade companies such as Exxon, Chevron, ConocoPhillips and Occidental Petroleum to acknowledge their influence over such policies and consider how a changing policy environment could affect their profitability (236 ECR, 12/9/14).

But this proxy season, “the context has changed considerably,” Timothy Smith, a senior vice president at Boston-based Walden Asset Management, told Bloomberg BNA.

Walden is one of about 30 sustainable investment firms, public pension funds, foundations and other investors hoping that a newly minted global deal to fight climate change as well as recent developments in the public debate makes the companies take their proposals more seriously.

Investors Want Details

“A year ago, these were important issues, but they could be seen as somewhat speculative given that there wasn't a lot of concrete policy action happening in the world,” said Andrew Logan, who works with investors to advocate for more sustainable business practices through the nonprofit Ceres. Now that nearly 200 nations have agreed on a plan that would involve “pretty aggressive decarbonization,” investors want to know which side of the issue companies stand on, he told Bloomberg BNA

Investors have filed 15 resolutions asking oil and gas companies to provide more details on the millions of dollars they spend lobbying the government on a range of topics, including climate change, and rethink their membership in groups like the Chamber of Commerce and the American Legislative Exchange Council that are campaigning against carbon and clean energy policies in the U.S.

“Shareholders have every right to know how company resources are being expended to lobby around these issues, as well as the measures taken by company management to protect the company's financial health and shareholder value,” Denise L. Nappier, who as Connecticut's treasurer manages the state's $30 billion retirement plans and trust funds, said in a statement.

The resolutions are among nearly 150 total shareholder proposals focusing on climate change submitted so far this proxy season, according to a preliminary tally provided by Ceres.

How Companies React

Not all of the resolutions filed are expected to appear on company proxies for a vote, since they could be withdrawn after talks with investors or challenged at the U.S. Securities and Exchange Commission first. If they do make it on the ballot, they aren't likely to pass either, as environmental issues generally don't garner enough support.

One thing that could positively influence how the climate proposals fare this year is a recent shift in European oil majors’ response to similar questions from their shareholders. Last year, BP Plc and Royal Dutch Shell Plc endorsed shareholder resolutions on climate change, which ended up getting unprecedented levels of support from voting shareholders (73 ECR, 4/16/15).

“That I think has, to some degree, begun to change investor expectations as to how companies should approach these resolutions,” Logan said.

BP and Shell were also part of a group of Europe's largest oil companies that declared their support for the international climate change agreement reached in Paris at the end of 2015. Most of their counterparts in the U.S. stayed silent, except for Exxon Mobil, which came out in favor of a carbon tax and put out its own statement on the Paris summit.

Smith said it's clear Exxon Mobil is trying to protect its reputation amid allegations—which it denies—that the company misled the public and possibly investors by supporting groups that question the danger of climate change, even while its own scientists briefed executives on the threats it could pose.

Spotlight on Exxon Mobil

While it isn't likely to change Exxon Mobil's opposition to shareholder resolutions on climate change, he said the company has historically been “more than willing” to sit down and talk with concerned investors.

An Exxon Mobil spokesman said the company's reaction to this year's proposals will be outlined in its proxy in early April, before its annual meeting. Exxon is facing eight climate-related resolutions, including one looking to add a “climate-competent” board member (166 ECR, 8/27/15).

On the issue of lobbying, the Irving, Texas-based company has said in the past that it already “provides ample transparency and accountability” by complying fully with state and federal requirements on lobbying activities and disclosure. And though Exxon Mobil has resisted repeated requests from shareholders to set a goal to reduce its greenhouse gas emissions, it did become the first company to agree to produce a report on whether its oil and natural gas reserves could become stranded and lose their value as a result of carbon restrictions aimed at addressing climate change.

“We are confident that none of our hydrocarbon reserves are now in danger or will become stranded,” the company told shareholders in 2014.

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