Analysis by campaign group shows how investment firms signed up to responsible investment principles helped block calls for oil giant to improve its climate-related disclosures
ExxonMobil's AGM in May was an eventful meeting. Guardian journalists were banned from attending thanks to what the company described as the paper's "lack of objectivity on climate change reporting demonstrated by its partnership with anti-oil and gas activists and its campaign against companies that provide energy necessary for modern life, including newspapers". Chief executive Rex Tillersen once again gave short shrift to the idea that a rapid transition towards clean energy is imminent, declaring "the reality is there is no alternative energy source known on the planet or available today to replace the prevalence of fossil fuels in the global economy". And shareholders defied the company for the first time in a decade, voting to require the firm to allow minority shareholders to nominate someone to the board, potentially paving the way for a climate expert to sit at the company's top table.
However, the real drama came with the series of 10 climate-related resolutions, each of which were voted down by shareholders. Chief amongst them were calls for the company to undertake a "stress test", assessing its investment plans against the prospect of governments acting to introduce policies compatible with the 2C temperature goal set out in the Paris Agreement. The resolution, which mirrored similar resolutions put to other oil and gas majors during this proxy season, was backed by 38.2 per cent of shareholders who defied the company's recommendation that the resolution be blocked.
Related articles
The vote was seen as a pretty good result by climate activists. Rob Schuwerk, senior counsel for energy analysts Carbon Tracker, said backing for the resolution by over a third of shareholders was a significant achievement that sent a strong signal to the company's board. "An unprecedented number of Exxon's shareholders have demanded that it analyse how a two degree transition will impact its business," he said. "Exxon must now meet this demand or confront a more wary investor class next year."
But could the vote have been closer still? Could Exxon have been defeated? Could the company have been forced to spend this summer carrying out a comprehensive stress test of its future investments?
Those are some of the questions addressed today by a report from the Asset Owners Disclosure Project (AODP), which takes the microscope to how shareholders voted at the AGM. It shows how if several large investors had taken a stronger line on the responsible investment principles they have previously signed up to the resolution may well have passed.
For example, the report notes how a number of large investors who supported the Exxon board - including Blackrock and Vanguard, the world's two largest asset managers who jointly own 11 per cent of the company, JP Morgan, Capital Group and Franklin Templeton - are also signed up to the UN-backed Principles for Responsible Investment (PRI). Principle 3 states: "We will seek appropriate disclosure on ESG (environmental, social, and governance) issues by the entities in which we invest".
For Julian Poulter, CEO of AODP, stress testing investment plans against a 2C policy landscape is an entirely "appropriate disclosure", particularly in the wake of this week's ratification of the Paris Agreement's 2C goal by the US and China. "The global commitment to limit climate change to two degrees poses a clear threat to the business model of fossil fuel companies," he said in a statement. "Shareholders have a right to know how Exxon plans to manage climate risk. Asset managers and asset owners who helped Exxon defeat this modest climate resolution are not only risking their own money, they are betraying the millions of ordinary people whose pensions are invested in Exxon stock."
It looks like a pretty open and shut case of "disturbing hypocrisy", as Poulter calls it, especially when you consider how the report also reveals how 136 PRI signatories failed to respond to requests for information from the VoteYourPension campaign. Principle 6 of the PRI states that: "We will each report on our activities and progress towards implementing the principles."
Investment giant Blackrock comes in for particular criticism, with AODP highlighting how the company's chief executive Larry Fink recently wrote to investors to argue that ESG factors like climate change "have real and quantifiable financial impacts", adding that "for too long, companies have not considered them core to their business - even when the world's political leaders are increasingly focused on them, as demonstrated by the Paris Climate Accord".
However, is there another side to the argument? Could those investors who helped Exxon defeat this year's resolution yet ensure that a stress test or comparable measures are undertaken sooner rather than later? Is this really a case of hypocrisy, or are those investors signed up to the PRI taking the long view on how best to get the likes of Exxon to engage with climate issues.
from Home - Business Green http://ift.tt/2cbUPeb
Advertisement
Sourced by "Home Hacks". Scouring and supporting the art of DIY home projects by sharing links and information provided by numerous active reputable DIY veterans and company's. Any projects you start please be of proper age, follow all required safety measures, and use the required protective equipment when handling any chemicals, power tools, or during any construction project. If you need advice regarding your next project we suggest visiting Contractor Talk.
