A change in the climate

Recent wins by activist shareholders to pressure US majors like ExxonMobil do more on climate change and emissions clearly point to producers facing growing pressure to act going forward.

At its annual shareholder meeting in Dallas this week, ExxonMobil’s chief executive Rex Tillerson had a blunt response when shareholder Michael Crosby, an ordained minister, asked the company to invest in alternative and renewable sources of energy. 

“Quite frankly, Father Crosby, we chose not to lose money on purpose,” Tillerson said. “Even with hundreds of millions of dollars given to them to be written off, they [renewables industry] only survive on the back of enormous government mandates, subsidies which are not sustainable.

“So we chose not to invest in businesses that require government mandate and subsidies for them to exist,” Tillerson said.

ExxonMobil and Chevron may have won for now. Shareholders of both the companies rejected separate proposals to appoint environmental experts to their boards of directors. Both said they already have experts on their board to study environmental issues associated with their operations.

But the pressure is rising. Chevron’s shareholders voted in favor of a “proxy access” proposal that gives large investors powers to nominate a director to the board. Viewed as a success for corporate governance activists, it may allow investors closer scrutiny of subjects including climate change.

And majors across the Atlantic are already making changes. Both BP and Shell shareholders at their annual general meetings voted overwhelmingly in favor of a resolution that requires more transparency over the company’s response to climate change.  One key difference, though: the proposal had support of the boards of BP and Shell, unlike their US peers.

Specifically on US operations, shareholders are also stepping up pressure on the US majors to disclose more about onshore shale drilling operations that use hydraulic fracturing techniques some consider risky. The proposals, which were again rejected, were mooted because of “leaks, spills, explosions and community impacts” associated with the technology.

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