DALLAS — Stockholders at Exxon Mobil Corp., the world’s largest private-sector oil company, passed a proposal yesterday to nominate outside candidates to the board, a move that could affect the company’s decisions on climate change.
New York City Comptroller Scott Stringer, the fiduciary for New York city’s five public pension funds, which invests about $150 billion, filed the proxy access resolution, which received 62 percent support.
The nonbinding resolution is the first measure opposed by Exxon’s board to pass since 2006, according to Stringer’s office. It allows investors who hold 3 percent or more of company stock for at least three years to nominate directors; similar resolutions have passed at dozens of other companies.
"If this company is to properly address fundamental long-term risks like climate change, its board of directors must be diverse, independent and accountable," Stringer said in a statement.
The vote touched off a debate among activists about the best way to get Exxon to change its approach to climate risks in the wake of last year’s revelations that the company may have suppressed evidence on climate science.
Investors like the California Public Employees’ Retirement System (CalPERS), the country’s largest, have taken an incremental approach. Rep. Ted Lieu (D-Calif.) — along with many of the 60 to 70 protesters who picketed the meeting — wants pension funds to divest from Exxon, and some critics want to see Exxon face civil or criminal penalties.
Exxon faced 11 shareholder resolutions at yesterday’s annual meeting. The majority related to climate change and Exxon’s business plans to address climate change and greenhouse gas regulations. All but the proxy access resolution were defeated.
Lieu: Proxy access doesn’t meet urgency
A resolution from the New York State Common Retirement Fund, which requested Exxon to publish a report on the long-term effects of climate change policies upon the firm, received 38 percent support.
Pete Grannis, deputy comptroller for New York state, said a group of shareholders clearly want the company to address climate risks.
"Exxon has a responsibility to its investors to explain how it can adjust its business to meet the global effort to reduce fossil fuel consumption," he said in a statement.
Attorneys general in Massachusetts, New York and the U.S. Virgin Islands are investigating whether Exxon misled investors or violated financial laws.
Exxon denies the allegations. Company officials have said the accusations are politically motivated and based on "discredited reporting funded by activist organizations."
While pension fund officials tout the passage of proxy access to address climate change and other corporate issues, they acknowledge that any results will take several years.
Lieu said he is tired of waiting. He has called repeatedly for CalPERS and other pension funds to sell Exxon shares.
"When you look at it, it basically has a path to put a person on the ballot for a vote that maybe, someday, can get one person on the board of directors that might think somewhat about climate. That is not going to change Exxon Mobil’s behavior," Lieu said in an interview.
"There is a fierce urgency to address climate change, and the pension funds are fooling themselves if they think engagement is working," Lieu said.
In a March 29 letter to CalPERS CEO Anne Stausboll, Lieu and California Rep. Mark DeSaulnier (D) said they haven’t seen "discernible evidence" that the fund’s engagement efforts have triggered "any significant change" from Exxon on climate change.
Stausboll wrote back, saying change comes through patient engagement.
"If we were to walk away, we would lose that opportunity," she said.
Tight security amid protests
As shareholders pressed their cases with the Exxon board and CEO Rex Tillerson inside the Morton H. Meyerson Symphony Center, where the oil giant has held its meetings for years, protesters gathered across the street.
Carrying signs urging the divestment of Exxon stocks, the demonstrators made speeches urging climate regulation and shouted slogans like "Tick-tock, the time is up, climate action now!" and "Global warming is a war of the rich and upon the poor!"
The meeting took place under tight security. Dallas police officers stood at the front door and walked around inside the symphony hall in dark windbreakers. Attendees entered through metal detectors similar to those at an airport or football stadium. Exxon employees escorted reporters throughout the building, even following them to the men’s room doors.
Exxon barred The Guardian newspaper from the meeting, citing its "lack of objectivity on climate change reporting," columnist Nils Pratley said in a column yesterday.
The meeting also attracted a loyal group of stockholders.
"If y’all don’t like Exxon, why don’t you go buy some solar stock?" asked one man, who described himself as a geologist. He said volcanic eruptions are to blame for climate change.
Another man broke into tears as he praised Tillerson for his work. "You personify all that is best in America," he said.
‘Turning off the taps is not acceptable’
In his opening remarks, Tillerson acknowledged the recent Paris climate deal in which nearly 200 nations vowed to keep global temperatures to no more than a 2-degree-Celsius rise over above preindustrial levels.
But in other statements and a 15-minute press conference, he mostly repeated Exxon’s long-held position about the need to balance climate risks with the demand for energy in emerging countries.
Asked how Exxon is preparing for potential financial risks associated with the Paris climate accord, Tillerson said the company uses an internal carbon price.
"We impose that cost in all of our investment decisions, our operating decisions, our business plans," he said.
When asked if that policy has ever been used to close down or not pursue a project, Tillerson did not answer. But, he said, the carbon cost "certainly can make a project marginal if it has a very high carbon intensity."
Exxon’s projections for energy demand are in line with the Paris Agreement, Tillerson said.
"We are not ignoring the risk that is out there," Tillerson told the audience, adding that the world’s poorest communities need energy access.
"Turning the taps off is not acceptable to humanity," he said, to applause from shareholders.
The case of the missing ‘moral’
While only one shareholder resolution passed, the meeting allowed activists to make their case to Tillerson and Exxon’s board, who were seated in the balcony of the symphony hall.
Gabe Rissman, a Yale University student who filed a lobbying resolution along with the United Steelworkers union, said Exxon’s political spending against climate regulations contradicts its positions that it views global warming as a concern and endorses a revenue-neutral carbon tax.
The proposal would have compelled Exxon to disclose lobbying payments to and membership in trade groups, such as the American Legislative Exchange Council, or ALEC.
"I find many of ALEC’s proposals to be distasteful," said Hughes Jenkins, a nine-year employee at Exxon’s Baton Rouge refinery who presented the proposal.
Sister Patricia Daly, a nun from New Jersey who has attended several Exxon meetings, said she was frustrated at Exxon’s attempts to keep outside messages away from the meeting.
Not only did the company prevent her from speaking to board members, but it edited the language of her shareholder proposal.
"They get really angry if we attempt to communicate with a board member outside the corporate secretaries," Daly said.
Daly’s proposal, submitted months ago, asked Exxon to acknowledge the "moral imperative" of limiting climate change to 2 degrees Celsius. In the official documents provided to all Exxon stockholders weeks in advance, the proposal title was changed to read: "POLICY TO LIMIT GLOBAL WARMING TO 2°C."
Exxon spokesman Alan Jeffers said the wording was changed to comply with Securities and Exchange Commission regulations. The board itself set the policy on shareholders’ communicating with individual members, Jeffers said, so "it’s inaccurate to say the company has a policy."
The Tri-State Coalition for Responsible Investment, which proposed the "moral imperative" resolution, is taking the matter up with the SEC, said Associate Director Mary Beth Gallagher.
"They don’t acknowledge the word ‘moral,’" she said.
This story also appears in EnergyWire.