Exxon gets nudge on climate change
DALLAS — After a decadelong push to get oil companies to help fight climate change, activist investors scored a modest but significant victory that might someday move the biggest U.S. oil company, Exxon Mobil Corp., to reconsider its approach to the issue and its business.
Nearly two-thirds of the investors who voted at the Irving-based company’s annual meeting on Wednesday supported a nonbinding initiative that could clear a path for a scientist or other specialist on climate change to join Exxon Mobil’s board of directors. It’s a sign that sentiment is shifting among
Big Oil investors — and perhaps even executives — who have long resisted major changes to the lucrative fossil fuel business.
The Rev. Michael Crosby, an activist shareholder, noted that the debate over a series of nonbinding resolutions marked the first time he has heard Exxon executives address climate change near the beginning of the annual meeting.
“This is the biggest risk to the company’s business, not to mention everybody on the planet,” Crosby said. “Exxon Mobil has a chance to restore the public’s trust.”
Critics like Crosby have argued that Exxon and the entire oil industry will have to change their business model of finding and pumping more and more oil in the face of increasing regulations aimed at limiting the greenhouse gases emitted by fossil fuels.
Fighting climate change has become a priority for governments around the world; in Paris last year, 195 countries signed an international accord aimed at slowing the rise in global temperatures that threatens to melt polar ice, raise sea levels, and inundate coastal areas.
Oil investors, however, are not rushing to force changes in the way companies do business. At Exxon, shareholders overwhelmingly rejected four of the five climate change resolutions, including one that would have urged Exxon executives to conduct a financial analysis of climate change policies and another calling on the company to support the Paris climate accords.
The one nonbinding proposal they endorsed — also by an overwhelming vote — would give shareholders with a stake of 3 percent or more the power to nominate a director, opening the way for activists to get a climate change experts on the board. Exxon Mobil’s board of directors will decide how to respond to the shareholder vote at its next meeting in July.
‘A judgment of balance’
Concerns about climate change are getting a hearing in the boardrooms of Big Oil even as the industry contends with the worst oil bust in a generation. European companies such as BP, Royal Dutch Shell and others have already declared their support for shareholder resolutions that call on executives to analyze how their business plans fit with goals on climate change.
U.S. oil companies, however, have largely resisted such initiatives. In California on Wednesday, investors in Chevron Corp. rejected five climate-related resolutions, including one that would have put a cap on the company’s greenhouse gas emissions.
“On the question of climate change, what we’re seeing is a bitter family feud within Big Oil,” said Peter Doran, a researcher at the Center for European Policy Analysis and author of “Breaking Rockefeller,” about early rivalries in the oil industry. “There’s a lot at stake, not just for the oil industry, but for everyone else.”
Exxon Mobil chief executive Rex Tillerson framed the debate around climate change not as a disagreement on the science of climate change but rather on the policies that companies and governments have taken to address rising temperatures. The reality, he said, is there is no energy source today that could replace oil and gas in the global economy.
“It’s a judgment of balance between future climactic events, which could prove to be catastrophic but are unknown,” Tillerson told shareholders, “and the more immediate needs of humanity to address poverty, starvation, broad-based disease control and the quality of life which many people are living today. And the only way out of that is to provide them with the energy sources we have today.”
‘They still compete’
When Exxon Mobil makes plans for multibillion-dollar investments, Tillerson added, it already weighs the possible financial costs of tougher emissions rules that might be put in place. But those carbon-cost projections rarely deter it from starting a major project, Tillerson said.
“What we typically find,” he said, “is when you impose that cost of carbon, these very large oil and natural gas developments, because of their size, they still compete reasonably well.”
Outside the Morton H. Meyerson Symphony Center in Dallas, where Exxon Mobil’s meeting was held, protestors gathered with signs saying “Regulate, baby, regulate” and “Exxon knew,” shorthand for allegations under investigation by the New York attorney general and others that the company suppressed its own research after discovering decades ago that burning fossil fuels could raise global temperatures.
“As the world moves forward, Exxon Mobil stands still,” said Patricia Daly, a Catholic nun from New Jersey. “Decades have been lost in the fight against climate change, due in part to (Exxon’s) campaign of disinformation.”
But many shareholders, who enjoyed sprinkled donuts and a virtual-reality tour of Exxon Mobil operations in Papua New Guinea, were largely skeptical of the climate proposals, which were sponsored by pension funds in New York and California, among other investors. Some shareholders said the issue should be addressed gradually, considering economic as well as environmental issues.
One shareholder, Sol Stein, acknowledged climate change is real but said Exxon Mobil is flexible enough to adapt to it, pointing to the company’s investments in solar technology and energy efficiency.
“They’re very smart,” he said. “They’ll figure it out.”