Phillips 66 shareholders support climate risk study on Gulf Coast
A majority of Phillips 66 investors voted for a shareholder proposal that asked the Houston refiner to produce information about the public health risks of expanding petrochemical operations along the U.S. Gulf Coast.
The proposal, which was filed by the climate activist shareholder group, As You Sow, argued that building chemical facilities in areas more prone to climate risks such as frequent storms, flooding and sea level rise, could pose financial, health, environmental and reputation risks to the Houston refining and pipeline company.
Some 54 percent of shareholders approved the proposal during the company’s annual meeting on May 6. The proposal requests the company assess the measures it is taking to prevent public health effects from chemical releases.
“Shareholders are increasingly concerned about the impact of climate change on their portfolio,” said Danielle Fugere, president and chief counsel for As You Sow. “Especially for those that have long-term beneficiaries.”
The proposal points to chemical releases and plant shutdowns during Hurricane Harvey in 2017 as an example of a climate liability for shareholders. It
notes that Houston, where some of its major plants are located, has experienced three 500-year floods in a three-year time period.
Phillips 66 cited Harvey as a major reason for a $123 million decrease in pretax income from its chemicals business in 2017.
The Woodlands chemical maker Chevron Phillips Chemical Co. is jointly owned by Phillips 66 and the oil major Chevron and operates the Cedar Bayou facility in Baytown along in the Houston Ship Channel.
“Operations can become inundated and pose significant chemical release risks during extreme weather events,” the shareholder proposal filed by As You Sow said. “Growing storms and the costs they bring to our company are predicted to increase in frequency and intensity as global warming escalates.”
Similar proposals will be filed by As You Sow for a vote at Exxon Mobil, which has large refining and chemical plants along the Gulf Coast, and Chevron annual meetings on May 27.
Phillips 66 did not say
“Operations can become inundated and pose significant chemical release risks.”
As You Sow shareholder document
whether it would implement the proposal but indicated it will provide more information about the risks of expanding petrochemical operations and investments along the U.S. Gulf Coast.
“Phillips 66 is currently reviewing its disclosures, and working with (Chevron Phillips Chemical) on its disclosures, to determine how best to incorporate more information as requested by the shareholder proposal,” said Dennis Nuss, a spokesperson for Phillips 66.
As You Sow leaders said the majority vote shows that investors fear that the company is not doing enough to protect shareholders from climate risks — and it shows important investors are concerned, not just the activists.
“When you get above 50 percent, that signals that some of the largest investors, like BlackRock and
Vanguard, are concerned,” Fugere said. “So, it does help push the company to take the concern seriously.”
Institutional investors in the last year indicated climate risks and other environmental, social and governmental issues are a higher priority than in the past. In January, Larry Fink, founder and chief executive of BlackRock wrote in his annual letter to shareholders that the firm would make environmental sustainability a core investment goal.