The US Securities and Exchange Commission (SEC) has blocked a shareholder proposal co-filed by the Church Commissioners for England, to be voted on at the Exxon annual general meeting (AGM), for the second consecutive year.
The proposal was co-filed with As You Sow, a US-based non-profit organisation promoting environmental and social corporate responsibility through shareholder advocacy, coalition building and innovative legal strategies.
It was backed by Robeco, the Presbyterian Church USA, and a number of religious communities in North America.
The proposal requested the oil giant to issue a report describing if, and how, it plans to reduce its total contribution to climate change and align its operations and investments with the Paris Agreement’s goal of maintaining global temperature rise well below 2ºC.
But Exxon asked the SEC last January for permission to omit the resolution from the proxy materials sent out before the company’s AGM, expected to be held on 27 May 2020. Its petition has now succeeded.
In a separate ruling, the SEC also allowed Chevron to reject a similar resolution.
Last year, the Church Commissioners and New York State Common Retirement Fund (NYSCRF) had filed a resolution to be proposed at Exxon’s AGM, asking the oil giant to disclose emissions reduction targets, but this was also barred by the SEC at the company’s request.
However, at that AGM, shareholders were able to stage a significant rebellion, registering 40.8% support for a proposal to separate the positions of Exxon’s chair and chief executive officer.
As You Sow said Exxon’s current reporting was confusing, at best.
“Exxon has implied it is in alignment with the global Paris Agreement, yet has announced increased investments in oil and gas projects at alarming rates. While those investments may decrease temporarily in the face of the coronavirus pandemic, shareholders seek to understand the company’s long-term plans for how it intends to align with the ultimate Paris goal of limiting global temperature rise to 1.5 degrees Celsius. No such plans have been forthcoming to date,” it said.
Edward Mason, head of responsible investment at the Church Commissioners, said that regardless of the SEC ruling, it was imperative for investors that Exxon should report if, and how, it plans to align its operations and investments with the goal of restricting warming to well below 2ºC and stave off catastrophic climate impacts.
Mason, who also leads the Climate Action 100+ engagement with Exxon alongside NYSCRF, said: “ExxonMobil is doubling down on its investment in carbon-intensive oil and gas infrastructure and production at a time when every company should be taking responsibility for reducing its carbon emissions.
“Exxon is woefully unprepared for a low carbon future, and its strategy poses extreme financial, environmental and social risks.”
“Exxon is woefully unprepared for a low carbon future, and its strategy poses extreme financial, environmental and social risks”
Edward Mason, head of responsible investment at the Church Commissioners
And he warned that investors would “give harsh judgement” on Exxon’s climate governance and strategy in their voting on shareholder proposals that have made it to the ballot, and on director elections.
Sanford Lewis, lawyer for the Exxon shareholders, said that since 2016, SEC staff had rewritten the principles governing shareholder proposals to make it much more difficult for shareholders to file proposals at the oil majors regarding climate change.
He warned: “These interpretations by the SEC ban proposals that are too specific as ‘micromanaging,’ but also allow companies to declare a proposal that complies with the new micromanagement interpretation to be substantially implemented by general, non-responsive publications by the big oil and gas companies.”