Every climate-related shareholder proposal was voted down by wide margins at the May 31 annual meetings of supermajors Exxon Mobil Corp. and Chevron Corp., according to preliminary voting results.
The outcomes were a sharp contrast to results in the past two years, when shareholders supported some resolutions put forward by environmental activists. In 2021, for example, hedge fund Engine No. 1 won three Exxon board seats with pledges to change the company's approach to climate change.
In 2023, activist resolutions called for both companies to set Scope 3 emissions targets and publish a variety of reports on subjects such as emissions data and assessments of the risks to assets in a net-zero world. Scope 3 emissions in the oil, natural gas and refined products sectors are those that come from customer use of the fuels. The US oil and gas industry has opposed Scope 3 disclosures, saying estimates are unreliable and carbon emissions would be counted twice.
The climate-related shareholder proposal that received the most "yes" votes at Exxon — 36.4% of the total cast — would have required the company to directly measure methane emissions rather than use estimates and report this figure publicly in an accepted format, such as the UN's Oil & Gas Methane Partnership program.
The Chevron measure that received the most votes in favor — 18.6% — called on Chevron to assess the impact of the energy transition on its workers and the communities in which it operates.
But many shareholder proposals that focused on climate impacts failed to garner even 10% of the votes. Climate change and emissions were the topics of five of eight shareholder resolutions at Chevron and eight of 12 resolutions at Exxon.
Many of the proposals this year were new and lacked institutional support, said Thomas Peterson, climate coordinator for activist shareholder group As You Sow, in an email. "There has also been a reduction in support from large asset managers, some of whom appear to be stepping back from their stated climate commitments or failing to implement their stewardship goals," Peterson said.
Peterson said resolutions typically need support from 20%-30% of shareholders before large institutions climb aboard. As You Sow sponsored a proposal that would require Exxon to track and report the greenhouse gas emissions of assets it sells to other firms, which received 18.4% of the vote. The group sponsored a similar measure at Chevron that gathered 18.3% of the vote. Although neither proposal passed, the level of shareholder support was still encouraging, Peterson said.
Rob Schuwerk, the North American executive director of the Carbon Tracker Initiative, a think tank dedicated to examining the financial impact of the energy transition, said Exxon's approach to climate-related proposals had dampened votes. The new proposals will need time to find acceptance with investors, Schuwerk said.
"We would expect that as investors come to understand that retirement obligations for Exxon's exits are generally not pre-funded, and include obligations that are not visible on the balance sheet today, those numbers will go up," Schuwerk said in an email.
Companies wary of additional reporting
Both Exxon and Chevron pushed back against activist investor requests for more reports and analysis. Exxon noted that 10 of the 12 shareholder proposals — climate-related or not — would add to its current reporting requirements.
"Unfortunately, there are some anti-oil and natural gas activists who use the SEC's shareholder proposal process to further their own interests, which are often in conflict with the interests of many of the company's other shareholders," Exxon said in an introduction to the shareholder proposals in the meeting's proxy statement. "These activist firms, by their own admission, prefer not to own fossil fuels stocks yet acquire a minimal ownership stake in the company with the sole purpose of targeting campaigns and pressuring investors."
Exxon singled out Follow This, an activist shareholder group based in Amsterdam, as an example. Follow This sponsored a proposal that would have required Exxon to report Scope 3 emissions and to reduce the amount of oil and gas it sells. Nearly 90% of shareholders voted against the proposal.
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