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Exxon, Chevron shareholders reject ESG resolutions at annual meetings

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Exxon, Chevron shareholders reject ESG resolutions at annual meetings

Shareholders at Exxon Mobil Corp. and Chevron Corp. rejected several investor-led environmental, social and governance resolutions at the oil and gas majors' respective annual general meetings on May 29.

In Dallas, about 75% of Exxon shareholders voted against a resolution to report on the public health risks of its Gulf Coast petrochemical operations. In March, Exxon asked the SEC to block a vote on that specific resolution, saying it was an effort to micromanage the company. The SEC, however, disagreed and denied Exxon's request.

In March, the SEC did block, also at the request of Exxon, a separate resolution calling on the company to set and publish short-, medium- and long-term emissions reductions targets aligned with the goals of the Paris Agreement on climate change. The New York State Common Retirement Fund and the Church Commissioners for England filed that resolution in December 2018.

With its resolution scrapped, however, the two investor groups urged shareholders ahead of the annual general meeting to vote against the entire board and to vote in favor of another proposal to create an independent chair, separating the role of board chairman from the CEO position. About 59% of Exxon shareholders vetoed the proposal, with 41% voting in favor of it May 29.

"The result of Exxon refusing to put our shareholder proposal to the vote is that investors have simply expressed their frustration at Exxon's governance on other ballot items. Today's increased support for the separation of chair and chief executive, in the face of board opposition, is a measure of investors' profound dissatisfaction," Edward Mason, the head of responsible investment for the Church Commissioners for England, said May 29.

Also at the May 29 meeting, Exxon shareholders rejected resolutions: to create a climate change committee; to disclose political contributions; and to report on lobbying activities.

The resolutions follow a wave of investor activism pushing for large energy companies to take more serious action on climate change, among other issues. Although shareholder resolutions in the U.S. are nonbinding, companies generally pay attention to those that win majority shareholder support.

Investor resolutions that tend to see higher percentages of the vote are typically those that "see a lot of investor activity coalescing" ahead of these shareholder meetings, Carbon Tracker Initiative's North American Director Rob Schuwerk said in a May 29 phone interview.

California-based Chevron's shareholders also vetoed several investor-backed resolutions on May 29, including one asking the company to report on its Paris-aligned climate change business plan.

"This proposal is based upon the flawed premise that a global agreement to limit warming to 2 degrees Celsius requires each individual fossil fuel producer to reallocate investment to different energy resources. A decrease in overall GHG emissions, however, is not inconsistent with continued or increased fossil fuel production by the most efficient producers," Chevron said May 29.

Similar to Exxon, Chevron shareholders rejected proposals to create a climate change committee and to adopt an independent chair policy.

Many investors have been calling for the U.S. oil majors to catch up to their European counterparts on climate change. At the end of 2017, Royal Dutch Shell PLC set goals to cut emissions, including Scope 3 emissions from the upstream and downstream sectors. Additionally, in late 2018, Shell said it would link its performance on its emissions reductions targets to executive pay, and the company ended its membership in the American Fuel & Petrochemical Manufacturers trade association over differences on climate change issues.