Against the wishes of the board, Exxon Mobil Corp. shareholders approved a proposal for the company to publish a report assessing the long-term impacts of climate change on its business.
The resolution, which specifically requests that the report evaluate Exxon's portfolio based on a scenario where global temperature increases are held below 2 degrees Celsius in accordance with the Paris global climate agreement, received 62.3% of votes at the company's May 31 annual meeting.
Exxon is the second large U.S.-based oil and gas company to recently see a majority vote for climate change disclosure. Occidental Petroleum Corp. shareholders passed a similar resolution May 12.
Exxon Chairman and CEO Darren Woods reiterated that while the company remains committed to the Paris pledge, the board does not believe the proposed disclosures are warranted. "Our outlook assumes increasingly stringent climate policies," he said during the meeting. "At the same time, it assumes growing energy demand through 2040, including substantial demand for oil and gas. ... We're confident in the commercial viability of our portfolio."
Institutional investors BlackRock Inc., Vanguard Group and State Street Global Advisors, which own a combined 18% of Exxon's 2.2 billion shares, according to S&P Capital IQ data, did not disclose how they voted on the disclosure resolution, but the original proposal filed in April noted that "major asset managers (e.g. BlackRock, State Street Global Advisors) have called for improved climate risk disclosures." BlackRock also supported the Occidental shareholder resolution, according to an investment strategy announced by the firm earlier in 2017.
Shanna Cleveland, carbon asset risk manager at the sustainable investment advocacy group Ceres, said she was surprised by the vote result. "We knew that there was a lot of mainstream support for scenario analysis as a key tool for assessing climate risk, but we did not anticipate getting 62%," she said in an interview. "The mood is that the company and the markets are really starting to understand what a key factor the energy transition is in gauging how well a business will do over the long term."
Craig Rhines, chief investment officer of the powerful California Public Employees Retirement System pension fund, told S&P Global Market Intelligence after the vote that he is "optimistic" that Exxon will respond to the resolution, which his fund co-filed.
Exxon shareholders also proposed a resolution asking the company to publish a report on methane emissions, but with only 38.7% of the vote, it was not approved.
Chevron Corp., which also held its annual meeting May 31, was due to vote on a proposal similar to those passed by Occidental and Exxon shareholders, but Hermes EOS and Wespath Investment Management withdrew the resolution May 2 to "provide Chevron with additional time to incorporate new best practice recommendations into its disclosure on how climate change is factored into its strategic planning."