Exxon Mobil Corp. will soon publish a report addressing the long-term impacts of climate change to its business after the majority of its shareholders pressed the oil major's board to disclose associated financial risks.
"The board has decided to further enhance the company's disclosures ... and will seek to issue these disclosures in the near future," Exxon said in a Dec. 11 SEC filing. "These enhancements will include energy demand sensitivities, implications of two degree Celsius scenarios, and positioning for a lower-carbon future."
Exxon declined requests for further comment. The proposal, which received 62.3% of votes at the company's annual meeting in May despite board opposition, specifically asked Exxon to use the Paris Agreement on climate change's scenario where global temperature increases are held below 2 degrees C.
Backed by fund giants such as BlackRock Inc., Vanguard Group Inc. and State Street Global Advisors, activist shareholders pushed climate change into the energy industry corporate spotlight in 2017 as several other companies considered proposals for 2-degree C scenario disclosures, including Hess Corp., Dominion Energy Inc. and Occidental Petroleum Corp. The push is part of a broader trend toward environmental, social and governance investing in the U.S. and abroad.
Exxon Chairman and CEO Darren Woods Source: Associated Press |
New York state comptroller Thomas DiNapoli applauded Exxon's response to the shareholder resolution, which was sponsored by the New York State Common Retirement Fund.
"Exxon's decision demonstrates that investors have the power to hold corporations accountable and to compel them to address our very real climate-related concerns," he said in a Dec. 12 statement.
Still, sustainable investment advocacy group Ceres' oil and gas industry program director Andrew Logan emphasized Exxon's recent filing is just a first step.
"This is a major change in direction for Exxon, which in the past has said ... it views the below-2 degree Celsius trajectory agreed to in the Paris Agreement as 'highly unlikely,' he noted in an email. "[The company] can conduct this analysis in a way that illuminates the risks of a low-carbon transition for investors, or it can choose to do so in a way that obscures rather than reveals."
Exxon will not be the first U.S. energy company to respond to activist shareholders' climate change disclosure demands. Even though a similar proposal was voted down by Marathon Petroleum Corp. investors during the annual meeting in April, the oil refiner in October released a report detailing its climate change risk mitigation strategy per recommendations by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, an international monitoring body chaired by Michael Bloomberg.
"The primary risk to our refining and marketing segment is decreased consumer demand for traditional transportation fuels in many Organisation for Economic Co-operation and Development countries, including the U.S., due to higher CAFE standards, increased market share of electric vehicles, replacement with biofuels or increased costs as a result of regulation," the report concluded.

