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Exclusive: New York asks SEC to force climate vote onto Exxon proxy
February 24, 2016 / 6:06 AM / 2 years ago

Exclusive: New York asks SEC to force climate vote onto Exxon proxy

The logo of Exxon Mobil Corporation is shown on a monitor above the floor of the New York Stock Exchange in New York, December 30, 2015. REUTERS/Lucas Jackson

HOUSTON (Reuters) - New York state’s comptroller and four other Exxon Mobil (XOM.N) shareholders asked the U.S. Securities and Exchange Commission this week to force the oil producer to include a climate change resolution in its annual shareholder proxy, according to a filing seen by Reuters.

The move, the first since the Paris climate accord, ratchets up the tension between the world’s largest publicly traded oil company and a growing chorus of investors concerned that climate change or legislation designed to curb it will harm Exxon’s ability to operate profitably.

It also comes as Exxon is fighting an inquiry by New York state’s attorney general into whether it misled the public and shareholders about the risks of climate change. New York City officials have also launched efforts to force greater climate disclosure by Exxon.

Exxon told the SEC last month it intended to block a vote on the resolution at its annual meeting this May, claiming it was vague and asked for metrics that are hard to quantify. It is not uncommon for companies to attempt to block shareholder resolutions if executives feel such resolutions have little to do with core operations.

New York State Comptroller Thomas DiNapoli, who oversees the state’s $178.3 billion pension fund, said in a filing with the SEC that the information is crucial to helping making an informed decision about whether or not to invest in the oil company.

“As investors, we need to know how Exxon Mobil’s bottom line will be impacted by the global effort to reduce greenhouse gas emissions and what the company plans to do about it,” DiNapoli said in a statement to Reuters.

Exxon and the SEC declined to comment.

The SEC will likely issue a ruling before Exxon sends its proxy materials to shareholders later this spring.

Exxon has said in the past that climate change poses little risk to its reserves and that it would start providing some information about how it arrived at this conclusion.

The company has also said it has worked transparently for years on climate science and has properly disclosed business risks.

That does not go far enough for New York State, the Church of England and other shareholders who own Exxon shares worth more than $1 billion. The group, led by DiNapoli, wants the company to include a shareholder proposal in its annual proxy that, if approved, would require Exxon to report annually how it could be affected by climate change regulations.

PARIS

Late last year, representatives of 195 countries in Paris committed to rein in rising emissions that have been blamed for global warming. Exxon rivals such as ConocoPhillips (COP.N) and Hess Corp (HES.N) acknowledged the reality of climate change and said they agree steps should be taken to curb its effects.

The Paris deal aims to limit the rise in global temperatures to under 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, a mark scientists believe could be a tipping point for the climate.

It was that 2 degree target that DiNapoli’s group used as a benchmark, asking, in effect, that Exxon study the effects of such a policy change. The United States has yet to ratify the Paris proposal, though Obama administration officials are confident it will occur.

“We believe that our desire to see reporting on how Exxon Mobil’s business would fare were warming to be restricted to 2 degrees Celsius is widely shared in the institutional investor community,” Edward Mason, head of responsible investment for the Church of England’s commissioners, said in a statement.

In its rebuttal to the SEC last month, Exxon said the proposal was too vague and that it had already honored the spirit of the proposal’s intention, in part by publishing a 2014 report on its website entitled, “Energy and Carbon – Managing the Risks.”

DiNapoli and the church were joined in the SEC filing by the Vermont State Employees’ Retirement System, the University of California Retirement Plan and the Brainerd Foundation.

Reporting by Ernest Scheyder; Editing by Terry Wade and Andrew Hay

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