Illustration: Rebecca Zisser/Axios

As the political urgency around climate change has grown, activist shareholders are increasingly pressuring fossil fuel companies to change how they operate.

The big picture: Climate-related reforms have received especially strong support from large institutional investors, yielding changes in disclosure, governance, compensation and more.

What's happening: These shifts have swept through even the largest players in the industry.

  • Urged by investors, Oxy Petroleum and Pennsylvania utility PPL Corp shareholders passed resolutions in 2017 to publish reports that would address the impact of climate change on the company's bottom line and the plans in place to reduce emissions and improve sustainability.
  • In December 2018 — in a joint statement with Climate Action 100+, a group of more than 300 investors with over $33 trillion in assets — Shell announced plans to link executive pay to the company’s performance on greenhouse gas emissions targets.
  • In May 2019, a Climate Action 100+ resolution passed with the approval of 99% of BP’s shareholders requiring the company to disclose the carbon intensity of its products and its efforts to align with the goals of the Paris Agreement. The resolution also linked the bonuses of 36,000 employees to BP’s performance against climate targets.

Yes, but: Not all climate-related resolutions pass.

  • Though they came close, Dominion Resources, Duke Energy and DTE Energy were unable to garner majorities for climate-related proposals in 2017.
  • Companies are also reluctant to establish separate positions within their organizations, such as a board committee or independent chairman, that would exclusively oversee climate reporting.

What to watch: Stakeholder preferences are gathering force quickly. In 2016, 38% of Exxon shareholders rejected a resolution around climate risk reporting and Paris Agreement targets, only to have it pass with 62% approval the next year.

  • Companies may soon be taking a more proactive approach to get out ahead of investor demands. In a recent example, BP, Shell, Exxon, EDF Renewables and Mobil joined together to encourage carbon tax legislation, breaking from their industry trade groups.

Anna Mikulska is a nonresident fellow in energy studies at Rice University’s Baker Institute's Center for Energy Studies and a senior fellow at the University of Pennsylvania's Kleinman Center for Energy Policy.

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