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Column / Harder Line

Investors ramp up pressure on Exxon over climate change

A group of hands poking an oil barrel with needles
Illustration: Rebecca Zisser/Axios

NEW YORK — Investors on both sides of the Atlantic are pushing ExxonMobil to disclose targets that would drastically reduce its greenhouse gas emissions in line with the Paris climate agreement.

Driving the news: The New York public pension fund and Church of England’s endowment have filed a resolution for consideration at Exxon’s annual meeting in May calling for the company to disclose such targets. The oil giant has asked the federal Securities and Exchange Commission, which governs the process, to throw it out. A decision is expected imminently.

Why it matters: The investment community is becoming an alternative battleground between publicly traded companies and climate change as U.S. government policy on the matter retreats under President Trump.

  • While resolutions pushed by shareholders are non-binding, they’re symbolically significant. Companies usually comply with proposals if they get more than 50% support from investors during votes at annual meetings, most of which occur during the springtime.

Where it stands: The SEC is more likely than not to grant Exxon’s request, because the federal agency said last month that another oil and gas company — Devon Energy — could exclude a nearly identical resolution. The stakes are higher with the Exxon resolution, its backers say, with an unusual amount of support from investors around the world.

  • A group of investors representing $9.5 trillion in assets under management — roughly 10% of the entire world’s investment dollars — sent a letter last month to the SEC supporting the resolution.
  • Such a letter is unusual, New York Comptroller Thomas DiNapoli, who manages the New York fund, told me in an interview last week. "I hope that gives our position greater standing on the part of the SEC," he said.
  • A spokesperson for the SEC declined to comment for this article.

Flashback: These two players have been successful in the past. DiNapoli and the Church of England were behind a 2017 resolution urging Exxon to write a report disclosing the risks climate regulations pose to its bottom line. A surprising 62% of shareholders supported it. Exxon issued the report last year.

  • The church has also been successful urging other big fossil-fuel producers, including BP and mining giant Glencore, to take action on climate change via this same process, known as “shareholder democracy.”

The resolution pending with Exxon calls for disclosure of short-, medium- and long-term targets for reducing greenhouse gas emissions from company operations and products that are in line with the Paris agreement.

  • The accord calls for, but doesn’t require, countries to drastically reduce emissions to keep the Earth's temperature from rising 2 degrees, a goal many experts say is already unattainable. Trump has vowed to withdraw the United States from the deal.

The other side: An Exxon spokesperson referred to the firm’s publicly available letter to the SEC arguing to omit the proposal from consideration, citing three main arguments:

  1. The proposal is vague, indefinite and misleading.
  2. The company has “substantially implemented” it already and existing policies “compare favorably to the proposal.” The company has not, however, disclosed any such targets resembling what the proposal asks for.
  3. The resolution seeks to micromanage the company. It’s this argument that's likely to prevail, because it’s what the SEC cited in granting Devon’s request.

In response to Exxon’s letter, DiNapoli cited his trips to the annual United Nations climate-change conferences like the one in 2015 when the Paris deal was forged.

  • “When you go to those gatherings, outside of the U.S. debate, you realize the world community recognizes this as an urgent issue,” DiNapoli said.
  • He said Exxon should want to take more action — akin to European peers BP and Royal Dutch Shell — to reduce emissions and diversify their business in response to the global energy transition.

The intrigue: Some activist investors are worried about an apparent shift at the SEC. The agency last year granted a request by EOG Resources to throw out a proposal calling on the oil producer to set greenhouse gas reduction targets, a type of resolution that hadn't been excluded before. The reason? It would micromanage the company, the same issue that could prevail this time.

  • Investors have noticed a higher number of similar moves this year by the agency, which is considered independent from the executive branch but whose commissioners are appointed by Trump.
  • In a twist, that same company, EOG Resources, ended up agreeing this year to set targets cutting its emissions of methane, a potent greenhouse gas that’s the primary component of natural gas.

The bottom line: The shareholder proposals and resulting votes are just one part of an overall process of investors nudging companies in their preferred direction, as the EOG result showed. DiNapoli says he’s going to keep pressuring Exxon no matter what the SEC decides.