ENVIRONMENT

ExxonMobil Shareholders Are Starting The Climate War The Oil Giant Deserves

Trouble has been brewing for months.
ExxonMobil has changed course on how its describes climate change in the last few years, going from downplaying concerns to a
ExxonMobil has changed course on how its describes climate change in the last few years, going from downplaying concerns to accepting that it is a serious issue.

ExxonMobil's investors want the company to come clean about how climate change could affect its business.

On Wednesday, shareholders will meet in Dallas, Texas. They are scheduled to vote on investor resolutions, including some that would require the energy giant to disclose the risks climate change poses to its bottom line.

ExxonMobil investors worth $6 trillion, including the California Public Employee's Retirement System and the Church of England, are backing the resolutions on climate risk. They worry that climate change might hurt the company's operations, and that policies designed to curb global warming could soon make selling fossil fuels a losing game.

The largest publicly traded energy company in the world, ExxonMobil has urged shareholders to reject the proposals, saying it already does enough to address climate risk, according to Scott Silvestri, senior media relations adviser at the firm.

Indeed, ExxonMobil addressed concerns about climate change in a 2014 risk disclosure statement, which companies are required to file. But proponents of the new resolutions argue that ExxonMobil's past reporting on climate change has been unsatisfactory.

Shareholders have considered, and rejected, similar resolutions in the past. Though these latest resolutions are unlikely to pass as well, they could help pressure the company to become more transparent about how planetary warming and climate policy might impact its operations, according to supporters of the proposals. 

Michele Vaughan (L) and Ashlee Whitaker, both of Dallas, protest outside the ExxonMobil annual shareholders' meeting at the M
Michele Vaughan (L) and Ashlee Whitaker, both of Dallas, protest outside the ExxonMobil annual shareholders' meeting at the Morton H. Meyerson Symphony Center May 28, 2008, in Dallas, Texas. ExxonMobil shareholders will convene Wednesday in Dallas.

Thanks in part to slumping oil prices and allegations that the company misled the public about its knowledge of climate change, ExxonMobil has been beset for months by public criticism, legal challenges and financial woes that have brought investors' concerns to a boiling point.

Wednesday's vote comes amid reports that the company knew about links between fossil fuels and climate change as early as the 1970s.

In September 2015, the site InsideClimateNews, along with The Los Angeles Times and the Columbia Journalism School, unearthed documents showing that ExxonMobil had early knowledge of climate change.

Numerous reports have since surfaced indicating that ExxonMobil and the American Petroleum Institute, the country’s largest oil and gas lobbying group, spent decades and millions of dollars downplaying the environmental risks posed by burning oil and other fossil fuels.

The revelations have hurt investors' confidence in the company, according to Kathy Mulvey, the climate accountability campaign manager at the Union of Concerned Scientists. She has worked with institutional investors to address climate and other risks in the past.

"I think what's really shifting things is the evidence that the company decided not to chart a different course based on what it knew and, furthermore, that ExxonMobil embarked decades ago on a coordinated campaign to deceive the public about climate change," Mulvey told The Huffington Post on Tuesday. 

ExxonMobil denies that it deliberately withheld information on the links between fossil fuels and climate change, saying it came to no firm conclusions about climate change in the 1970s. However, reports about the extent of its climate knowledge have prompted legal challenges.

In November, the New York state attorney general launched an investigation to determine whether the firm misled investors about the risks of climate change. In March, a coalition of state attorneys general announced they had begun similar investigations.

The Department of Justice also asked the FBI in March to look into whether ExxonMobil had broken federal racketeering statutes by suppressing information about the links between fossil fuels and climate change. The move recalled past efforts to punish corporate duplicity: Federal prosecutors successfully used the very same statutes to prosecute tobacco companies for willfully misleading the public about the health effects of smoking.

New York Attorney General Eric Schneiderman has launched an investigation to determine whether ExxonMobil misled investors ab
New York Attorney General Eric Schneiderman has launched an investigation to determine whether ExxonMobil misled investors about the risks of climate change.

Plummeting oil prices have also helped force the company onto the ropes. ExxonMobil has had to dial back new oil exploration projects. And in February, Standard and Poor’s downgraded ExxonMobil's credit rating, a sign that investors might have doubts about the company's ability to continue generating fat returns.

Now, the oil giant is facing a reckoning from shareholders. Since January, a group of investors has been calling on the company to provide annual assessments detailing precisely how its business would be affected by global temperature increases and policies designed to slow the planet's warming.

The company published a report in 2014 outlining its strategies for dealing with a warming planet and climate policy. But shareholders remain concerned that international efforts to slow climate change by curbing fossil fuel use could hurt ExxonMobil's business model. They say the company has not told investors how its business would perform if global temperature increases were limited to 2 degrees Celsius above pre-industrial levels, the warming cap set by the global climate accord adopted by 195 countries in December.

Calls for greater transparency at the oil giant reflect a broader trend of investors demanding that companies be more upfront about the risks posed by climate change and climate policy, according to Lance Pierce, president of CDP North America, a nonprofit that tracks corporate disclosures around climate change.

"As more and more investors have themselves begun to internalize the projected risks of climate change to their portfolios, they've begun in increasing numbers to make asks of this industry and others about what the impacts are," Pierce told HuffPost. 

"What we're seeing now is not new, and it's probably not the high water mark either," Pierce added. 

Even if the proposals are not adopted Wednesday, they still could help convince the company's executives that shareholders feel strongly about the issue, according to Mulvey.

ExxonMobil has already tempered its public position on climate change. The company's CEO, Rex Tillerson, said as recently as 2012 that fears about climate change were overblown, stoked by environmental groups who “manufacture fear.” Now, the company says it's confronting climate change head on. 

“We see the issue of climate change, we see the risks of climate change and take them seriously, and we are working hard on lower emissions technology,” Alan T. Jeffers, a company spokesman, told The New York Times last week. 

For instance, the company has partnered with clean technology firm FuelCell to develop improved carbon capture and storage technologies. 

ExxonMobil CEO Rex Tillerson has changed his tune on climate change in recent years. 
ExxonMobil CEO Rex Tillerson has changed his tune on climate change in recent years. 

Other energy companies are beginning to shift their official position on climate change as well, according to Mulvey. 

"The other fossil fuel companies are definitely paying attention," Mulvey said. "The pressure that's rising on ExxonMobil should create a powerful incentive for other companies to distinguish themselves."

Whether public statements about transparency and climate change will translate into action remains difficult to say, according to Kert Davies, executive director of the Climate Investigations Center, a group that monitors environmental policy. 

"They're not going to win," Davies told HuffPost, referring to shareholders putting climate change resolutions before ExxonMobil. "But shareholder activists are long haul activists. They’re very patient."

Even so, some environmentalist activists see shareholder resolutions, no matter how progressive, as insufficient. The logic is simple: Fossil fuel companies are unlikely to change their basic business model, and it’s too late to try to work with them to clean up their act. These activists advocate divesting from fossil fuel companies altogether. 

“There’s just no more time for fooling around," Bill McKibben, founder of environmental advocacy group 350.org, told reporters on a call Monday. "We’ve lost a quarter century trying to catch up with physics. We’re losing this fight badly at this point, and there’s no longer time for playing games."

HuffPost

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