2017 Proxy Season Shows Investors are Concerned About Climate Change
Shareholders are starting to take climate change seriously, as the 2017 proxy season indicates. There were a number of majority and near-majority shareholder votes supporting proposals calling for action on climate change plus a large amount of resolution withdrawals due to corporate climate commitments.
The Interfaith Center on Corporate Responsibility (ICCR) filed 66 shareholder resolutions directly related to climate change impacts in 2017. Many of the resolutions were filed at multiple companies and co-filed by a large group of investors. The ICCR filed resolutions with 17 companies, mostly in the energy sector, requesting they create a business plan for a two-degree Celsius temperature increase consistent with the Paris Climate Agreement. The resolution received a majority vote at ExxonMobil and Occidental Petroleum. At the remaining companies, the resolution achieved above 40 percent or was withdrawn because of corporate climate commitments.
Methane is a greenhouse gas with a warming potential about 23 times greater than carbon dioxide. An ICCR resolution persuaded EOG Resources, Inc. shareholders to commit to publicly disclose methane emissions percentage and other methane emissions metrics. ICCR members reached agreements with Sempra Energy and Washington Gas to report publicly on methane leak tracking and mitigation. An As You Sow shareholder resolution filed with ExxonMobil achieved a 38 percent vote. The resolution called for Exxon to take strong action on methane leaks.
Methane is the primary component of natural gas. Natural gas can be a more potent climate change contributor than coal if methane emissions are more than 3.2 percent across the natural gas supply chain. A big natural gas leak near Los Angeles was found in October 2015. SoCal Gas built a relief well to capture the leaking gas and by mid-February the leak was fixed. The amount of methane leaked had the same 20-year impact on the climate as burning almost a billion gallons of gasoline. The leak proves that companies need to take methane seriously.
For three years, ICCR shareholders, led by the Midwest Capuchin Franciscans, filed a resolution calling on ExxonMobil to elect an independent director with climate change expertise. In January, ExxonMobil decided to appoint a climate scientist to its board of directors. Dr. Susan K. Avery, an atmospheric scientist and the former president and director of the Woods Hole Oceanographic Institution, was elected to the board.
A number of As You Sow resolutions on climate change resulted in them being withdrawn due to the companies taking action. One of those resolutions called for Andarko Petroleum Corporation to publish an analysis of long term impacts to the company’s oil and gas reserves and resources if carbon restrictions or commitments adopted by governments consistent with the Paris Agreement’s two-degree temperature increase result in less demand for oil and gas. The company agreed to meet with As You Sow for discussion.
This year’s proxy season proves that climate change is a topic of growing concern among investors. It stands in stark contrast with President Trump’s administration, which has demonstrated that it does not care to address or tackle climate change. As it did during the Bush administration, the business community will continue to address climate change and take climate action.