Exxon Investors to Company: Make Climate Curb Fallout Public

  • CEO Woods sees crude oil surviving Paris-driven carbon limits
  • Vote comes amid reports U.S. to abandon Paris Climate Pact

What's at Stake If U.S. Leaves Paris Agreement?

Exxon Mobil Corp. investors, in a split with the company, urged the explorer to publish a detailed analysis on how carbon curbs could affect the value of its oil fields, refineries and pipelines.

The non-binding measure, backed by shareholders including the California Public Employees’ Retirement System and the Church of England investment fund, comes amid reports President Donald Trump may soon abandon the 2015 Paris Climate Accord. More than 60 percent of voters approved the resolution during Exxon’s annual general meeting in Dallas on Wednesday.

The vote was “an unprecedented victory for investors in the fight to ensure a smooth transition to a low-carbon economy,” New York State Comptroller Thomas P. DiNapoli said in a statement. “Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of Exxon Mobil.”

While Exxon’s management opposed the resolution, Chief Executive Officer Darren Woods said he remains committed to the Paris pact’s goals and methods. Even with that agreement in place, he said, oil demand will grow in the coming decades, particularly in underdeveloped regions of the world.

“Energy needs are a function of population and living standards,” Woods said in his first annual meeting since becoming chief executive officer on Jan. 1. “When it comes to policy, the goal should be to reduce emissions at the lowest cost to society.”

Population growth and a desire for higher living standards will increase usage of petroleum-derived fuels, especially for transportation, because there are few widely-available alternatives, he said. There’s a huge untapped energy market among the 1 billion people who currently have no access to electricity and the 3 billion who don’t use modern cooking fuels, Woods said.

Exxon shares fell 0.6 percent to $80.61 at 2:15 p.m. in New York trading.

“It’s going to take a global solution” to limit greenhouse gas emissions that contribute to climate change, Woods said.

The remarks come as Trump mulls pulling the U.S. out of the Paris agreement. On Wednesday, Trump tweeted he would announce his decision within days.

Woods said his forecast assumes governments adhere to the strictures of the Paris pact, which calls for limiting emissions to prevent global temperatures from exceeding pre-industrial levels by 2 degrees Celsius. He declined to comment on what a U.S. exit would mean for the agreement.

Staunch Advocate

Woods has been a staunch advocate for keeping the U.S. in the Paris group, as was his predecessor Rex Tillerson, who is now Trump’s secretary of state. In his first blog post after becoming CEO, Woods advocated low-emission fuels, carbon capture and biofuels as tools for meeting the goals of the Paris agreement.

Wednesday’s climate vote also marked a shift in support on climate change risk issues from large asset managers. BlackRock Inc., Exxon’s second largest shareholder, supported the climate proposal this year for the first time, according to a person familiar with the matter. 

In May 2016, the proposal received a 38 percent “yes” vote after the company said it already disclosed ample data about emissions and risk management. As a result of this year’s 62 percent “yes” vote by investors, the board will reconsider its opposition.

At rival oil explorer Chevron Corp., activists failed to carry the day. About 73 percent of shareholders rejected a proposal at the company’s annual meeting on Wednesday that urged the second-largest U.S. oil producer to look into shifting its focus to renewables and away from fossil fuels.

— With assistance by Emily Chasan

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