Donald Trump withdrew America from the Paris climate change agreement early Friday, but not before shareholders in Exxon Mobil, the world’s largest listed oil company, sent a powerful message to the companies of the need to get serious about climate change and its impact on their businesses.
In fact Exxon shareholders, including some of the worlds biggest money managers-have forced Exxon to publish what amounts to an impact statement of climate change policies on its business. It is a move that we will see repeated at other global giants such as mining and energy companies. Exxon’s CEO urged Trump to remain in the Paris accord, as did Chevron, BP and BHP Billiton, as well as many other CEO’s of major global groups. Tesla CEO, Elon Musk followed through on his threat to quit two key Trump business groups, and resigned via tweet after the President announced his decision.
More than 63% of Exxon’s shareholders at the energy giant’s annual meeting in Dallas on Wednesday voted in favour of the proposal, which was put forward by two shareholders – the New York State pension fund and the commissioners of the Church of England. Some of the world’s biggest investors, led by the giant Blackrock (the world’s biggest money manager $US5 trillion in funds under management) voted in favour of the resolution, reversing its opposition to the same idea a year ago. Calpers, the Californian state employee pension fund (with over $US300 billion invested) also voted in favour of the resolution, as it did a year ago.
The Financial Times (the business sector’s global bible) reported that the move “suggests there will still be significant pressure from investors” to encourage companies to address climate change, even if President Trump withdraws the country from the Paris agreement.”
More importantly Donald Trumps’ Secretary of State, Rex Tillerson was the long time CEO of Exxon Mobil, and the company’s new CEO, Darren Woods, last week wrote personally to the President urging him to keep the US in the Paris accord. Woods restated the company’s support for the agreement at the annual meeting.
The proposal approved by the meeting calls calls on the company to report every year on “the long-term portfolio impacts of technological advances and global climate change policies”. In particular, it requests an assessment of the effects on Exxon’s oil and gas reserves and resources of a scenario in which governments introduce policies to restrict greenhouse gas emissions to try to keep the rise in global temperatures since pre-industrial times to 2C.
Exxon’s board had recommended shareholders vote against the proposal on climate change, claiming that it already took the impact of possible climate policies and technological changes fully into account in its planning. A climate change – related resolution failed to get approval last month (for a second year in a row) at the annual meeting of Warren Buffett’s Berkshire Hathaway company, one of the world’s biggest insurers. It all depends what sort of reputation the company and its management have with shareholders. For years Exxon under Rex Tillerson rejected climate change and pressure on the company to start taking it into account in its business rtategy and investing.
Most important of all the 62.2% vote in favour of the proposal was a significant jump from the 38.1% who voted for a similar resolution at Exxon’s annual meeting a year ago. The strongly suggests that the global investment community has moved significantly on the issue of climate change and its impact on companies (and the investments of the groups ike Blackrock).
