ExxonMobil must allow its shareholders to vote on a climate change resolution, the US Securities and Exchange Commission has ruled. The resolution, which shareholders will vote on in May, would force the oil giant to disclose how climate change would affect its business.
New York comptroller Thomas P. DiNapoli co-filed the shareholder proposal in December, asking Exxon to publish an annual assessment of the long-term portfolio impacts of climate change policies.
Exxon tried to block shareholders from voting on the proposal. In a letter to the SEC Exxon’s attorneys said it was too vague and Exxon already provides its investors with sufficient information about how it manages its carbon-related risks. The letter cites Exxon’s 2014 report, Energy and Carbon — Managing the Risks.
This week the SEC rejected Exxon’s request to block the DiNapoli’s proposal from a shareholders’ vote at its annual meeting in May. “We are unable to conclude that the proposal is so inherently vague or indefinite that neither the shareholders voting on the proposal, nor the company in implementing the proposal, would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires,” the SEC wrote in a March 22 letter.
The SEC decision comes as Exxon is under investigation by New York attorney general Eric T. Schneiderman for possibly lying to the public and investors about climate change risks.
The attorney general also went after Peabody Energy — the largest publicly traded coal company in the world — saying the company had tried to cover up the effect that future carbon proposals would have on its shareholders. In this case, Peabody agreed to file revised shareholder disclosures that reveal such risks.
Exxon spokesperson Alan Jeffers would not comment directly on the SEC ruling. He emailed a statement to Environmental Leader that said: “We will provide the board’s position on the shareholder resolutions in our proxy document, which will be distributed to shareholders next month.”
DiNapoli called the ruling a “major victory.” In a statement he said: “Investors need to know if ExxonMobil is taking necessary steps to prepare for a lower carbon future, particularly now in the wake of the Paris agreement.”
Lux Research director Brent Giles notes that Exxon has taken steps to account for carbon costs. The company uses an internal carbon price, includes it in their Outlook for Energy report and requires business lines to include a proxy in their economics when seeking funding for capital investments.