Forty one percent of investors voted to separate ExxonMobil’s board chair from its CEO at the company’s annual general meeting today, sending “a strong signal that investors are dissatisfied with the board’s approach, including its approach to managing climate risk,” said Andrew Logan, senior director of oil and gas at the sustainability nonprofit organization Ceres.
Logan added that the company should heed this strong signal through “real engagement with investors, independent oversight, and meaningful governance on climate change.”
The proposal, filed by the Kestrel Foundation, became the main vehicle by which investors could express their concern about Exxon’s climate strategy after the company successfully petitioned the U.S. Securities and Exchange Commission (SEC) to keep a different proposal that called for the company to set greenhouse gas emissions reduction goals from going to a vote. The co-filers of that proposal, Church of England and New York State Comptroller Thomas DiNapoli, publicly declared their support for the proposal to separate the board chair and the CEO and vowed to vote against Exxon’s entire board.
“This has been a very difficult Annual General Meeting for Exxon and a warning shot to management,” said Edward Mason, Head of Responsible Investment at the Church of England, who delivered remarks at Exxon’s annual general meeting. “The result of Exxon refusing to put our shareholder proposal to the vote is that investors have simply expressed their frustration at Exxon’s governance on other ballot items. Today’s increased support for the separation of chair and chief executive, in the face of board opposition, is a measure of investors’ profound dissatisfaction. We now expect the company immediately to institute the intensive, meaningful engagement on climate strategy with Climate Action 100+ investors that it has delayed for too long.”
“Shareholders sent a strong message that they are dissatisfied with Exxon’s poor governance, which is preventing the company from adequately addressing climate risk,” said New York State Comptroller Thomas P. DiNapoli. “Exxon would ignore this level of support for an independent board chair at its own risk.”
The vote at Exxon comes as investor concern over climate risks at oil and gas companies is growing, with significant results at Royal Dutch Shell and BP just last week.
“Investors have come to understand the severity of climate risk for the oil and gas sector,” Logan added. “While peer companies such as Shell, BP, Equinor and Occidental Petroleum have taken steps to respond to investor concerns on climate, Exxon has done the exact opposite. It’s not hard to see why investors would vote for a change in the company’s governing body when Exxon’s board has refused to meaningfully engage on such a serious issue. Left with few other avenues through which to voice their displeasure and concern, they’ve sent a very strong — and very public — rebuke to Exxon, not to mention a warning shot to other fossil fuel companies that fail to address climate-related risks.”
About Ceres: Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit ceres.org and follow @CeresNews.
About Climate Action 100+: Climate Action 100+ is an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 320 investors with more than $33 trillion in assets collectively under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures. The companies include 100 ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside more than 60 others with significant opportunity to drive the clean energy transition.