By DAVID KOENIG, AP BUSINESS WRITER, DALLAS — May 25, 2016, 4:17 PM ET
Shareholders at Exxon Mobil and Chevron rejected resolutions backed by environmentalists that would have pushed the companies to take stronger stands in favor of limiting climate change.
Environmentalists took solace, however, that some of their ideas gained considerable support.
At Chevron Corp., a resolution asking for an annual report each year on how climate-change policies will affect the company received 41 percent of the vote. A similar resolution at Exxon got 38 percent.
Also, Exxon Mobil Corp. shareholders voted to ask directors to adopt a proxy-access rule, which would make it easier for shareholders to propose their own board candidates. Backers including the New York City comptroller said it could result in the election of independent directors who could help the company address risks like climate change.
The meetings Wednesday — Exxon’s in Dallas, Chevron’s in San Ramon, California — came as the companies are trying to dig out from the collapse in crude prices that began in mid-2014. Exxon earned $16.15 billion last year, its smallest profit since 2002. Chevron’s annual profit plunged 76 percent to $4.59 billion and included the company’s first money-losing quarter since 2002.
Crude prices have rebounded since February, boosting the shares of the top two U.S. oil companies, but they remain about half of what they were at their last peak.
Exxon is also dealing with investigations by officials in several states into what the company knew and allegedly didn’t disclose about oil’s role in climate change.
The company’s shareholders rejected resolutions to put a climate expert on the board and support the goal of a UN meeting in Paris last year to limit global warming to 2 degrees Celsius above pre-industrial levels.
Patricia Daley, a Dominican sister from New Jersey and sponsor of one of the resolutions, said Exxon lacked “moral leadership.”
“Our company has chosen to disregard the consensus of the scientific community, the will of the 195 nations that signed the Paris agreement,” religious leaders and even other oil companies, Daley said.
Exxon CEO Rex Tillerson said his company has long recognized that climate change is a serious risk and might require action. But, he said, any policies should be implemented evenly across the world, allow market prices to pick solutions, and be flexible enough to respond to economic ups and downs and “breakthroughs in climate science.”
Exxon forecasts that oil and gas will make up 60 percent of the world’s energy supply in 2040 — about the same share it holds today. Its CEO said the company was balancing the need to produce more energy for growing world demand with environmental considerations.
Tillerson said there is no alternative source that can replace the ubiquity of fossil fuels. He expressed confidence that technology will provide the key to limiting carbon emissions.
“We’ve got to have some technological breakthroughs,” he said, “but until we achieve those, to just say turn the taps off is not acceptable to humanity,” he said.
The shareholders responded with robust applause.
Across the street from the meeting hall, about 60 protesters gathered and urged large shareholders such as pension funds to divest their shares. Many held signs with slogans such as “Exxon Liar Liar Earth on Fire.” The mood was sedate, however, perhaps owing to the warm, muggy weather.
Exxon shares rose 59 cents to $90.26, and Chevron shares gained $1.60 to $101.79.
This story has been corrected to note that the climate-change resolution won 38 percent support, instead of a maximum of 25 percent support.
Leading Investors and Businesses Back A Strong Paris Climate Agreement
By Christopher N. Fox
The UN climate conference now underway in Paris represents a critical opportunity to limit the risks of climate change and accelerate the shift to clean energy. That’s whyCeresand leading investors and businesses are in Paris making the economic case for a strong global climate agreement. Together, we are focused on the dual objectives of addressing climate risks by ratcheting down reliance on high carbon resources, on the one hand, while simultaneously seizing the Clean Trillion opportunity tied to clean energy investment and transition, on the other.
Record investor and business support
As the Paris negotiations officially have kicked off, over 400 investors with more than $24 trillion in assets released astatement[see column at right] calling for an ambitious global agreement on climate change. That’s the largest-ever group of investors calling for strong government action on climate change. Investors are publicizing their clean energy investments through the Global Investor Coalition on Climate Change’sLow-Carbon Investment Registry, and announcing other actions they are taking on climate change through the newInvestor Platform for Climate Actions.
In addition, more than 1,600 companies have signed Ceres’Climate Declaration; 147 companies have signed the White House Act on Climate BusinessPledge; six major U.S. banks released astatementcalling for a strong climate deal; and the CEOs of 14 major food companies have launched a high profile climatepledge. And thousands of businesses worldwide are joining forces with theWe Mean Business Coalitionin support of climate policy action.
Tackling climate change is a multi-trillion dollar opportunity
Combating climate change requires rapid, large-scale shifting from fossil fuels to clean energy. This transition to clean energy is a multi-trillion dollar opportunity. To limit warming to below two degrees Celsius – a key goal of the Paris climate talks – the International Energy Agency estimates the world needs to invest an additional $40 trillion in clean energy by 2050. That’s slightly more than an additional $1 trillion invested in clean energy – a “Clean Trillion” – per year for the next 35 years.
The Paris climate talks are catalyzing important momentum toward the Clean Trillion goal. The national climate plans that almost every nation in the world has submitted to the UN can spur $13.5 trillion in investment in energy efficiency and low-carbon technologies between 2015 and 2030, according to a recent IEAanalysis.
Much more action needed after Paris
A strong Paris climate agreement will accelerate the transition to clean energy, but much more action will be needed in the years ahead to limit warming to below two degrees Celsius. In the months after Paris, the most important single step that the U.S. can take to lead on climate change is to implement the EPA Clean Power Plan, the first-ever nationwide limits on carbon pollution from electric power plants. This US plan for boosting electric sector clean energy transition is a critically important step for the climate and the economy, as recognized by leading voices in the business community — more than 365 companies and investors announced their support for the plan in a July 2015lettercoordinated by Ceres.
As aptly noted by Letitia Webster, senior director of global sustainability at VF Corporation, a North Carolina-based apparel company whose brands include The North Face, Timberland and Reef, “The Clean Power Plan will enable us to continue to invest in clean energy solutions and further advance our greenhouse gas reduction goals.”
And as Mars, Inc. Global Sustainability Director Kevin Rabinovitch points out, “It’s going to take action from all of us … For businesses like Mars, that means delivering on efficiency and renewable energy; for the EPA and state governors, that means developing and delivering against initiatives like the Clean Power Plan.”
Both VF Corporation and Mars are represented as part of the delegation of business and investor leaders that Ceres is bringing to the Paris climate talks to support strong climate policy action. By backing a strong Paris climate agreement and the EPA Clean Power Plan, leading investors and businesses are making a smart business decision. They are supporting policies that will expand investment in the clean energy technologies that the world needs to stabilize the climate and promote a sustainable economy and world.
To learn more about Ceres plans for COP21 in Paris, and what actions leading investor and business leaders have been taking on the road through Paris clickhere.
This statement is signed by 404 investors representing more than US $24 trillion in assets.
We, the institutional investors that are signatories to this Statement, are acutely aware of the risks climate change presents to our investments. In addition, we recognise that significant capital will be needed to finance the transition to a low carbon economy and to enable society to adapt to the physical impacts of climate change.
We are particularly concerned that gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions. In turn, this could jeopardise the investments and retirement savings of millions of citizens.
There is a significant gap between the amount of capital that will be required to finance the transition to a low carbon and climate resilient economy and the amount currently being invested. For example, while current investments in clean energy alone are approximately $250 billion per year, the International Energy Agency has estimated that limiting the increase in global temperature to two degrees Celsius above preindustrial levels requires average additional investments in clean energy of at least $1 trillion per year between now and 2050.
This Statement sets out the contribution that we as investors can make to increasing low carbon and climate resilient investments. It offers practical proposals on how our contribution may be accelerated and increased through appropriate government action.
Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments. We believe that well designed and implemented policies would encourage us to invest significantly more in areas such as renewable energy, energy efficiency, sustainable land use and climate resilient development, thereby benefitting our clients and beneficiaries, and society as a whole.
HOW WE CAN CONTRIBUTE
As institutional investors and consistent with our fiduciary duty to our beneficiaries, we will:
■ Work with policy makers to support and inform their efforts to develop and implement policy measures that encourage capital deployment at scale to finance the transition to a low carbon economy and encourage investment in climate change adaptation.
■ Identify and evaluate low carbon investment opportunities that meet our investment criteria and consider investment vehicles that invest in low carbon assets subject to our risk and return objectives.
■ Develop our capacity to assess the risks and opportunities presented by climate change and climate policy to our investment portfolios, and integrate, where appropriate, this information into our investment decisions.
■ Work with the companies in which we investto ensure that they are minimising and disclosing the risks and maximising the opportunities presented by climate change and climate policy.
■ Continue to report on the actions we have taken and the progress we have made in addressing climate risk and investing in areas such as renewable energy, energy efficiency and climate change adaptation.
SCALING UP INVESTMENT: THE NEED FOR POLICY ACTION
We call on governments to develop an ambitious global agreement on climate change by the end of 2015. This would give investors the confidence to support and accelerate the investments in low carbon technologies, in energy efficiency and in climate change adaptation.
Ultimately, in order to deliver real changes in investment flows, international policy commitments need to be implemented into national laws and regulations. These policies must provide appropriate incentives to invest, be of adequate duration to improve certainty to investors in long-term infrastructure investments and avoid retroactive impact on existing investments. We, therefore, call on governments to:
■ Providestable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge.
■ Strengthenregulatory support for energy efficiency and renewable energy, where this is needed to facilitate deployment.
■ Supportinnovation in and deployment of low carbon technologies, including financing clean energy research and development.
■ Developplans to phase out subsidies for fossil fuels.
■ Ensurethat national adaptation strategies are structured to deliver investment.
■ Considerthe effect of unintended constraints from financial regulations on investments in low carbon technologies and in climate resilience.
ABOUT UNEP FI– UNEP FI is a global partnership between UNEP and the financial sector. Over 200 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. Through its Climate Change Advisory Group (CCAG), UNEP FI aims to understand the roles, potentials and needs of the finance sector in addressing climate change, and to advance the integration of climate change factors – both risks and opportunities – into financial decision-making. Visit www.unepfi.org.
ABOUT IIGCC– The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for investors. IIGCC’s network includes over 90 members, with some of the largest pension funds and asset managers in Europe, representing €7.5trillion in assets. IIGCC’s mission is to provide investors a common voice to encourage public policies, investment practices and corporate behaviour which address long-term risks and opportunities associated with climate change. Visit www.iigcc.org.
ABOUT INCR– The Investor Network on Climate Risk (INCR) is a North Americafocused network of institutional investors dedicated to addressing the financial risks and investment opportunities posed by climate change and other sustainability challenges. INCR currently has more than 100 members representing over $13 trillion in assets. INCR is a project of Ceres, a nonprofit advocate for sustainability leadership that mobilises investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Visit www.ceres.org.
ABOUT IGCC– IGCC is a collaboration of 52 Australian and New Zealand institutional investors and advisors, managing approximately $1 trillion and focussing on the impact that climate change has on the financial value of investments. The IGCC aims to encourage government policies and investment practices that address the risks and opportunities of climate change, for the ultimate benefit of superannuants and unit holders. Visit www.igcc.org.au.
ABOUT AIGCC– The Asia Investor Group on Climate Change (AIGCC) is an initiative set up by the Association for Sustainable and Responsible Investment in Asia (ASrIA) to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing. AIGCC provides capacity for investors to share best practice and to collaborate on investment activity, credit analysis, risk management, engagement and policy. With a strong international profile and significant network, including pension, sovereign wealth funds insurance companies and fund managers, AIGCC represents the Asian voice in the evolving global discussions on climate change and the transition to a greener economy. Visit http://aigcc.asria.org/.
ABOUT PRI– The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of Environmental, Social and Governance issues (ESG) for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. In implementing the Principles, signatories contribute to the development of a more sustainable global financial system. Visit www.unpri.org.
The sponsoring organisations thank CDP for its support of the statement. CDP is an international, not-for-profit organisation providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information (www.cdp.net).
Repost from the San Francisco Chronicle [Editor: Significant quote: “Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.” – RS]
Investing in socially responsible companies makes sense
By Tom Kiely, Lenny Mendonca and Steve Westly, September 17, 2015
What do CalPERS, and many of the world’s largest sovereign wealth funds from Scandinavia to the Mideast have in common? They’re betting big on sustainability.
In May, the California Public Employees’ Retirement System, a $307 billion retirement fund, said it will require its asset managers to factor environmental and social risks into their investment decisions. Norway’s giant national sovereign wealth fund, with $890 billion in assets built off its oil and gas reserves, is divesting from companies that mine or burn coal. A majority of the world’s largest institutional investors — pension funds, insurance companies, sovereign wealth funds — incorporate considerations about a business’s environmental and social track record into their investment decisions.
However, too many company managers are still under the spell of the myth that shareholders are the only stakeholders who count. For decades, neo-classical economists suggested — and business schools taught — that sustainability investments unnecessarily raise a firm’s costs, creating a competitive disadvantage. Invest in anything but the bottom line, and you risk your survival we’ve been told endlessly.
Shareholder idolatry holds executives back from making the investments they should to benefit the planet and their businesses in the long-term. For every corporate leader there is a regiment of laggards.
Sure, most of the Standard & Poor’s 500 companies issue sustainability or social responsibility reports each year, but try reading those reports — they are a catalog of the tepid. Few companies integrate social and environmental factors deeply into their business strategies. U.S business organizations, such as the Chamber of Commerce, have opposed government-led efforts to reduce climate risk as overly bureaucratic and costly for business, while doing little to further business-led initiatives to improve corporate sustainability.
That’s a big mistake. For instance, in one recent study, three Harvard Business School professors showed how “firms with good performance on material (our emphasis) sustainability issues significantly outperform firms with poor performance on these issues.”
When it comes to these investments, the materiality test is crucial. Companies make all kinds of investments in sustainability and in corporate social responsibility programs. But only some of these things have a material impact on performance. The researchers looked at a set of environmental, social, and governance measures that both companies and their investors deemed material and measured their impact on stock prices.
What did they find? Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.
This makes sense to a growing number of investors. Smart sustainability investments allow companies to attract better employees, improve their brands to sell more or sustain a price premium.
What should be done? Companies must do a better job of compiling non-financial data on their environmental and social performance and report it to investors and other stakeholders. Fifty percent of institutional investors surveyed by PricewaterhouseCoopers in 2014 said they were dissatisfied with the environmental-social-governance information companies provided.
Business leaders need to step up and champion these efforts.
Also, executives should act like leaders in policy debates. In early June, 80 companies, including U.S.-based Coca-Cola and Mars, pressed the British government to fight for strong action against climate change in international talks, and to aggressively push for a long-term low-carbon plan for the United Kingdom.
Where are U.S. business leaders on this?
Business leaders should propose a concrete plan for pricing carbon, for instance. After all, more than 150 companies already factor a carbon price into their business planning decisions, according to a recent study by CDP, a sustainability measurement organization. Executives have the public clout to elevate the debate on carbon pricing, and the experience to propose pragmatic frameworks for getting this done.
Corporate executives need to stop thinking of sustainability as a political discussion, and see it for what it is: good business.
Tom Kiely is a member of the Standards Council of the Sustainability Accounting Standards Board. Lenny Mendonca is a consultant to leaders in the public and social sectors. Steve Westly, a former state controller, is managing director of the venture capital firm the Westly Group.
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