Resolved clauseWith board oversight, shareholders request ExxonMobil issue a report (at reasonable cost, omitting proprietary information) describing how the company could alter its business model to yield profits within the limits of a 1.5 degree Celsius global temperature rise by substantially reducing its dependence on fossil fuels.
Whereas clauseExxon, in 2019, signed a ‘Statement on the Purpose of a Corporation,’ committing the Company to all stakeholders, including ‘protect[ing] the environment by embracing sustainability practices across our businesses.’
Inconsistent with this ‘embrace’ of sustainability, Exxon lacks a business strategy consistent with limiting global temperature rise to 1.5 degrees Celsius, with no commitment to Net Zero by 2050 or a roadmap to get there. Importantly, current 2025 emission targets ignore the Scope 3 emissions of their products, which account for 83 percent of total emissions.
2022 Proxy Statement LOGO 73
Table of Contents
A global transition towards a low carbon economy places unprecedented risk on oil companies and the economy. The Intergovernmental Panel on Climate Change warns oil industry emissions need to drop 50 to 90 percent by 2050 to avoid catastrophic consequences. The United States’ Commodity Futures Trading Commission stresses ‘climate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy’. The United Nations Environment Programme Finance Initiative reports in ‘Universal Ownership’ that 50 percent of companies’ earnings are at risk from climate costs, creating systemic risk for Exxon, and diversified investors alike.
A failure to plan for this transition may place investor capital at substantial risk. The CEOs of Shell, Equinor, and BP predict peak oil demand may occur by 2025. Carbon Tracker reports Exxon could lose 80 percent of its petroleum investments if the world takes action to limit global temperature rise.
Peers have begun investing in clean energy, including wind, solar, and renewables storage, while Exxon has invested in less effective carbon mitigation solutions like carbon capture and sequestration. The World Benchmarking Alliance reports companies need to dedicate 77 percent of capital expenditure to low carbon projects to meet a 1.5 degree scenario. Yet, Exxon plans to invest a fraction of that amount–only 3.3 percent–in ‘lower emission energy solutions’ through 2025.
Exxon’s current strategy has not benefited its stock price for a decade, with the stock price falling approximately negative 20 percent, compared to a near tripling of the S&P 500. Exxon’s returns remain at risk in the absence of a comprehensive climate strategy.
Supporting statementThe proponent suggests such a report could include a roadmap (with timelines, short and long term goals, capital expenditure planning) to alter its energy mix to reduce fossil fuel dependence, including options such as buying, or merging with, companies with renewable energy assets or technologies, and/or internally expanding its renewable energy portfolio, and/or exercising stricter capital discipline by focusing on high return, low cost, and low carbon capital expenditures to boost return on capital, reduce societal greenhouse gas emissions, and protect shareholder value.”