As current and former chairs of the Public Policy Committee, Directors Austin and Hernandez, Jr., respectively, bear responsibility for governance oversight of Chevron’s climate policy and lobbying activities. The Directors failed to ensure that the company provided a meaningful response to a shareholder resolution approved by a majority of the company’s shareholders concerning climate-related lobbying and failed to establish sufficient governance to address risks from misalignment between the company’s lobbying practices and its stated support of the Paris Agreement.

Wespath recognizes that climate lobbying is only one measure of Chevron’s overall management of climate risk, and we believe that the company is lagging in other key areas of climate risk management. As an example, Chevron does not align with the majority of best-practice assessment criteria in the Climate Action 100+ Benchmark.2 Among key areas of climate risk management, Wespath believes that failure to address corporate climate lobbying is a heightened risk that is material to the long-term success of companies like Chevron and of particular relevance for diversified investors.3 Clarification on Chevron’s lobbying alignment is crucial for investors as the long-term objectives of oil and gas companies will fall under increasingly intense public scrutiny.

As diversified long-term investors, we recognize that Chevron and other oil and gas companies perform an economically critical role in supplying energy resources and that removing this supply abruptly would lead to undue social harm. However, we also recognize that climate change poses significant risks to the health of the economic system. Major economic disruption jeopardizes investors’ ability to attain the returns required to meet investment objectives. Addressing these risks while responsibly managing the social impacts of a transition to a Paris-aligned energy system requires a systemic approach. This approach needs to include reducing reliance on traditional energy sources like oil and gas through innovation and efficiency efforts and increasing alternative supplies of affordable and reliable renewable energy. In turn, these actions must be supported and enabled by sensible and ambitious climate policy.

While Chevron continues to meet society’s current demand for oil and gas, it also needs to demonstrate clear support for this transition approach as both public demands to address climate risk and the physical impacts of climate change continue to rise. This includes increased transparency and accountability at the board and management level on how Chevron aligns with the commitment to support the Paris Agreement in its lobbying and policy engagement. Our analysis finds that the company has not made its lobbying alignment with Paris clear, despite strong investor interest and engagement. Increased attention to and management of this issue will help Chevron avoid intense regulatory scrutiny and maintain its social license to operate.

Investors have repeatedly engaged Chevron without meaningful observable progress. Accordingly, we must publicly state our intention to vote against Directors Austin and Hernandez, Jr. to underscore the materiality and urgency of action to address this issue.

Furthermore, we acknowledge that the inconsistencies related to Chevron’s lobbying activities are symptomatic of broader misalignment throughout the oil and gas sector. We are inclined to vote similarly against directors responsible for oversight of lobbying at other Climate Action 100+ focus companies that appear to demonstrate insufficient progress addressing climate lobbying alignment. We encourage other investors to do the same.