Climate change presents financial risks to the global economy. Human activities have already caused about 1 degrees C of global warming above pre-industrial levels. If global greenhouse gases (GHG) emissions continue to increase at the current rate, warming is likely to reach 1.5 degrees C by around 2040 and up to 4 degrees C by the end of the century, leading to significant economic and social disruptions.

Oil and gas companies are highly exposed to low-carbon transition risks as well as opportunities.

While Imperial has a goal to achieve a 10 percent decrease in greenhouse gas (GHG) emissions intensity by 2023, it has not committed to longer term targets in line with what is needed to achieve the goal of the Paris agreement (i.e., "holding the increase in the global average temperature to well below 2 degrees C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees C...").

Investors increasingly favor companies with energy transition strategies. Climate Action 100+, an investor initiative with 545 investors from across dozens of countries, who manage nearly USD $52 trillion in assets under management, is encouraging the world's largest companies in terms of GHG emissions to adopt strategies to reduce their carbon footprint and to reach net zero by 2050.

Several oil and gas companies have adopted net zero by 2050 targets, including Cenovus, Enbridge, ConocoPhillips, Occidental, BP, Repsol, Shell and Total. More than 1,000 companies worldwide are setting long term emissions reduction targets through the Science Based Targets Initiative.

A growing number of financial companies are adopting net zero by 2050 targets for their financed emissions, including TD, HSBC, Morgan Stanley and Barclays. 33 institutional investors, including CDPQ, Calpers and Axa Group, have commited to transitioning their investment portfolios to net-zero GHG emissions by 2050.

28 countries, including Canada, have adopted net zero targets by 2050. Canada's Nationally Determined Contribution (NDC) under the Paris Agreement aims to reduce GHG emissions by 30% by 2030.

A net zero by 2050 ambition should cover Imperial's total scope 1 emissions (i.e. direct emissions from the activities of an organization) and Scope 2 emissions (i.e. indirect emissions from electricity purchased and used by the organization).

Such long term ambition should be accompanied by interim targets (e.g., 2025, 2030, 2040). A strong climate strategy should also include a governance framework with board's oversight, expertise and training on climate-related issues, as well as linking executive compensation to any climate-related targets, in line with what the Task Force on Climate-related Financial Disclosures (TCFD) has recommended.

Given the material long-term business risks and opportunities associated with the low-carbon energy transition, Imperial Oil must provide more clarity on how it plans to reduce scope 1 and 2 emissions in line with our collective need to achieve net zero GHG emissions. We urge shareowners to vote FOR this proposal.