Exxon Carbon Asset Risk 2016
|Company||Exxon Mobil Corporation|
|Filer||New York State Comptroller|
|Sector||Oil and Gas|
|Subject(s)||Climate Change; Carbon Asset Risk|
|Resolved Clause Summary||Annually assess 2 degree scenario|
|Supporting Memo||Download PDF|
This resolution is submitted by the New York State Common Retirement Fund and the endowment fund of the Church of England as lead proponents of a filing group.
RESOLVED: Shareholders request that by 2017 ExxonMobil publish an annual assessment of long term portfolio impacts of public climate change policies, at reasonable cost and omitting proprietary information. The assessment can be incorporated into existing reporting and should analyze the impacts on ExxonMobil’s oil and gas reserves and resources under a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2 degree target. The reporting should assess the resilience of the company’s full portfolio of reserves and resources through 2040 and beyond and address the financial risks associated with such a scenario.
It is our intention that this be a supportive but stretching resolution that ensures the longterm success of the company.
Recognizing the severe and pervasive economic and societal risks associated with a warming climate, global governments have agreed that increases in global temperature should be held below 2 degrees Celsius from pre-industrial levels (Cancun Agreement). Pursuant to the Durban Platform, 184 parties submitted plans to reduce greenhouse gas emissions in advance of the 21st Conference of the Parties. In November 2014 the United States and China agreed to policy and regulatory actions to reduce greenhouse gas emissions and re-affirmed and expanded those actions in September 2015.
ExxonMobil recognized in its 2014 10-K that “a number of countries have adopted, or are considering adoption of regulatory frameworks to reduce greenhouse gas emissions.” and that such policies, regulations, and actions could make its “products more expensive, lengthen project implementation timelines and reduce demand for hydrocarbons,” but ExxonMobil has not presented any analysis of how its portfolio performs under a 2 degree Scenario.
In response to a previous shareholder resolution regarding Carbon Asset Risk, ExxonMobil asserted “that an artificial capping of carbon-based fuels to levels in the ‘low carbon scenario’ (such as IEA 450ppm) is highly unlikely” and did not test its portfolio against a 2 degree scenario.
However, ExxonMobil’s peers, Shell, BP, and Statoil have recognized the importance of assessing the impacts of these scenarios by endorsing the “Strategic Resilience for 2035 and beyond” resolutions that received almost unanimous investor support in 2015. BHP Billiton now publishes a “Climate Change: Portfolio Analysis” evaluating its assets against 2 degree scenarios, and ConocoPhillips states that it stress tests its portfolio against 2 degree scenarios. More recently, ten major oil and gas companies have announced that they will support the implementation of clear stable policy frameworks consistent with a 2 degree future.
This resolution aims to ensure that ExxonMobil fully evaluates and mitigates risks to the viability of its assets as a result of public climate change policies, including in a 2 degrees Scenario.