Oil and Gas Firms Facing Record Number of Climate Shareholder Resolutions

Oil and Gas Firms Facing Record Number of Climate Shareholder Resolutions

The oil and gas industry is facing a record number of global warming shareholder resolutions in 2004, with an expansion of such proxy measures to smaller independents, according to a recent analysis.

According to the Coalition for Environmental Responsible Economies, or CERES, state, city, religious and other institutional shareholders have filed 13 resolutions requesting risk disclosure and plans to reduce greenhouse gas emissions with 10 oil and gas companies, five of which are facing questions on the issue for the first time.

In addition to targeting household names such as ExxonMobil and ChevronTexaco, the shareholders have broadened their concern to smaller, independent exploration and production companies, such as Devon and Apache. These companies, the shareholders say -- which only drill for and produce oil and gas and are not diversified with distribution or retail operations -- are even more vulnerable to regulatory- or market-based limits on carbon dioxide emissions worldwide.

One or more resolutions have been filed at Anadarko, Apache, ChevronTexaco, Devon, ExxonMobil, Imperial, Marathon, Petro Canada, Unocal, and Valero. Shareholders are also in dialogue with ConocoPhillips and Occidental regarding their climate change policies as a result of resolutions filed in the last two years.

The shareholder filers, collectively representing more than $250 billion in assets, include four state and city pension funds, a foundation, socially responsible investment firms, and a number of religious pension funds associated with the Interfaith Center on Corporate Responsibility, a coalition of 275 religious institutional investors that helped coordinate the filings.

The resolution filings also were coordinated in part by CERES, a coalition of investors (including many of those involved in the filings) and environmental groups that has been active in promoting investor awareness of global warming risks. The news event today announcing the record number of 2004 shareholder resolutions was made possible by the nonprofit Civil Society Institute of Newton, Massachusetts.

Most of the resolutions seek reports on how the companies in question are responding to and preparing for rising regulatory and competitive pressures to reduce greenhouse gas emissions. Oil “supermajors” ExxonMobil and ChevronTexaco also received resolutions requesting a report on the companies' efforts to invest in renewable energy (similar resolutions received record votes of 21 percent and 32 percent, respectively, last year). Shareholders also filed a resolution with ExxonMobil requesting full disclosure of the science supporting the company's policies on climate change.

The resolutions come at a time of growing investor demand for information on how heavy-emitting sectors are planning for coming constraints on carbon emissions. The electric power sector has received similar resolutions, with giants American Electric Power and Cinergy recently agreeing to shareholder requests by promising reports on how they are responding to rising pressure to reduce their emissions.

Resolutions with the oil industry in the last few years have already begun to yield change. Last year's resolution at ConocoPhillips spurred the company's board to create a strong climate change policy.. ChevronTexaco established a policy that included assuming a price per ton of carbon when assessing new projects, a practice in place at foreign competitors BP and Shell Oil.

The comptrollers and treasurers were part of issuing an investor "Call to Action" at the Institutional Investor Summit on Climate Risk convened by CERES at the United Nations in November, 2003, demanding better disclosure and certainty on climate policy from companies, Wall Street fund managers, the Securities and Exchange Commission, and policymakers. Their involvement in the oil industry filings came as a result of that pledge.