May 25, 2016, Scientific American
ExxonMobil faced demands from some of its largest shareholders at its 2016 Annual Meeting Wednesday morning to be transparent about and responsive to the effects of climate change. The primary worry among most investors is that the company is not properly preparing for the consequences of the Paris climate change accord.
“The strategy behind such advocacy is simple: to use one’s financial stake within a company to raise an issue and lobby for changes,” reported Benjamin Hulac at ClimateWire (reprinted by Scientific American). ExxonMobil tried to block the proposals, but the US Securities and Exchange Commission ruled otherwise.
By afternoon, the proposals related to climate change were rejected. Rex Tillerson, ExxonMobil’s Chairman and CEO, offered this advice:
The reality is there is no alternative energy source known on the planet or available today to replace the prevalence of fossil fuels in the global economy. The world is going to have to continue using fossil fuels, whether they like it or not.
Tillerson is also a national board member of the Boy Scouts of America. He gave this advice in Scouting magazine:
Never compromise on honesty or integrity. There is no path to personal success through any other means. You will sometimes encounter situations where you’ll be tempted to take a shortcut and compromise integrity for short-term gain. But I can assure you those gains will be short-lived. Once you compromise your personal integrity, restoring it is a difficult thing to do.
#EXXONKNEW offers its judgment of ExxonMobil’s honesty and integrity: “Exxon knew about climate change half a century ago. They deceived the public, misled their shareholders, and robbed humanity of a generation’s worth of time to reverse climate change.” New York’s attorney general began its investigation along these same lines in November 2015, and more attorneys general joined him in March 2016. Even the FBI’s criminal division is looking into the matter. A few days ago, U.S. Representative Lamar Smith (R-TX), Chairman of the Congressional Committee on Science, Space, and Technology, accused the attorneys general of abusing their power.
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The Sisters of St. Dominic and 34 institutional investors put forth a resolution to “adopt a policy acknowledging the imperative to limit global average temperature increases to 2 degrees Celsius above pre-industrial levels, which includes committing the company to support the goal of limiting warming to less than 2 degrees Celsius.” ExxonMobil called the proposal “so inherently vague and indefinite as to be materially misleading,” and added that the company “has already substantially implemented the proposal.”
ExxonMobil’s industry peers, including BP and Shell, 81 companies in all, signed the American Business Act on Climate Pledge. But not ExxonMobil.
In the Paris Agreement, the nations of the world agreed that climate change is an urgent problem requiring cooperative action. ExxonMobil disagrees.
NPQ consistently informs its readers of stakeholder and shareholder strategy successes, failures and frustrations, such as with the San Diego Opera and Sweet Briar College (and here), made even more complicated by the B Corporation. In an interview with NPQ editors, Tom Kochan, co-director of the MIT Sloan Institute for Work and Employment Research at the MIT Sloan School of Management, offered this assessment:
In the past there had been more of a sense that the job of management was to balance the interests of multiple stakeholders—owners, to be sure, but also employees, and customers, and suppliers, and maybe even the communities in which the business was located. That shifted in the 1980s with leverage buyouts and hostile takeovers and everything that followed in the wake of that movement. Since then too many academics and business leaders bought into the notion that the corporation was solely an instrument for maximizing shareholder value. That, I think, is being challenged directly in the case of Market Basket, and I think the fact that it resonated so well with the public—with workers around the country—demonstrates that the protesters have struck a chord and that other people are equally fed up with the inequality in society and attribute some of that to the greed of business owners or shareholders.
ExxonMobil did lose a vote at its 2016 Annual Meeting over a resolution that will enable large shareholders to nominate candidates for the board, a rule known as “proxy access.”
ExxonMobil had its beginnings when the U.S. Supreme Court ruled that John D. Rockefeller’s Standard Oil was an illegal trust. The Rockefeller Family Fund recently eliminated its holdings in fossil fuel companies and ExxonMobil in particular because of its “morally reprehensible conduct,” joining the largest divestment movement in history.
At this writing, ExxonMobil shares are up.—Jim Schaffer