ExxonMobil investors reject all sustainability-related proposals amid legal tensions

All four sustainability-related proposals were rejected during ExxonMobil’s annual general meeting (AGM) yesterday, as the oil major continues its legal offensive against activist shareholders.

Just 2% of shareholders voted in favour of a proposal to include GHG emissions reduction goals into executive pay incentives, while 20% voted for the publication of a report on gender and race-related pay disparities. 

Two other sustainability-related proposals even received less support than last year: the first, calling for a report on plastic production got 21% of votes (25% last year), and the second, which sought the development of an additional social impact report, received just 7% of votes in favour, compared to 17% last year.

ExxonMobil shareholder lawsuit

In January, ExxonMobil filed a lawsuit against two shareholders, Follow This and Arjuna Capital, to prevent them from proposing stricter climate targets at this year’s AGM. When the two investors withdrew the proposals, the company decided to forge ahead with the lawsuit anyway in an attempt to prevent similar future proposals. 

Several of ExxonMobil’s shareholders have spoken out against the legal offensive, considered a tactic of “intimidation and bullying”, and vowed not to be silenced. 

Earlier this month, CalPERS, the largest pension fund in the US with US$495 billion in assets, as well as the New York State Common Retirement Fund and a number of others, denounced the “attack on shareholder rights”.

Overwhelming support for board nominees

As a gesture of non-confidence, these investors announced that they would vote against some or all of management’s nominees to the board. But at yesterday’s AGM, the 12 nominees listed in the proxy statement were elected as directors, with an average support of 95%.

“Today, our investors sent a powerful message that rules and value-creation matter. Their vote signals a belief that we are on the right track by overwhelmingly re-electing our directors and soundly defeating all four proposals that would have hampered our ability to create long-term value by providing the world with the energy and products it needs while investing billions to reduce carbon emissions in our own business and others’,” commented ExxonMobil CEO Darren Woods.

Climate proposals consistently rejected at oil and gas AGMs

Oil and gas majors are being criticised by NGOs, think tanks and certain companies and investors for their lack of climate ambition, misalignment with the goals of the Paris Agreement and even backtracking on set targets.

But proposals to increase emissions reduction goals, align with a 1.5ºC temperature scenario or include Scope 3 emissions in targets consistently get rejected by shareholders at their AGMs.

In 2023, all of the climate-related resolutions filed by minority shareholder groups at BP, Chevron, ConocoPhillips, Equinor, Eni, ExxonMobil, Repsol, Shell, and TotalEnergies’ AGMs were rejected – though the ones calling for greater disclosure garnered more support than those asking for stronger climate action.

'Taking a stand on the substance'

Shell, TotalEnergies and Repsol proposed a Say on Climate vote, which allows shareholders to vote on the company’s climate strategy and its implementation, and was overwhelmingly approved with 80%, 89% and 98% of votes respectively. But none of the votes on actual climate measures were approved, leading NGO Reclaim Finance to conclude that “shareholders prefer to reward companies that  put a Say on Climate on their AGM agenda by voting in their favour, rather than taking a stand on the substance by voting against damaging climate strategies”.

Earlier this year, shareholders at Shell’s AGM rejected a proposal filed by Follow This to align its climate targets with the Paris Agreement by including Scope 3 emissions, with just 18.6% of votes in favour.

According to Climate Action 100+, none of the 10 Western oil majors analysed are aligned with a 1.5ºC scenario (BP is the closest at 28% alignment).