May 15, 2003
Report Asks When ExxonMobil Will Wake Up to Climate-Related Risks
by William Baue
For the second year in a row, a report tells ExxonMobil shareowners to beware of the significant
risks the company faces in terms of how the oil giant addresses climate change.
The lead-up to this year's Annual General Meeting (AGM) at ExxonMobil (ticker: XOM) may seem
like deja vu to some investors, save for a few significant changes. As with last year's
AGM, the oil company again faces a host of shareowner resolutions. The number has jumped from 12
to a whopping 23 resolutions, one of which asks for a report on climate change risk. And again Campaign ExxonMobil and Coalition for Environmentally Responsible
Economies (CERES) commissioned a report that identifies how ExxonMobil continues to lag its
peers in addressing climate-related risks.
"ExxonMobil is alone among its peers in
continuing to deny the risks posed by climate change," said Claros Consulting's Mark Mansley, author of the
report. The document, entitled Sleeping Tiger, Hidden Liabilities,
follows up on last year's study, Risking Shareholder Value? ExxonMobil and
The report admits that ExxonMobil has taken a few tentative
steps toward addressing climate change risks. However, the report states that climate change risks
have "significantly increased" this year, such that ExxonMobil's actions fail to keep pace with the
other three "supermajor" oil companies, BP (BP) , ChevronTexaco (CVX), and Shell (RD).
The primary contention of the report is that ExxonMobil has no clearly articulated, centralized
plan for addressing and mitigating climate-related risks, a void that prevents investors from
assessing how these risks may reduce shareowner value.
"[I]t's ridiculous to suggest, as
their [report] has, that ExxonMobil's approach to climate change is diminishing shareholder value,"
said ExxonMobil spokesperson Cynthia Langlands. "ExxonMobil has taken many concrete steps to
address the risk of climate change. These include: Conserving energy in our refineries and
chemical plants resulting in 37 percent more efficiency than 25 years ago."
acknowledges that this is "a positive step, but it is not a particularly noteworthy." The report
documents how ExxonMobil's improved efficiency falls in line with that of the U.S. economy, the
U.S. chemical industry, and the U.S. iron and steel industry, and falls way short of emissions
reductions made by Shell and BP.
ExxonMobil also points to its ten-year, $100 million
investment in Stanford University's Global Climate and Energy Project (GCEP), which will research
technologies that reduce greenhouse gas (GHG) emissions that contribute to global warming.
However, the report counters that ExxonMobil has only committed to providing $10 million a year
for three years.
"Even if ExxonMobil participates the full ten years, it will only be
spending one-tenth of one percent of what the company plans to spend on new oil and gas exploration
over the same period (announced in October 2002 as $100 billion)," states the report. "The
investments at Stanford are also substantially less than the sums that competitors are spending on
low carbon energy technologies."
"Just one of BP's recent renewable energy investments, in
a solar plant in Spain, alone exceeds $100 million," the report adds.
ExxonMobil has no
current investments in renewable energy, nor does it participate in emissions trading or carbon
pricing, and it has not set internal emissions reductions targets, according to the report. Shell
is involved in all four of these activities, BP in three, and ChevronTexaco in two, the report
The report states that shareowners can begin to rectify the situation by voting
for two resolutions that call for the company to report on climate-change risk and renewable energy
development, respectively. Shareowners are also advised to support a resolution that calls for
splitting the Chair and CEO positions.
The report recommends shareowners vote against
the re-appointment of Philip Lipincott as chair of the Public Issues committee. According to the
report, that committee has failed to properly manage the climate change issue.
resolutions have the backing of major institutional investors, according to Campaign ExxonMobil,
the coalition of environmental and religious investors that encourages the company to adopt more
sound environmental policies and practices. Institutional Shareholder Services (ISS), which advises
institutional investors on proxy voting, is again supporting the renewable energy resolution, which
received a 20.3 percent vote last year, as well as the new climate change resolution.