May 27, 2004
ExxonMobil Mocks Climate Change, Maine Treasurer Finds It No Laughing Matter
by William Baue
Senior management remains resolute in its disbelief of climate change risk.
At the ExxonMobil (ticker: XOM) annual meeting yesterday, an
exchange between Dale McCormick, the treasurer of Maine, and Lee Raymond, the
chair and CEO, exemplified the company's dismissive attitude toward climate change risk.
Treasurer McCormick first asked the company's auditor, PricewaterhouseCoopers, how ExxonMobil accounts for
liabilities related to climate change regulations on its balance sheet. The auditor deferred to
management, so Treasurer McCormick asked if she could direct the question to the board's audit
committee, to which Mr. Raymond replied "no," as the committee is guided by management's
"May I pose it to you?" Treasurer McCormick asked.
sure, you can pose anything to me," Mr. Raymond replied lightheartedly, drawing laughter from the
"Will you answer me then?" Treasurer McCormick retorted.
"Oh, that's a
different question," Mr. Raymond responded sarcastically, prompting more laughter.
seemed like he used laughter to dismiss the question," Treasurer McCormick later told
SocialFunds.com. "I think maybe I shamed him into answering the question when I said, 'Sir, I do
not think it is a matter of laughter when an institutional investor representing over 3 million
shares cannot get answers to an important question like this."
"The potential liabilities
of climate change are neither likely nor can they be estimated," Mr. Raymond answered at the
"The answer he gave was definitely in concert with the company's past position on
climate change, which is a 'head-in-the-sand' position," Ms. McCormick told SocialFunds.com.
"Consider the fact that Russia has indicated that it intends to sign the Kyoto Protocol, which will bring the Kyoto Treaty
into effect this year, with all the concomitant requirements, changes, policies, and impacts."
A shareowner resolution
asking ExxonMobil to provide evidence and documentation underpinning its opposition to the global
scientific consensus on climate change received support from 8.8 percent of voting shareowners.
This result is almost triple the 3 percent threshold necessary for resubmitting the resolution next
year. The resolution, which was filed by Christian Brothers Investment Services (CBIS), a socially responsible
investment (SRI) firm, cites a June 2002 edition of ExxonMobil Perspectives:
"There continue to be substantial and well-documented gaps in climate science. These gaps
limit scientists' ability to assess the extent of any human influence on climate . . .," the
The resolution calls on ExxonMobil to reveal these gaps, and to
"discuss all relevant peer reviewed research data leading to the company's conclusions, including
data that do not support the company's position." It also asks the company to explain the specific
differences between its position on climate change and that of the Intergovernmental Panel on
Climate Change (IPCC), which determines global
scientific consensus on climate change. The IPCC clearly links climate change to human activity.
Finally, the resolution asks ExxonMobil to "project the estimated costs of mitigating climate
change compared to the costs of failing to do so."
Interestingly, another climate-change
related resolution that received more than 22 percent support last year asked the company to do
something very similar--report on how the company intends to mitigate climate change risk.
However, the US Securities and Exchange Commission (SEC) allowed ExxonMobil to omit from its proxy this and another
climate change-related resolution.
In its appeal to the SEC, ExxonMobil pointed to a
report it released in early 2004 that addressed climate change. Shareowner filers point out that
the report did not actually fill the resolution's requests of presenting its strategy for
mitigating climate risk, but rather used the report as another opportunity to deny and avoid the
implications of climate risk. The SEC permission to omit the resolutions was based on the mere
issuance of the report, not on the validity of the report's conclusions, according to John Wilson,
director of SRI at CBIS.
Two other resolutions received significant support at this
year's annual meeting, upping the results from last year's tallies. A
resolution filed by the New York City Employees Retirement System (NYCERS) asking the company to
explicitly bar sexual orientation discrimination in its Equal Employment Opportunity (EEO) policy
received 28.9 percent support, up from 27.3 percent last year. And a
resolution introduced by longtime corporate governance advocate Bob Monks asking the company to split its CEO and chair roles
received 27.1 percent of the vote, up from 21.5 percent last year.
At the meeting, Mr.
Raymond said that these increases were not "particularly significant."