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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 recommendations.

"May I pose it to you?" Treasurer McCormick asked.

"Oh, sure, you can pose anything to me," Mr. Raymond replied lightheartedly, drawing laughter from the crowd.

"Will you answer me then?" Treasurer McCormick retorted.

"Oh, that's a different question," Mr. Raymond responded sarcastically, prompting more laughter.

"It 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 meeting.

"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 publication states.

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."

 

 
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