Shareholders at Exxon’s AGM on the 25 May delivered an unequivocal message to the Board: they need to come clean on how their financial position would be impacted by accelerating decarbonisation.
Reflecting the rising materiality of global action on climate change for oil and gas companies, 52% of shareholders supported a Resolution put forward by Christian Brothers Investment Services (CBIS) asking the Board to publish an audited account of how Exxon’s assets, liabilities and profitability could be impacted if governments keep their promises to cap global warming at 1.5°C. Only with this information will shareholders (and also creditors) have adequate visibility on the risks to their capital deployed in Exxon.
Beyond sending a clear message to Exxon’s Board, this vote has far wider ramifications. It makes clear the need for all companies facing material risks from decarbonisation and climate change to incorporate these in their financial reporting. It, therefore, also provides timely support for the draft SEC rule that would require companies to incorporate material climate considerations into their financial statements. A failure to deliver this information will increasingly leave the market blind to hidden, yet foreseeable, losses and liabilities, and thereby result in a dangerous misallocation of capital. Too much capital will flow into activities that harm our climate.
The consequences will be felt beyond any single company’s shareholders, and could well be irreversible. The vote at Exxon must not be ignored.