ExxonMobil Shareholders Reject Climate Change Resolutions

U.S. oil giant ExxonMobil Corporation (NYSE:XOM) has been relieved of the tremendous pressure to implement climate change policies, after its shareholders narrowly voted the proposals down.

The policies, which necessitated limiting greenhouse gas emissions, reducing global warming, putting a climate expert on the board, reporting on fracking activities and even climate change impact assessments, were rejected at ExxonMobil’s annual meeting.

Notably, just one out of the eleven climate-related proposals was passed at the meeting. Per the resolution, directors have been instructed to adopt a proxy-access rule that would make it easier for minority shareholders to propose board candidates and remove incumbent directors.

This is expected to pave the way for the inclusion of a climate activist in the company’s board. However, it must be noted that ExxonMobil's board had opposed the proposal on grounds that the policy exposed the influence of "special interest groups" in the company.

Notably, this is first time in the company’s history that the climate-related proposals received so much support. Initial results showed 38% support from ExxonMobil investors that cast ballots. This is a sign that more conventional shareholders like pension funds, sovereign-wealth funds and asset managers are beginning to take the threat of a global warming from fossil fuels more seriously.

ExxonMobil had intended to avoid the vote on the proposals but the U.S. Securities and Exchange Commission rejected the plan.

Additionally, the White House declared that it intended to put forward a new rule that requires companies with federal contracts to reveal whether they share information about the risks to their operations from changing climate conditions, as well as their goals to cut greenhouse gas emissions. The rule, which is expected to be implemented by this fall, would have a notable impact on most federal contracts.

However, ExxonMobil remains unperturbed by this announcement. In fact, the company mentioned that it had published a report in 2014 on managing climate risks. ExxonMobil added that the report had stated that none of the company’s oil and gas holdings are challenged by a global push to reduce carbon emissions.

Church Commissioners for England and the New York State Common Retirement Fund, along with others led the filing of the ExxonMobil resolution.

Notably, ExxonMobil’s shareholder meeting this year was pretty tensed as it came after the Paris accord on a curb in fossil fuel emissions and average global temperatures of less than 2 degrees Celsius above preindustrial levels. Alongside, New York's attorney general also examined accusations from environmentalists that ExxonMobil had misled the public about climate change risks. Several shareholders used this to urge the company to show how such a goal will affect its business units.

ExxonMobil currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include CVR Refining, LP (NYSE:CVRR) , Murphy USA Inc. (NYSE:MUSA) and Braskem S.A. (NYSE:BAK) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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