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Investors reject climate proposals targeting ExxonMobil, Chevron

The Climate 202

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Good morning and welcome to The Climate 202! Today we're jealous of our colleague Mariana Alfaro's adorable dog and work setup. But first:

Investors reject climate proposals targeting ExxonMobil, Chevron

Nearly two-thirds of investors in ExxonMobil and Chevron on Wednesday rejected proposals for the oil giants to align their climate strategies with the Paris agreement.

The votes were yet another sign that climate activist investors are having a less successful proxy season this year than in 2021, as fossil fuel firms reap record profits fueled by the war in Ukraine. 

The details: Both oil majors held their annual shareholder meetings on Wednesday. At ExxonMobil's meeting, around 28 percent of investors voted in favor of a proposal from the Dutch climate activist group Follow This, while roughly 33 percent of Chevron's investors backed the resolution.

The proposal calls on the companies to set medium- and long-term targets for aligning their emissions trajectories with the Paris agreement. While ExxonMobil and Chevron have both set goals of reaching net-zero operational emissions by 2050, critics such as Follow This argue that these plans are not Paris-compliant.

Mark van Baal, the founder of Follow This, told The Climate 202 that he was grateful for the support from nearly one-third of investors, which he said represents a small but significant minority.

“It's still a shareholder rebellion,” van Baal said. “And the only thing we can do now is work with these investors to convince the rest.”

ExxonMobil CEO Darren Woods urged investors to reject Follow This's resolution at the meeting, saying it would curtail energy supplies at the height of the supply crunch related to the war in Ukraine.

“We do not believe it's in the best interest of our shareholders or society for ExxonMobil to reduce the supply of critical products needed by society, which is the intent of your proposal,” Woods said.

At shareholder meetings earlier this month, investors in BP, ConocoPhillips and Equinor also beat back climate proposals. So far, the 2022 proxy season has struck a sharp contrast with last year, when the small activist hedge fund Engine No. 1 shocked the world by winning three seats on ExxonMobil's board.

Activists notch smaller wins

About 52 percent of ExxonMobil shareholders did approve, however, a resolution calling on the company to issue an audited report assessing the impact of a net-zero emissions world on its financial statements.

The shareholder proxy advisory services Glass Lewis and ISS recommended voting for the motion, which was spearheaded by Christian Brothers Investment Services, an investment management firm that works with Catholic individuals and institutions.

“We think more transparency is always a good thing,” John Geissinger, the firm's chief investment officer, told The Climate 202. “We're glad the majority of shareholders agreed with us.”

Nearly 98 percent of investors also approved a resolution from Mercy Investment Services requiring the board to issue a report on “the reliability of Chevron's methane emission disclosures.” 

Mary Minette, Mercy's director of shareholder advocacy, said in an email that she was “very pleased” to see investors recognize the importance of “accurate and transparent measurement” of methane, a powerful planet-warming pollutant.

From the boardroom to the courtroom

Meanwhile, at Royal Dutch Shell's meeting on Tuesday, 20 percent of investors supported Follow This's resolution, down from 30 percent last year. A majority of investors backed Shell's current climate strategy.

“We are pleased that the overwhelming majority of shareholders continue to support Shell, our energy transition strategy and the progress we have made in the past 12 months,” Shell CEO Ben van Beurden said of the voting results. “We are on the right track.”

Tuesday's meeting came two days before the first anniversary of a historic Dutch court verdict ordering Shell to slash its emissions 45 percent by 2030. Shell is appealing the ruling, despite calls from Odey Asset Management to drop the appeal.

Milieudefensie, the Dutch wing of the environmental group Friends of the Earth, helped bring the lawsuit over Shell's emissions targets. Nine de Pater, a campaigner for the group, slammed the oil company for continuing to resist the ruling.

“Shell and its board of directors are not taking the climate crisis seriously,” she said. “They don't have concrete and sufficient plans to comply with the verdict. And that means that they will continue to endanger people's lives.”

A Shell spokeswoman said in an email that the court decision unfairly targeted one firm, rather than requiring every oil major to slash emissions.

“Shell agrees that for the world to make the transition to cleaner energy, we must move quickly, but we must also move together,” the spokeswoman said. “The Milieudefensie ruling imposes regulation against one company without setting clear policy and regulatory framework needed to drive change across the global energy system.”

On the Hill

Manchin's fifth bipartisan energy meeting focuses on energy security

Sen. Joe Manchin III's (D-W.Va.) fifth bipartisan energy meeting on Wednesday focused on bolstering global energy security following Russia's invasion of Ukraine, according to attendees.

But it's unclear whether the bipartisan energy group will agree on a legislative framework before July 4. And Democrats appear on track to blow past a self-imposed Memorial Day deadline for striking a deal on their stalled reconciliation package.

Manchin told reporters after Wednesday's meeting that attendees discussed boosting U.S. exports of oil and natural gas, which proponents argue are cleaner than fossil fuels produced overseas.

“With the war in Ukraine … the world's counting on us,” he said, adding, “What's our ability to produce? How can we reduce our emissions … as we replace some of the dirtier products?”

Sen. Mitt Romney (R-Utah), another participant, acknowledged that the bipartisan talks may not yield legislation. “The question is whether we will ever have a bill, or whether instead there will be a move to reconciliation for those items that the Democrats agree on,” he said.

Sen. Kevin Cramer (R-N.D.) told reporters that he thinks the bipartisan conversations will continue until July 4. He also expressed skepticism of federal tax credits for electric vehicles — a subsidy that Manchin has previously criticized.

Senate panel deadlocks on gas price-gouging ban

Members of the Senate Commerce Committee on Wednesday deadlocked 14-14 on a bill that would increase fines for companies that manipulate gasoline prices, Kellie Lunney and Lilliana Byington report for Bloomberg News.

The Transportation Fuel Market Transparency Act, similar to legislation the House narrowly passed last week, marks Democrats’ latest attempt to blame soaring gas prices on oil companies.

A tie means that the bill won’t advance out of the committee unless Senate Majority Leader Charles E. Schumer (D-N.Y.) files a discharge petition to send it to the floor. Schumer has said he wants the Senate to vote on the legislation, although the bill is not expected to garner enough Republican support to pass.

Senate confirms head of EPA's research office

The Senate on Wednesday voted 51-43 to confirm Christopher Frey as assistant administrator of the Environmental Protection Agency’s Office of Research and Development.

Frey, a former North Carolina State University professor who was critical of the EPA's handling of science under former President Donald Trump, overcame opposition from some Republicans. In a speech on the Senate floor, Environment and Public Works Chair Thomas R. Carper (D-Del.) praised him as “an outstanding public servant" and “a deeply respected scientist.”

Agency alert

EPA proposes protections for world’s biggest sockeye salmon fishery

The Environmental Protection Agency on Wednesday announced that it will protect Alaskan waters home to one of the world's largest salmon spawning grounds, potentially putting an end to a decade-long battle between Alaska Natives and mining interests in Bristol Bay, The Washington Post's Dino Grandoni reports.

If finalized, the EPA's action would deal a potentially fatal blow to the proposed Pebble Mine for gold, copper and other metals. The agency relied on a rarely used authority under the Clean Water Act to conclude that the mine would destroy 8.5 miles of streams and lead to “unacceptable” injury to the region's salmon.

SEC unveils proposals to stamp out ‘greenwashing’

The Securities and Exchange Commission on Wednesday unveiled a pair of rule changes to crack down on companies' unfounded claims about their environmental, social and corporate governance (ESG) credentials and to standardize the disclosure process, Katanga Johnson and Ross Kerber report for Reuters. 

The proposals, which are in a public comment period, come as ESG labels are rising in popularity, causing regulators and activists to express concern that companies are misleading shareholders about the sustainability of their products — a practice known as “greenwashing.”

According to an SEC official, the proposals would prevent firms from using an ESG label if it is not central to investment decisions.

Pressure points

Al Gore rips Congress for stalling on climate, gun control

Former vice president Al Gore on Wednesday criticized Congress for failing to pass comprehensive gun control legislation in the wake of a mass shooting at an elementary school in Texas, drawing a parallel with lawmakers' seeming inability to pass major climate legislation since President Biden’s Build Back Better bill was put on hold in December, the Associated Press reports. 

“Our democracy has been paralyzed, bought, captured,” Gore said during a climate panel at the World Economic Forum in Davos, Switzerland. “It has to stop.”

Corporate commitments

Corporations promise to ‘buy green’ at Davos

On the third day of the World Economic Forum, a global “buyers’ club” of more than 50 companies, including Microsoft and Ford Motor, pledged to purchase aluminum, steel and other products made with processes that have little to no carbon footprint by 2030, Lisa Friedman reports for the New York Times.  

The sectors involved in the First Movers Coalition are responsible for about 30 percent of global emissions — a figure that is expected to rise to nearly 50 percent by midcentury if left unchecked. Their joint announcement is intended to increase demand for sustainable versions of materials that are otherwise difficult to make without significant emissions.

In the atmosphere

Viral

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