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TheStreet Open House

Exxon Mobil Investors Win Concession on CO2 Risk

NEW YORK (TheStreet) -- Responding to shareholder pressure, Exxon Mobil (XOM) Thursday agreed to publish a Carbon Asset Risk report on its Web site, outlining for shareholders its strategies for handling future constraints on carbon emissions and the impact such constraints could have on its operations.

Two investors, Arjuna Capital, the sustainable wealth management platform of Baldwin Brothers, and As You Sow, a non-profit promoting environmental corporate responsibility, had posted a shareholder resolution. Following the company's announcement that it would supply the requested information, the two firms withdrew the resolution.

In a phone interview, Danielle Fugere, president of As You Sow, described the concerns of the resolution as "an environmental issue, but moreso, it's a financial issue."

"If you look at the fossil fuel business, that's trillions and trillions of dollars," Fugere said, noting the market is often described as a "carbon bubble."

"If world governments put a cap on carbon, you would see that bubble burst and that would throw the world economy into disarray," she said. Instead, the plan of As You Sow and other investors is to ensure "the bubble is going to be let out slowly in a way that nobody loses all their money."

As awareness of global warming has grown in recent years, a consensus has emerged that man-made carbon dioxide emissions are a leading cause. Through public pressure and the work of organizations like the Intergovernmental Panel on Climate Change, a U.N. advisory panel made up of scientists, governments have become increasingly aware of the risks associated with pumping ever more carbon dioxide into the atmosphere.

As stated in the press release issued by the shareholders:

World governments agree that if catastrophic warming over 2°C is to be avoided, no more than one-third of current proven carbon reserves can be burned. ... Yet, a recent Unburnable Carbon report calculates that in 2012 alone, the 200 largest publicly traded fossil fuel companies collectively spent an estimated $674 billion on finding and developing new reserves - reserves that cannot be utilized without breaking the world's carbon budget.

The win for shareholders at Exxon Mobil, the largest oil company in the world, was preceded by a first-of-its-kind proposal and vote on the risk of stranded assets filed by As You Sow at Consol Energy  (CNX) last year, a move that failed to win a majority backing by shareholders but was supported by almost 20% of voting shares. 

Those moves are part of a broader effort to get oil and gas producers to address investor concerns that assets that could become stranded as constraints on carbon dioxide emissions become more intense. A shareholder initiative coordinated by Ceres, bringing together shareholders representing $3 trillion in assets under management, asked 45 companies for greater disclosure on the risk from such constraints, the impact on capital expenditure and strategies in place to avoid stranded assets.

-- Written by Carlton Wilkinson in Asbury Park

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