Dr Raj Thamotheram compares the essential urgency of investor engagement on climate change to the first major social movement, the campaign to abolish slavery. And he says the crucial moment this proxy season is the ExxonMobil annual meeting.
So why is ExxonMobil set to be the litmus test for climate aware investors in 2019?
● First, there is ExxonMobil’s shameful record on climate change. It has paid lip service to the importance of tackling the climate challenge but according to respected Harvard academics, engaged in a systematic campaign of misinformation over four decades, to reduce regulatory action. More recently ExxonMobil has acted via the trade associations it funds but the aim remains the same – to block and delay any challenges to its core business model. Some might call this “climate denialism” which the company’s defenders says formally ended in 2018 when it joined the Oil & Gas Climate Initiative. But Mary Robinson, the chair of the Elders, now labels climate denialism by O&G companies and others as “malign and evil”.
● Second, investor engagement has been given every chance and as The Economist notes, ExxonMobil “is a notable laggard”. This is not news: one of us organised the first ever engagement between the company and its mainstream investors in the UK some 15 years ago! As Generation IM has recognised, “quiet diplomacy has failed” and this is especially so at a company like ExxonMobil. Just because the mega investors are late to the stewardship debate about the climate crisis does not mean that high impact companies should be given 5 years from now, as Blackrock’s Larry Fink seems to think (see comments at 34:30). The reasons that Blackrock and other mega managers give for not voting against management are superficially plausible but on more careful analysis, quite weak. And if investors retreated from escalating their engagement with Exxon, they would either need to divest fully or completely lose credibility with many of their own staff, clients and commentators, the authors included.
● Third, there is tidal wave of regulatory capture happening in many countries and especially in the USA. Nowhere is the challenge to investor rights as explicit as with Exxon, where the SEC has prevented the strategic disclosure which financial regulators (the Network for Greening the Financial Sector, NGFS) say is needed and which investors will get from non-US companies. Global investors cannot accept this laying down.
See more at Preventable Surprises