Analysis-Big oil pardons investors as energy issues overcome climate issues

© Reuters. File Photo: A BlackRock Inc sign is hanging above a company building in New York, USA on July 16, 2018. REUTERS / Lucas Jackson


Ross Carver and Simon Jessop

Boston / London (Reuters)-Big Oil has made the ride easier at this year’s shareholders’ meeting compared to last year’s tough execution of hostile investor polls related to climate issues.

A major oil company has easily defeated some of the hottest climate change resolutions raised by shareholder activists at its current annual shareholders’ meeting.

Investors’ more supportive stance is in line with rising energy prices after Russia’s invasion of Ukraine, following many companies’ efforts to accelerate plans to move to a low-carbon economy after years of pressure. ..

“Big oil may have convinced some investors that the energy crisis will nullify the climate crisis,” said the Dutch environment, the organization that submitted numerous resolutions that were defeated in the recent AGM. Activist Mark van Baal is in the Ukrainian conflict.

Last year, companies faced growing shareholder support for solving environmental and social issues and voting. For example, ExxonMobil (NYSE :) Corp had the board of directors of a Texas-based company vote for three new directors, marking a breakthrough victory for activist investor engine # 1.

But that was the time.

Only 15% of shareholder votes BP (LON :) The May 12 annual meeting supported a call by British oil companies to accelerate the energy shift, while 21% agreed in a similar vote last year.

In addition, 17% of investors supported the Occidental Petroleum Corp (NYSE :) call for emission reduction targets at the shareholders’ meeting on May 6, and 16% supported the Marathon Petroleum Corp (NYSE :) on April 27. ) Supported measures to report on the method. The transition plan has affected workers and communities.

At ConocoPhillips (NYSE :), 58% of last year’s votes helped set emission reduction targets. According to Securities Filing, only 42% supported a similar measure on May 12 requiring Houston-based companies to set overall emission reductions in line with Paris’ climate targets. ..

Shareholders’ Meeting in Exxon, Chevron (NYSE :) and Shell (LON :) are scheduled for later this month.

Analysts said investors’ shift from environmental priorities partially reflected concerns, as the war in Ukraine, which Russia describes as a “special military operation,” is tightening energy supplies. ..

Geopolitics “provided a strong and plausible excuse to put off instead of tackling important climate change measures,” said ShareAction’s financial sector survey, a non-governmental organization focused on responsible investment. Manager Abhijay Sood said.

Caitlin McSherry, investment stewardship director at asset management firm Neuberger Berman, said investors can also accommodate the additional details many companies have announced regarding their transition plans.

“This has given some investors more peace of mind to vote for management,” McSherry said. Neuberger refused to discuss most of the votes in detail.

Occidental claimed that it had already set appropriate goals. A Houston-based representative of the company said its AGM results “reflect Oxy’s shareholders’ confidence in the company’s Net Zero strategy and the disciplined and rigorous goals we have set. “.

A ConocoPhillips spokesperson said the vote at AGM supports the view that shareholder proposals for emissions are “not an appropriate solution for transition-oriented portfolios and E & P (exploration and production) companies producing.” ..

A representative of the Ohio-based marathon refused to comment on the vote at the annual meeting.

BP did not immediately respond to the request for comment.

Black rock pullback

Perhaps the market-wide driving force is top asset manager BlackRock Inc (NYSE :), and this week there is little support for such a solution, as many topics such as climate change are too normative. Said.

Mood swings were reflected in a series of similar votes at major Wall Street banks in April.

Andrew Logan, senior director of the Boston-based nonprofit Ceres oil and gas program, is trying to build investor support for climate change proposals, AGM’s low aggregates show that activists have already said. Emissions for many companies, a simpler change than planning to reduce them.

“We’re finding an equilibrium here in terms of what investors are willing to help,” Logan said. “This is a healthy process.”

Some environmental resolutions at shareholders’ meetings still have strong support. At the annual meeting of Costco Wholesale Corporation (NASDAQ :) on January 20, 70% of the votes supported a call to major retailers to set emission reduction targets. Washington-based Costco didn’t immediately respond to requests for comment.

At least in the United States, politics may have also played a role in voting in big oil, said Heidi Welsh, executive director of the Sustainable Investment Institute, which tracks shareholder resolutions.

Republicans in Texas, Florida, and other US states have campaigned against companies they say have gone too far in imposing environmental or social policies.

“Large (asset) managers are looking at who will be elected in the fall and may not want to be a Republican crosshair,” Wales said.

Analysis-Big oil pardons investors as energy issues overcome climate issues

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