Shareholder activism is taking on an increasingly green tint, with at least 14 energy companies facing shareholder resolutions on environmental and social policies this year.
Exxon Mobil, Royal Dutch Shell, Total SA, Chevron and Eni SpA are among the major oil companies targeted by investors, according to data compiled by Bloomberg. More than 190 eco-resolutions have been proposed this year, up 88% since 2011.
“There’s a contingent of investors who are worried about climate change, methane emissions, water pollution, and other issues,” Gregory Elders, an analyst at Bloomberg Intelligence, said. “Companies realize they have to take more concrete action and to do more than just talk about the issues.”
More than half the resolutions, Bloomberg said, pressure management to identify risks associated with climate change, rein in greenhouse gases, or assess methane emissions. Shareholders also are seeking more reporting on water pollution, sustainability issues, and a link between executive compensation and environmental practices.
Bloomberg’s research also shows that while eco-resolutions typically win the support of only about 25% of shareholders, most companies succumb to shareholder pressure rather than risk confrontations with activists at annual meetings.
Last year, Exxon headed off a vote by issuing a report showing a surge in demand for energy in the decades ahead, especially for natural gas. This year, shareholders are urging the oil to return capital instead of investing in assets that risk becoming “stranded” by future climate regulations.
“Investors want more disclosure of climate change risks for fossil fuel companies and clear executive compensation links for sustainability performance,” Elders said. “The resolutions reflect uncertainty over how management is addressing potential business risk.”
In one recent vote, 98% of BP shareholders voted for a resolution that requires the company to improve its annual reporting on climate change risks.
More than 60 institutional investors representing nearly $2 trillion in assets have called on the U.S. Securities and Exchange Commission to push for better disclosure by oil and gas companies of climate change-related risks that will “profoundly affect the economics of the industry.”