In 2018, Chinese oil and gas giant CNOOC Ltd. agreed to improved emissions reporting and working on medium-term plans to address the low-carbon transition in its industry, in response to CBIS’ letter asking it to report to the CDP and disclose climate scenarios and emissions targets aligned with the Paris Agreement.
In the fourth quarter of 2017, CBIS asked the Board of Directors in a letter to produce a Two Degree Scenario Analysis, respond to a questionnaire from investor network CDP, and disclose how the Board is going to improve its climate competency and oversee climate risk.
In 2016, CBIS will begin to engage China National Offshore Oil Corporation (CNOOC) on the issue of climate change. CNOOC is China’s largest oil & gas company and can play a critical role in the transition to a low-carbon economy. China is the world’s largest consumer of energy and biggest greenhouse gas emitter, but it has set out a global action plan to limit global warming in accordance with the Paris climate accord. CNOOC has taken steps to address climate change, including developing technology to capture and store carbon, reducing energy consumption and improving energy ef¬ficiency in the production process, but it does not disclose emissions and provides only limited information regarding its renewable energy and carbon sequestration efforts. CBIS will work with CNOOC to ensure the company is creating targets to measure and reduce emissions and developing reporting to disclose its emissions, reduction goals, and progress.
In November 2017, CBIS met with Ford Motor Company’s new CEO Jim Hackett, an executive with strong sustainability credentials, and Ford’s Chairman of the Board, Bill Ford, Jr., to discuss the company’s policy advocacy on fuel economy standards , human rights due diligence in the supply chain, the need to undertake a Two Degree Scenario Analysis, and the importance of understanding disruptive trends and technology that can negatively impact its strategy plan. The company agreed to investigate what a Two Degree Scenario Analysis would entail.
CBIS led a meeting of BP executives and the Chair of the Board’s Remuneration Committee in March (with a follow-up meeting at our NYC office in April 2017), and convened a coalition of investors representing over $6 trillion AUM to join us. In June 2017, CBIS participated in a half-day discussion on lobbying alignment covering a range of concerns: cleaner vehicle goals, advanced mobility progress, and reaching low-income markets. CBIS is working to address growing pressures on the company from newer competitors that are shifting demand from the internal combustion engine to new technologies and mobility strategies. CBIS pressed Ford to respond to these trends, and its roll-out and timeframes for low-carbon fleets, and the policy, cybersecurity and leadership risks accompanying them. Much more progress is needed by Ford to stay ahead of the curve and be a relevant transport company in the coming decades.
Ford recently outlined ways it is building consumer acceptance of and demand for fuel-efficient vehicles. The company is investing an additional $4.5 billion in electrified vehicle solutions by 2020, and it expects that by the end of the decade, more than 40% of Ford’s nameplates globally will be electrified. CBIS has discussed with the company for nearly 15 years ways that it could improve the energy efficiency and increase the miles/gallon of its fleet. Electric vehicles are cleaner than petroleum-fueled vehicles and seen as a partial solution for bettering the environment.
In 2016, CBIS was invited to join a strategic planning session with several teams of Ford Motor Co. to discuss strategies out to 2030, including autonomous vehicles, electrified fleets, utility partnerships on infrastructure, vehicle design, and public policy. CBIS raised questions about cyber security concerns for self-driving (autonomous) vehicles and targeting segments of the market like the elderly and disabled for such vehicles, to the need for adapting car design to accommodate extreme weather from climate change. CBIS also discussed new partnerships to build out fueling/recharging infrastructure, the necessity of self-driving cars to move beyond fossil fuels (cars of the future are expected to be high tech in more than one way), and the trend in highly customizable cars and the opportunities that might produce—as well as the environmental risks inherent in parts and technologies that might quickly become obsolete.
After 10 years of engagement with Shell, in November 2017, CEO Ben van Beurden announced the company’s ambitious new pledge to increase investment in renewable fuels and to cut carbon emissions in half by 2050. The company committed to:
- Cut total lifecycle greenhouse gas emissions (emissions from operations and those produced from Shell products) by half by 2050;
- Increase investment by up to $2 billion per year on renewable energy sources and electric car charging stations;
- Work with BMW, Daimler, Ford, and Volkswagen to install fast-charging stations on Europe highways;
- Report on progress every five years.
During the meetings, we additionally pressed the company to improve its climate scenarios, so that investors understand the company’s strategic planning related to technology advances, government policy, and consumer shifts. We also pushed for new board leadership to help the company meet its ambitious net zero emissions commitments.
On November 4, 2015, Van Beurden had a meeting in New York to update analysts on the company’s performance. CBIS pressed senior executives about contributing to a fund to clean up oil spills in the Niger Delta. We praised the company on its decision to withdraw from drilling in the Arctic, an area that presents high risk due to its remote location and dangerous conditions. We also encouraged the company to provide robust reporting on steps it is taking to combat climate change, in line with the company’s commitment to improve reporting following the May 2015 resolution.
In April 2015, CBIS attended Royal Dutch Shell’s SRI day in London. CBIS and 40 SRI colleagues from investment firms across Europe met with CEO Ben Van Beurden and Chad Holladay, Chair of the Corporate and Social Responsibility Committee. Discussions included the company’s strategy on climate change, renewable energy, and deepwater drilling, cleanup operations in Nigeria, and exploration in the challenging Arctic region. It is an example of best practice in corporate engagement with stakeholders.
A resolution co-sponsored by CBIS for Royal Dutch Shell asking for greater disclosure about their climate impact received 99% support at the May 2015 annual meeting. The results demonstrate the strength of shareholder interest in assessing climate impact along with company performance.
In April 2017, CBIS led a meeting of BP executives and the Chair of the Board’s Remuneration Committee in March (with another follow up meeting in April 2017), and invited a coalition of investors from three countries, representing over $6 trillion AUM, to join us to:
- Discuss executive remuneration incentives for the transition to a lower-carbon business model,
- Request an analysis of the risks/opportunities under a 2° C and 1.5 ° C business environment,
- Encourage the company to add board members that had more “new economy” experience like technological disruption, venture capital, and innovation development, in order to be successful in a shift in business model, and
- Raise concerns about recent strategies, incentives and energy models that do not align with the Paris Agreement goals.
We joined an SRI presentation in December 2016 via video and asked executives to discuss carbon pricing, whether it is realistic for nations to hit a two degree emissions target, stemming from the Paris Agreement, and BP’s outlook on the issue. CBIS has also been focused on collaborating with EU and UK investors to press the company on executive remuneration incentives that are aligned with a two-degree transition pathway, and plan to dialogue more in the spring on our vote against the compensation plan if such issues are not addressed.
In April 2015, a resolution that CBIS co-filed at BP asking the company to outline steps it is taking in the transition to a low carbon economy received a near unanimous vote of 98% in favor, in addition to support from the company. The results demonstrate the strength of shareholder interest in assessing climate impact along with company performance.
On November 13, 2015 BP held an investor webinar to share its progress implementing the resolution. CBIS asked the company to set company-wide greenhouse gas emissions reduction goals. Without external targets, it is difficult for investors to understand how the company is reducing risk and preparing for a carbon-constrained future. We also encouraged the company to share more information on steps it is taking with respect to research and development of low carbon alternatives.
In 2018, ExxonMobil left ALEC, a highly controversial lobbying group, due to disagreement on climate change positions. CBIS pushed this issue at our last in-person dialogue, asking for policy consistency. Exxon also announced robust methane reduction goals, to decrease it overall greenhouse gas profile.
In December 2017, ExxonMobil announced it would produce the Two Degree Assessment that CBIS and other institutional investors requested through a successful shareholder proposal in May. Subsequently, the company release two reports in February 2018, with analysis of “energy demand sensitivies, implications of Two Degree scenarios, and positioning for a lower-carbon future.” CBIS will be reviewing these thoroughly and reporting back to our investors on our learnings and future action steps.
On May 31, 2017, shareholders voted 62.1% in favor of Proposal 12, or the Two Degree Assessment proposal, which asked the company for reporting on its fossil fuel reserve risk under a 2 degree Celsius world. CBIS was a co-filer on the proposal and spent time and resources to build support from other faith investors, and to make the business case to dozens of large institutional investors globally. CBIS was part of a coalition of 54 investors respresenting $5 trillion in assets under management. Two-thirds of the filers were faith-based, and most were Catholic institutions. The resolution was the first environmental resolution to pass at Exxon, and the second highest vote in the company’s history.
In February 2017, CBIS hosted a meeting of over 75 investors in Washington, DC, in late February, featuring many of the top 100 holders of the company, to discuss where Exxon and its peers stand on key investor asks related to the energy transition.
In 4Q 2016, CBIS began to spearhead a new strategy to bring the weight of faith based investors behind a proposal asking for an assessment of the company’s reserves and resiliency under a two degree policy scenario (aka, the Paris Agreement). CBIS also met with the company in December, and pressed the company on its Energy Outlook assumptions, public policy, legal firestorms, and positioning the company for more rapid industry transition. We subsequently filed the Two Degree Assessment proposal after the dialogue took place, seeing no major changes in commitment or strategy from the company during that meeting. As of March 31, 2017, there are now over 50 co-filers to the proposal, representing over $4 trillion in assets under management. The proposal is consistent with requests for enhanced climate change disclosure that CBIS has requested of BP and Royal Dutch Shell.
CBIS co-filed a shareholder resolution in 4Q 2015 asking the company to support the goal of limiting global average temperature increases to 2°C above pre-industrial levels, in line with the goals of the recent Paris Climate Accord. On December 17, 2015, CBIS participated in a call with Exxon Mobil to discuss the resolution. Shareholders encouraged the company to establish goals for its climate change program, as many of their oil and gas peers have done. Simply reducing emissions by any amount over any time frame is not an effective way for investors to measure success. The company attempted to block our resolution from appearing on the ballot, as it disagrees with setting goals and instead feels its performance should be assessed based on solutions they put forward. However, it was unsuccessful, and a vote was held at the annual shareholder meeting in May 2016. CBIS attended the meeting and addressed the board, speaking on behalf of vulnerable communities and addressing the need for a new business model that takes into account the impacts on those communities while still providing energy to those who need it. The resolution received a vote of 18.5% in favor, a positive result for a first time resolution.
We believe that millions who live in poverty may face climate impacts and will depend on high emitting sectors to take action. The Pope’s 2015 encyclical, Laudato Si’, made a new moral call for attending to our common home. While Exxon Mobile provides vital energy services to the global economy, as the largest publicly traded oil company in the world and one of the largest greenhouse gas emitters globally, the company can play an important role in addressing climate change and providing leadership for the transition to a low-carbon economy. We are hopeful further conversation will change Exxon Mobil’s stance.
CBIS had previously filed a greenhouse gas (GHG) emissions reduction resolution at Exxon Mobil in advance of the company’s May 2015 annual meeting. Despite CBIS’ efforts to organize a Declare Your Vote initiative, the final vote was 9.6% in favor, in part due to changes at the largest proxy voting agency.