Time | ExxonMobil’s multi-front tussle with investors over the company’s positioning on climate change escalated last week when CalPERS, the largest U.S. pension fund, announced it would vote against every member of the company’s board of directors at its annual meeting on May 29.
The divergence between how Exxon and some of its investors view their financial interests demonstrates a new dynamic bound to grow as climate change becomes a more urgent societal challenge.
[…]The story behind ExxonMobil’s current tiff began last December when Arjuna Capital and Follow This submitted a resolution calling on the company to accelerate its emissions reduction plans. Instead of putting the resolution to shareholders for a vote at the company’s annual meeting this month, Exxon sued Arjuna and Follow This, arguing that the shareholder resolution process had “become ripe for abuse.” Even after the investors dropped the resolution, the company has persisted in its lawsuit.
Arjuna and Follow This are relatively small players, but the litigation has riled a broader group of investors with much deeper pockets. The New York State Common Retirement Fund, which manages around $250 billion in assets, said it would vote against 10 out of 12 Exxon board members citing the company’s climate positioning. On Monday, CalPERS, which has a $1 billion stake in Exxon, said it would vote against the entire Exxon board in response to the company’s litigation against investors. “ExxonMobil’s real agenda here seems to be intimidation, empowering corporate leaders at the expense of the investors who own the company and provide capital,” CalPERS said in a letter explaining the decision. “We can’t let that stand.”
CalPERS insists that its vote is a governance matter rather than strictly a climate-related issue. But the two are connected. CalPERS has a legal obligation to serve the financial interests of its beneficiaries and provide consistent returns long into the future. Given its enormous size, it invests across the entire market and will almost certainly suffer in any economic downturn—including a climate-driven one. Research has suggested that global economic output could be tens of trillions of dollars smaller by 2050 than it would have been otherwise as a result of climate change.
