Last week, New York District Attorney Eric Schneiderman issued a subpoena to Exxon Mobil ordering the company to provide financial information, as well as internal communications including emails, and other materials as far back as 1977. Schneiderman is investigating Exxon over suspicion of willfully failing to mention to its investors the risks climate change might pose to the company’s business. If this is true, then Exxon effectively violated its fiduciary duties and can be held liable. Moreover, the investigation might surface certain information that might uncover racketeering and securities frauds, since it’s well known, although harder to prove per se, that Exxon has been involved in manipulating public opinion on the matter, risking public health in the process – a situation akin to big tobacco which actively sought to convince the public that smoking isn’t bad for health.
Tugboats tow the oil tanker Exxon Valdez off Bligh Reef in Prince William Sound 5 April 1989. Image: Chris Wilkins
Recently, the Tri-State Coalition for Responsible Investment (CRI) — an alliance of Roman Catholic institutional investors primarily located throughout the New York metropolitan area, which owns an important share of Exxon stock– filed an investor’s resolution calling Exxon to take urgent measures to curb its greenhouse emission on moral grounds. Earlier this year, Pope Francis released a Climate Change Encyclical in which it basically urges the world to stop turning its backs on nature. No doubt, the Encyclical is an important factor that influenced the Tri-State CRI resolution for Exxon, in which the shareholders also ask that the company “elects to its Board independent specialists versed in all business aspects of climate change.”
“Since the Exxon Valdez incident, the public’s perception of ExxonMobil represents a company with questionable environmental practices. For years some shareholders concerned about ExxonMobil’s approach to climate change have asked to engage directly with members of its Board; consistently they have been denied this access to dialogue on matters of critical concern regarding climate change,” the authors write in the resolution.
“ExxonMobil claims that its energy production responds to a ‘moral imperative’ to meet growing energy demand and eradicate poverty, but this does not offset the necessity to mitigate climate change or the moral imperative to limit warming to 2°C,” according to the resolution.
“There is no doubt there is more interest in Exxon’s conduct than ever before,” said Reverend Michael Crosby, who represents the friars and has called on the company to address climate change for more than a decade. “Exxon has dismissed calls to take responsible action on the climate for so long, and now maybe there will be a feeling that what we’ve been calling for was right all along.”
No doubt, Crosby is referring to the previous 62 climate change-related resolutions issued by shareholders to Exxon. Inside Climate News reports 22 were either withdrawn or blocked by the company, while the rest didn’t get enough votes to pass.
Frankly, the faith-based shareholders – despite their cause is noble – have little chance standing in front of the board. That’s if their resolution ever reaches it, of course. The heat Exxon is under at the moment, doesn’t help one bit either. As for other shareholders, one can only assume that any board decision that might impact profits, hence returns, will not be supported.
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