In historic votes, shareholders demand strong climate action from the U.S. oil and gas industry

Winning vote totals on shareholder proposals at Phillips66 and ConocoPhillips this week sent a clear signal to the oil and gas industry that investors want to see ambitious climate action — and small commitments are no longer enough. 

At the oil majors’ annual meetings, resolutions seeking emissions reduction targets at ConocoPhillips and Phillips 66, both filed by Follow This, obtained majority shareholder approval, as did a vote at Phillips 66 requesting that the company issue a report on whether its lobbying activities are consistent with the goals of the Paris Climate Agreement. The lobbying resolution vote was among the many flagged by the Climate Action 100+ initiative — the world’s largest investor climate initiative which includes 575 investors managing a combined $54 trillion in assets. 

“These three majority votes in one week already equal the total number of previous majority votes on climate proposals in the entire history of the U.S. oil and gas industry,” said Andrew Logan, senior director of oil and gas at Ceres. Ceres is a founding partner of Climate Action 100+. “These votes at ConocoPhillips and Phillips 66 leave no doubt that investor expectations on climate have been raised for the oil and gas sector.”

 At the May 11 ConocoPhillips meeting, 58% of shareholders voted for a shareholder resolution that called for Scope 3 emissions reduction targets, which would require the company to account for the end use of its extracted fuels. ConocoPhillips recommended a “no” vote, citing the actions it has already taken as the first U.S. oil and gas company to commit to net-zero by 2050 targets for its Scopes 1 and 2 emissions.

“These votes are particularly notable in the case of a company like ConocoPhillips, which had previously set targets on Scope 1 and 2 emissions,” Logan added. “It indicates that investors are looking for transformative change in this sector.” Scope 1 refers to emissions in company operations and Scope 2 to emissions from supply chains. Scope 3 or “product emissions” are material to oil and gas companies' businesses as demand for their products is already changing because of the energy transition. 

On May 12, a majority of shareholders at Phillips 66 drove the message to the oil and gas industry home, voting in favor of another emissions reduction resolution as well as a Paris-Aligned lobbying resolution, filed by the California State Teachers Retirement System (CalSTRS).

Like other votes this proxy season, the recent oil and gas investor votes speak to the power of investor engagement through this initiative. In March, Climate Action 100+ released a Net-Zero Company Benchmark of 159 focus companies on the progress they’ve made towards the initiative's goals: reducing emissions, improving climate governance and climate-related financial disclosures.

“The Climate Action 100+ Net-Zero Company Benchmark assessments allow investors to clearly see where companies are lagging, both for indicators related to greenhouse gas emissions targets in the short, medium and long term targets and for lobbying disclosure practices,” Logan said. “As we look toward upcoming annual meetings at ExxonMobil and Chevron later in the month, the votes this week already indicate a clear shift in the standards that shareholders now hold for the oil and gas industry on climate.”

California Public Employees Retirement System (CalPERS), which is co-leading Climate Action 100+ investor signatory engagement with ExxonMobil, has underlined its support for changes to Exxon’s board of directors by filing a letter with the SEC that allows it to share its views with other Exxon shareholders, stating, “We believe that additional board refreshment is necessary due to the long-term financial underperformance at ExxonMobil and the need for a greater depth of skill sets and experience on the board to address the significant challenges the company faces. In order to effectively oversee the transition to a low-carbon economy, we believe the board would benefit from additional expertise in both its core business and in renewable energy technologies.”

About Climate Action 100+

Climate Action 100+ is an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 570 investors with $54 trillion in assets under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures. The companies include ‘systemically important emitters’, accounting for two-thirds of annual global industrial emissions, alongside others with significant opportunity to drive the clean energy transition. For more information, visit: www.ClimateAction100.org and follow: @ActOnClimate100.

About Ceres

Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.