Chevron chairman targeted by shareholders on climate issues
These efforts by shareholders to oust members of the board of directors are rarely crowned with success. But a number of large investment firms and pension funds, which usually play a key role in the vote, say they are prepared to use their votes to demand that companies tackle climate change.
Last year, widespread dissatisfaction with ExxonMobil’s climate change strategy and financial performance resulted in dissenting shareholders taking three seats on the 12-member board.
“More and more shareholders are calling for transformational corporate change,” said Eli Kasargod-Staub, director of shareholder advocacy group Majority Action, which organizes the campaign at Chevron. “If board members don’t take action, we believe responsible shareholders will hold them accountable.”
The group aims to move from the board of directors Michael Wirth61 years old, Chairman and Chief Executive Officer since 2018, and Ronald Sugar, 72, a board member since 2005 and retired chairman and CEO of Northrop Grumman, the aerospace and defense company. The group is not looking to fire Wirth as managing director, just to keep him out of the 12–council of members.
In a statement to The Washington Post, the company said, “Chevron’s Board of Directors is reviewing shareholder proposals in detail and will make recommendations to shareholders on how to vote on each request in our proxy statement, which we plan to publish next month.”
Over the past decade, more and more investors have begun to pressure the companies in which they hold stakes to reduce their carbon emissions and develop climate-responsive business plans.
Environmental groups and scientific reports say emission reductions are essential to thwart climate change and for the broader health of the planet. But some shareholder groups say companies also have a narrower financial reason to move away from fossil fuels: Governments will eventually impose stricter limits on their use, they say, and even if they don’t not, alternative energy sources will eventually become cheaper and reduce the demand for oil and gas.
Many investors have become impatient for change.
” There is a lot of [investor] frustration with the slow energy transition,” said Marc Goldstein, head of US research at Institutional Shareholder Services.
He foresees more efforts to move board members on climate issues.
“Big investors are increasingly going to vote against directors because of climate issues,” Goldstein said. “That doesn’t mean they’re going to vote against every director. They are going to look at which companies are leading and which are lagging in current emissions disclosure as well as their transition plans.
One of the biggest players, for example, BlackRock, the world’s largest fund manager, has repeatedly warned that it will steer away from high environmental risk investments.
“BlackRock believes that climate change has become a defining factor in the long-term prospects of businesses,” it said in January in a document indicating how he will decide how to vote in the shareholder elections this year.
BlackRock said it would ask companies “for a business plan of how they intend to deliver long-term financial performance through the transition to global net-zero carbon emissions.”
This year’s bid to overthrow Wirth and Sugar builds on a key event last year, when a group of shareholders introduced a resolution calling on Chevron to “significantly reduce greenhouse gas emissions ( GHG) of their energy products”.
“I think we had to be very clear with Big Oil,” said Mark van Baal, the founder of follow this, the group that submitted the resolution. “We need to get substantial reductions.”
Chevron’s board opposed the measure, saying the company supports an approach to meet the goals of the Paris Agreement, the landmark climate change treaty, “in the most effective way and as profitable as possible for society”.
More than 60% of shareholders sided with the reformers.
Much of the case against Wirth and Sugar today revolves around that resolution and the company’s conduct since then. Van Baal said the company ignored the wishes of shareholders, calling its actions over the past year a “snub”.
Even so, the case against the administrators faces headwinds. The two withstood a similar effort last year. With rising gas prices, Chevron’s stock price is also rising, which could make some shareholders less willing to force a change on the board. Moreover, the Russian invasion of Ukraine led to calls on Western companies to produce more oil, not less, to become less dependent on Russian resources.
Kasargod-Staub, the director of advocacy group Majority Action, said a better way to become independent of Russian oil is to develop more alternative energy sources at home.
The United Nations Intergovernmental Panel on Climate Change “reported just a week ago that we are rapidly running out of time to escape the worst ravages of runaway climate change,” he said. “Responsible long-term investors know that the solution to the crisis in Ukraine cannot lie in a massive expansion of fossil fuels.”