How ExxonMobil’s Investors Are Challenging It on Climate Impact

Image via Minale Tattersfield/Flickr CC

As the media continues to buzz – both pro and con – about President Trump’s decision to pull the United States out of the Paris Climate Accord, shareholders at one of the world’s largest oil companies are drawing a line in the sand. Exxon Mobil (XOM) investors are demanding that oil company officials meet with them soon to come up with a plan to track the company’s climate impact. The main thrust of the meeting will be to consider what risks climate change will have on the company’s ability to turn a profit, and what, if anything, should be done to mitigate these risks. More than 60 percent of the company’s shareholders signed on to the deal. The signees have said Mr. Trump’s decision on the climate deal will have no bearing on their attempts to get a better handle on what will happen to Exxon’s ability to make money in the energy sector.

Most people interviewed after the decision was announced said it’s an offshoot of standard meeting conversations, not really a new agenda for the company. Shareholders routinely get together to discuss circumstances that might impact the company’s ability to earn in the global marketplace.

That said, some market watchers admit these are uncertain times.

As Daniel Palmier noted, “With so much up in the air right now, with factors both in and out of our control, it’s tough to get a detailed handle on the issues companies, including Exxon, may face in the immediate future, much less in the longer term. Some of the risks they did consider included new technology, as well as emerging markets in growing economies, climate change, and new government policies. These factors will be added to other common concerns including shifting regional and global consumer choices as well as travel and overall demand.”

If this trend continues at Exxon, it could lead to similar scenarios at other oil companies. Investors are certainly worried, and there’s evidence they’re worried for good reason. It will be up to the oil companies to give them good information along with a narrative that answers their questions without creating undue stress or concern. This type of collective investor involvement creates a collision between a company’s public face and the inner workings of the company’s decision makers, which could create a complicated juxtaposition where initial questions lead to deeper questions … including, perhaps, what did company officials know, and when did they know it. Officials may not have to offer this information to reporters, who have been asking for years now … but majority investors are another category entirely.

About the Author: Ronn Torossian is CEO of 5WPR