Top Exxon shareholder dumps assets after company fails to meet key climate obligations

Nov 02, 2019 News

Legal and General investment Management Limited (LGIM), a European shareholder for ExxonMobil, came out earlier this year shaming the oil company for how it addresses climate change. Then, it voted to dump its assets.

CEO and Chair of ExxonMobil, Darren Woods

The company released a report, which found that Exxon is a ‘laggard’ as it has failed to meet climate reporting obligations. In the report, the shareholder issues regulations to pressure the Oil Giant’s leaders to step up their efforts to address climate change, the asset manager stated that ExxonMobil has not met some of their key minimum requirements, including on emissions reporting and targets.
Notably, the firm lauded other oil companies for their good work. Equinor, for example, was commended for committing to provide more details around how its future investment plans in oil and gas exploration are consistent with the Paris Agreement. Royal Dutch Shell was also given a pat on the back for adopting comprehensive emission targets, linked to executive pay, which include not just emissions from Shell’s operations, but also from the burning of its oil and gas products.
The firm’s assessment is purported to take into account a wide range of indicators to establish a comprehensive view of companies’ exposure to climate risks and opportunities. Since Exxon has been found lacking, LGIM voted to divest some of its assets. The divestment also applies to some other non-oil companies.
The divestment is only for LGIM’s Future World Funds, which are there for clients who maintain a commitment to environmental, social and governance themes. And, even though LGIM is one of Exxon’s top 20 investors, its shareholding accounts only for about 0.6 percent of the company’s asset base. So, it will not place a significant dent in the company’s holdings. But it is adamant that the divestment will set the right precedent.
The firm’s Head of Sustainability and Responsible Investment Strategy is quoted by Reuters as saying “In all other LGIM (non-Future World), funds that remain invested in those companies that have not met our criteria, we will vote against the election of the Chair of the Board… We can vote against the Chair on any number of issues, so to do so because of a single issue such as climate change sends a powerful message to companies that they should be raising their standards in this area.”
In ExxonMobil’s case, the current Chair and CEO is Darren Woods, for which LGIM has gotten a considerable push to oppose.
The company is coming under considerable pressure to up its efforts to address climate change.
It has been accused of hiding climate change from the public for decades, and is now facing two lawsuits alleging that it misled the public and its investors about the cost of climate change on its operations.
The oil company also is among the countries in the world with the most carbon emissions, which is purported to be a direct contributor to the climate crisis.

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