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Big Oil gets investor reprieve as energy worries trump climate concerns

ROSS KERBER SIMON JESSOP

Big Oil has enjoyed an easier ride at shareholder meetings so far this year compared with last year’s punishing run of hostile investor votes tied to climate concerns, as those issues have been eclipsed by tight oil supplies.

Major oil companies have handily defeated several highprofile climate resolutions brought by shareholder activists in the current run of annual general meetings.

Investors’ more supportive stance coincides with a surge in energy prices in the wake of Russia’s invasion of Ukraine and follows the efforts of many companies to speed up plans to transition to a low-carbon economy after years of pressure.

“It might be that Big Oil has convinced some investors the energy crisis overrides the climate crisis,” said Dutch environmental activist Mark van Baal of Follow This, an organization that filed a number of the resolutions defeated at recent AGMs, referring to the impact of the conflict in Ukraine.

Last year, companies faced an upsurge of shareholder support for resolutions and votes on environmental and social issues. ExxonMobil Corp., for example, had three new directors voted on to the Texas-based company’s board, marking a landmark win for activist investor Engine No. 1. But that was then.

Only 15 per cent of shareholder votes cast at BP’s annual meeting on May 12 backed a call for the British oil company to accelerate its energy transition, compared with the 21 per cent in favour in a similar vote last year.

Also, 17 per cent of investors backed a call for emissions-reduction targets at Occidental Petroleum Corp. at its May 6 shareholder meeting, while 16 per cent supported a measure on April 27 asking Marathon Petroleum Corp. to report on how its transition plans affected workers and communities.

At ConocoPhillips, 58 per cent of votes cast last year backed a push to set emissions-reduction targets. On May 12, only 42 per cent supported a similar measure that also asked the Houstonbased company to set overall emissions reductions in line with the Paris climate goals, according to a securities filing.

Shareholder meetings at Exxon, Chevron and Shell are set for later this month.

Analysts said investors’ shift away from environmental priorities partly reflects concerns as the war in Ukraine, which Russia describes as a “special military operation,” tightens energy supplies.

Geopolitics has “provided a powerful plausible excuse to procrastinate instead of committing to vital climate action,” said Abhijay Sood, financial sector research manager for ShareAction, a nongovernmental organization that focuses on responsible investment.

Caitlin McSherry, director of investment stewardship at asset manager Neuberger Berman, said investors could also be responding to the additional details many companies have issued on their transition plans.

“That gave, maybe, some investors more comfort” to vote with management, Ms. McSherry said. Neuberger declined to discuss most of its votes in detail.

Occidental had argued that it already set appropriate targets. A representative of the Houstonbased company said the outcome of its AGM “reflects the confidence Oxy’s shareholders have in the company’s net-zero strategy as well as the disciplined, rigorous targets we have established.”

A ConocoPhillips spokesperson said the vote at its AGM supported its view that the shareholder proposal for emissions was “not the right solution for an E&P (exploration and production) company with a transition-oriented portfolio and production.”

A representative of Ohio-based Marathon declined to comment on the vote at its AGM.

BP did not immediately respond to a request for comment.

A likely marketwide driver has been top asset manager BlackRock Inc., which this week said it would support fewer such resolutions on topics such as climate change because many were too prescriptive.

The change of mood was also mirrored across a series of similar votes at leading Wall Street banks in April.

Andrew Logan, senior director of oil and gas programs at Ceres, a Boston-based non-profit that seeks to build investor support for climate proposals, said the low tallies at AGMs could reflect how activists have already convinced many companies to take steps such as disclosure of emissions, an easier change than making plans to cut them.

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2022-05-17T07:00:00.0000000Z

2022-05-17T07:00:00.0000000Z

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