Exxon shareholder revolt gathers pace

The shareholder campaign to force oil giant ExxonMobil to develop a more effective climate change policy yesterday announced that it has secured support from 19 institutional investors, ahead of next week's annual meeting.

A coalition of shareholders, including public investment and pension funds from California, New York, Illinois, Maine and Vermont as well as the United Methodist Church and the AFSCME public employees' union, have signalled that they intend to support five shareholder resolutions proposed by descendants of the company’s founder John D Rockefeller.

The resolutions, which are being opposed by Exxon's board, call for the company to set greenhouse gas emission targets, create a climate change task force, report on its strategy to develop new energy technologies, increase R &D spending non-renewable energy and split the role of chief executive and chairman.

Exxon has been repeatedly criticised by environmentalists for failing to follow the lead of rival oil companies such as BP and Chevron, and refusing to invest heavily in alternative energy technologies. The company has long maintained that renewable energy is uneconomical and insists that the current board is better placed than shareholders to handle strategy and governance issues.

However, dissident shareholders argued that there is a strong business case for the company to adopt a more proactive position on combating climate change.

"Exxon Mobil's go-slow approach in addressing greenhouse gas reductions and investments in renewable energy sources places long-term shareholder value at risk," said California State Treasurer Bill Lockyer, who serves on the board at CalPERS and CalSTRS, two of the nation’s public pension funds. "Instead of dragging its feet, Exxon Mobil should be taking the lead in providing long-term climate solutions."

New York City Comptroller William C. Thompson, Jr. who oversees New York City retirement system assets said that splitting the chairman and chief executive role would force the company to be more responsive to shareholder concerns. " Absent this reform, the board will continue to follow rather than lead, and shareholders will continue to be frustrated by their unresponsiveness to their important concerns," he observed.

The new coalition holds 91 million Exxon shares worth $8.6bn and while this represents just a fraction of the firm's $505bn market capitalisation, they are confident wider support for the resolutions can be secured.

Earlier this week a group of leading UK institutional investors, including F &C Asset Management and Morley Asset Management, confirmed that they would be supporting the resolution calling for the appointment of a separate chairman, in part to help stimulate greater debate at board level over the company's climate change strategy.