DALLAS (Reuters Breakingviews) - Exxon Mobil shareholders have finally won a long-sought climate-change victory. Over 60 percent of them backed a move that forces the $340 billion oil giant to ramp up global-warming disclosure, up from under 40 percent in a similar attempt last year. Exxon already embraces the debate more than most. But shareholders want the company to be more forthcoming. Holdout industry peers will have to follow or risk investor ire.
Chief Executive Darren Woods, who took the helm at the beginning of the year, wrote in his first blog post about the importance of managing the risks of climate change. On several occasions Woods has talked about how Exxon does business in an environment in which, under the 2015 Paris accord, nearly 200 countries including China and India have agreed to reduce their carbon emissions.
At the company’s annual meeting in Dallas on Wednesday, Woods reiterated Exxon's commitment to adhere to the guidelines of the agreement even if President Donald Trump decides to withdraw the United States from the deal. Yet Exxon’s energy outlook remains fairly rosy, showing rising oil demand through 2040. Oil and gas development, Woods said, will still need $11 trillion of investment even under the constraints agreed in Paris.
Some shareholders have for several years found this discussion unsatisfactory. They have asked Exxon to analyze in more depth the potential impact on the company’s business of limits on greenhouse-gas emissions, and to attempt to assess what might happen beyond 2040. And they have demanded access to independent directors to discuss their concerns. The difference this year is that more of them, potentially including big institutions like BlackRock, now want more information. Following Wednesday's vote, the company has to oblige.
Speaking to reporters after the meeting, Woods was vague on Exxon's plans to comply. It's not the first time a U.S. company has gotten such a directive from shareholders – it happened at Occidental Petroleum earlier this month, for example – and greater disclosure is more common at European energy groups. Still, Exxon is the world's largest publicly traded oil and gas company and it sets the standard. Others in the sector should consider themselves on notice.