In reply to a controversy alert from proxy advisor Glass Lewis, ExxonMobil has said that the Paris Agreement target of net-zero emissions by 2050 target is unlikely to be achieved and should not be a future topic in its financial statements, Reuters reports.
Glass Lewis posted a controversy alert last week relating to shareholder pressure demanding the company do more to limit its climate impacts and strengthen its climate policies.
A shareholder proposal, which asked for a report evaluating the costs faced by the company if it were to abandon projects, will face a vote at the annual general meeting (AGM) on 31 May, according to Reuters. Glass Lewis backed the proposal after advising that as it stands, the net-zero scenario could cause financial risks for ExxonMobil.
A spokesperson for ExxonMobil said in response that “the requested report clearly would not provide new, decision-useful information.” They added that the shareholder request “ignore[s] the time, additional cost, and resources every report takes for the company to prepare.”
According to the International Energy Agency (IEA), to maintain the net-zero scenario and limit global warming to below 1.5C, there cannot be any new investment in fossil fuel supply projects – including new oil exploration. ExxonMobil has continued to invest in new oil expansion projects planned for decades to come. In April, the company approved a $12.7bn oil project in Guyana that is expected to produce oil for at least the next 20 years.
“It is clear that the IEA [net-zero scenario] does not, by the scenario authors’ own assessment, meet the level of likelihood required to be considered in our financial statements,” said the US-based oil giant in a response filed with the US Securities and Exchange Commission.
“It is highly unlikely that society would accept the degradation in global standard of living required to permanently achieve a scenario like the IEA” net-zero scenario, the response added.
The Glass Lewis alert also referred to public and regulatory scrutiny concerning the company’s operations in Guyana. Earlier this month, a Guyanese court ruled that ExxonMobil’s offshore oil unit is in breach of its environmental permit and insurance obligations.
Exxon pushed back against the adviser’s recommendation to review the impacts of a worst-case spill at its Guyanese platforms. Its board will also move to reject the proposal.
The latest shareholder proposal comes amid a barrage of climate resolutions put forward to various fossil fuel companies by activist shareholder groups, many of which are backed by pension funds. BP, Shell, and TotalEnergies are among other oil giants facing shareholder rebellions at their AGMs, scheduled for the end of this month.