The U.S. Securities and Exchange Commission has ruled Exxon Mobil Corp (XOM) must include a climate change resolution in its annual shareholder proxy, a defeat for the world's largest oil producer, which had argued it already provides adequate carbon disclosures.
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In a Tuesday letter to Exxon seen by Reuters, the SEC said the oil producer cannot keep a proposal spearheaded by New York state's comptroller from a full shareholder vote at the company's annual meeting in May.
If approved, the proposal would force Exxon to outline specific risks that climate change or legislation designed to curb it could pose to its ability to operate profitably.
Exxon had argued that the proposal was vague and that it already publishes carbon-related information for shareholders, including a 2014 report on its website entitled, "Energy and Carbon – Managing the Risks."
The SEC found those reports do not go far enough.
"It does not appear that Exxon Mobil's public disclosures compare favorably with the guidelines of the proposal," Justin Kisner, an attorney-adviser with the SEC, wrote to the oil producer.
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Exxon Mobil declined to comment on the SEC's ruling.
"We'll be communicating the board's recommendations on shareholder resolutions through the proxy document next month," Exxon spokesman Alan Jeffers said. It is not uncommon for companies to give shareholders their opinion on proxy votes.
New York state Comptroller Thomas DiNapoli, who oversees the state's $178.3 billion pension fund, called the SEC's decision a "major victory" for shareholders.
"Investors need to know if ExxonMobil is taking necessary steps to prepare for a lower carbon future, particularly now in the wake of the Paris agreement," DiNapoli said in a statement, referring to an agreement last fall by 195 countries to rein in rising emissions that have been blamed for global warming.
DiNapoli was joined in the SEC filing by the Church of England, the Vermont State Employees' Retirement System, the University of California Retirement Plan and the Brainerd Foundation.
Separately on Wednesday, the Rockefeller Family Fund said it will divest from fossil fuels as quickly as possible and "eliminate holdings" of Exxon.