Aegon has joined major investors to call for one of the world’s largest oil and gas companies to come clean on the impact of climate change.
Aegon Asset Management has joined companies with a total 10 trillion euro under management to back a resolution in which ExxonMobil is asked to disclose how resilient its portfolio and strategy would be should global temperatures increase by two degrees Celsius, compared to pre-industrial times.
Two degrees might seem unremarkable, but the increase is predicted to lead to the destruction of plant and animal habitats, reduce yields of important food crops, and exacerbate extreme weather conditions, including flooding and drought.
The proposal will be put before ExxonMobil's shareholder meeting on May 31. Aegon Asset Management, together with Aviva Investors, Legal & General Investment Management, Natixis Asset Management and others have declared they will vote in favor of the resolution.
Investment risk and opportunity
With climate change already accelerating, there is growing public and government pressure to support alternative energy sources. Without a transition strategy, existing fossil-fuel businesses risk their license to operate.
In the resolution, ExxonMobil is being asked to assess the resilience of its reserves and resources to 2040 and beyond, and address the financial risks associated with climate change. Natalie Beinisch, Aegon Asset Management Engagement Officer, suggests that for complete transparency, annual reporting should include a range of information, including: "Ongoing operational emissions management; low-carbon energy research and development and investment strategies; and public policy positions relating to climate change."
US companies lagging
The initiative follows Aegon Asset Management's support of 'Aiming for A resolutions' – with 'A' referring to the best A-E CDP (formerly Carbon Disclosure Project) performance. "We asked European listed companies to publish two-degree Celsius change scenarios," says Beinisch. "The 'Aiming for A' investor coalition is currently undertaking in-depth engagement with the ten largest UK-listed extractives and utilities companies, and expanding to become pan-European."
This latest move by Aegon is an effort investors to encourage companies in the United States to meet the standards set by their European peers. "While European companies such as Shell, Anglo American, and Rio Tinto have embraced these resolutions, US companies have been more resistant," says Beinisch. "Shareholders filed a similar proposal with ExxonMobil last year, which gained the support of 38.2% of shareholders. This was, however, opposed by the Board, on the basis that a two-degree scenario does not lie within a 'reasonably likely to occur' range of planning assumptions."