Legal & General targets US oil giant Exxon over climate change

Legal & General Investment Management (LGIM), one of the world’s largest fund managers with more than $1.5 trillion (€1.4 trillion) in assets, is taking its fight for greater action on climate change to the boardroom of US oil giant ExxonMobil.

The UK asset manager has pledged to vote against the re-election of Exxon chairman and chief executive Darren Woods at the company's annual general meeting later this month, citing concerns about its approach to climate change.

LGIM highlighted what it said was Exxon’s “persistent refusal” to disclose its full carbon footprint and to set company-wide emissions targets.

The fund manager, which holds a significant stake in Exxon, the world’s largest listed oil and gas company, is also backing a resolution for increased transparency on political lobbying amid accusations that the oil company has been promoting a disinformation campaign around climate change via third-party industry bodies.

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Lobbying by US oil companies is believed to have played a pivotal role in US president Donald Trump’s decision to remove the US, the world’s largest carbon emitter, from the Paris climate accord in 2017.

Outspoken

LGIM has become one of the most outspoken fund managers on climate change, warning that the world is facing a “climate catastrophe” unless drastic action is taken to cut carbon emissions.

While it has been criticised for continuing to maintain investments in some of the world’s biggest polluters, LGIM insists it is using its voting power as a shareholder to drive change from inside companies.

Last year it co-filed its first ever shareholder resolution, targeting BP, which led to the UK oil giant pledging to reduce its carbon footprint to net zero, seen as a breakthrough moment for the industry.

Pressure

Rival oil company Shell has also linked part of its chief executive 's remuneration to climate change targets as a result of pressure from LGIM.

"We remain concerned by the Exxon's lack of strategic ambition around climate change," Meryam Omi, LGIM's head of sustainability and responsible investment strategy, said.

“ To remain successful in a low-carbon world, companies must act today, aligning their capital decision with the goals of the Paris Agreement, and setting stretching targets.

“We are seeing many of Exxon’s peers step up, and reaffirm their sustainability ambitions even amid the current testing circumstances. The world, and Exxon’s investors, cannot afford the company to fall behind,” she said.

Ms Omi told The Irish Times that the outcome of the votes at the Exxon agm would be dependent on other shareholders but it had taken the decision to “predeclare” its voting intentions because the issue was so important.

She indicated that LGIM would keep “ratcheting up” pressure on the company to do more but stopped short of saying it would divest its holding in Exxon if the oil major failed to change its climate policies.

Exxon responded by saying its board “advises against the proposal” while referring enquiries to its 2020 proxy statement, which states it has invested heavily in reducing emissions since 2000 and is “on track to meet, goals to further reduce emissions from its operations”.

In a recent active ownership report, LGIM said it opposed the re-election of 4,000 company directors last year, in a number of cases for failing to take sufficient action on climate change.

It said climate change was the top engagement topic with companies in 2019, accounting for 249 engagements it had with companies, more than remuneration, diversity or strategy.

In the report, it noted that climate concerns reached new heights in 2019, a year that saw the hottest July and September on record.