Case study by Walden Asset Management
Investor: Walden Asset Management/Boston Trust & Investment Management
HQ: Boston, Massachusetts
Operations: Investment manager
USD AUM: $8.4 billion (as at 31/03/2018)
Asset mix: Multi-asset
ExxonMobil is the largest oil and gas company in the world by market capitalisation.
Headquartered in Dallas, Texas, and with a global reach from Russia to Indonesia and Canada, ExxonMobil is a central figure in the debate on climate change. As a result, the company has received numerous shareholder resolutions addressing the issue, including pleas to disclose its lobbying expenditures and initiatives. The oil industry’s impact on public policy, including climate policy, is particularly important. This includes direct and indirect lobbying through trade associations where ExxonMobil is a prominent member.
ExxonMobil has not been singled out for this resolution; each year investors file similar lobbying disclosure resolutions with approximately 50 companies.
Due to its size, ExxonMobil’s influence on public policy, including laws and regulations, is considered significant. Between 2010 and 2017, it spent over US$94 million on federal lobbying, not including its lobbying in 33 states.
While a company’s direct expenditures on federal lobbying are publicly disclosed to the Senate, significant lobbying is carried out through trade associations, and this information is secret. ExxonMobil is a member of associations like the US Chamber of Commerce, American Petroleum Institute and Business Roundtable, which do extensive lobbying. But their dues and payments to them are closely guarded secrets. The US Chamber of Commerce, of which ExxonMobil is an active and prominent member, vigorously attacked the Obama Administration’s Clean Power Plan, the government programme to reduce greenhouse gas emissions. This included suing to block the plan. It argued it was unnecessary government intrusion in the markets, ignoring the urgency of the need to address climate change. Company dues helped finance that lobbying.
However, such associations lobby on a range of issues, including climate change and the environment. Thus, the shareholder resolution challenges the company to be transparent about its payments and to explain what steps it takes if a trade association takes a controversial position on a climate lobbying issue.
The shareholder resolution to ExxonMobil is voted on at its annual meeting in May. There are numerous co-sponsors of the resolution but this year it is led by the United Steelworkers.
Walden Asset Management has played a central role in challenging ExxonMobil to address aspects of climate public policy. These efforts have occurred in private investor meetings with the company and as a co-filer of the lobbying resolution.
The resolution presses the company to evaluate its positions on public policy through a climate lens. Raising these issues as an investor provides a counter to the inevitable energy industry pressure to support the status quo. Over the last decade, Walden representatives have met over a dozen times with ExxonMobil executives, and public policy is always on the agenda.
As we work diligently to support forward-looking public policies on climate, it is important to monitor company lobbying, hold it accountable for trying to hold the clock back on important forward-looking policies or to commend it for positive advocacy.
For example, ExxonMobil takes a position supporting a carbon tax which it raises in meetings with Congress. A carbon tax or putting a price on carbon is clearly a key tool in reducing the use of fossil fuels and it is vitally important that companies like ExxonMobil support it.
ExxonMobil does engage investors to discuss their lobbying and in certain circumstances it has actively opposed certain trade associations’ actions. For example, in 2017 it attended a conference of ALEC (the American Legislative Exchange Council) and actively opposed a proposal against the Endangerment findings (a US finding that stipulates the dangers of greenhouse gas emissions). This intervention by ExxonMobil and other companies was crucial in blocking an attempt to undermine the scientific foundation supporting work to reduce greenhouse gases. The proposed ALEC bill, which acts as a model for conservative state legislators, would have promoted state action against climate science as an “end run” around federal action.
The initiative by investors pressing for more transparency around lobbying, particularly in relation to climate, is an important check and balance on the dollars and voice of major corporations in our legislative process.
Walden believes it is vitally important for investors to track company actions on public policy, support forward actions and challenge lobbying that blocks climate solutions.
Converging on climate lobbying: aligning corporate practice with investor expectations
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Case study: ExxonMobil